REG - Nat Bank of Canada - Report to Shareholders Part 1
26/02/2025 14:00
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RNS Number : 5736Y National Bank of Canada 26 February 2025
Regulatory Announcement (Part 1)
Q1 2025 Results
National Bank of Canada (the "Bank") announces publication of its First
Quarter 2025 Report to Shareholders. The First Quarter Results have been
uploaded to the National Storage Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and is available on
the Bank's website at
https://www.nbc.ca/about-us/investors/quarterly-results.html
(https://www.nbc.ca/about-us/investors/quarterly-results.html)
To view the full PDF of this First Quarter 2025 Report to Shareholders, please
click on the following link:
http://www.rns-pdf.londonstockexchange.com/rns/5736Y_1-2025-2-26.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5736Y_1-2025-2-26.pdf)
Report to Shareholders First Quarter 2025
National Bank reports its results for the First Quarter of 2025
The financial information reported in this document is based on the unaudited
interim condensed Consolidated Financial Statements for the quarter ended
January 31, 2025 and is prepared in accordance with International Financial
Reporting Standards (IFRS® Accounting Standards) as issued by the
International Accounting Standards Board (IASB), unless otherwise indicated.
IFRS Accounting Standards represent Canadian generally accepted accounting
principles (GAAP). All amounts are presented in Canadian dollars.
MONTREAL, February 26, 2025 - For the first quarter of 2025, National Bank is
reporting net income of $997 million, up 8% from $922 million in the first
quarter of 2024. First-quarter diluted earnings per share stood at $2.78
compared to $2.59 in the first quarter of 2024. These increases were driven by
total revenue growth in all of the business segments, partly offset by
increases in non-interest expenses and provisions for credit losses. The
Bank's income before provisions for credit losses and income taxes totalled
$1,537 million in the first quarter of 2025 compared to $1,261 million in the
first quarter of 2024, a 22% increase owing to good performance in all of the
business segments, in particular, in Financial Markets and Wealth Management.
Adjusted net income((1)), which excludes specified items((1)) related to the
acquisition of Canadian Western Bank (CWB), totalled $1,050 million in the
first quarter of 2025 from net income of $922 million in the same quarter of
2024. Adjusted diluted earnings per share((1)) stood at $2.93, up 13% compared
to $2.59 in the first quarter of 2024.
"The Bank generated strong first quarter financial results, reflecting solid
execution across business segments and our diversified earnings power. We were
also pleased to recently complete the acquisition of Canadian Western Bank,
marking a significant step forward in the acceleration of our domestic growth
and toward extending the depth of our banking capabilities to the benefit of
all our clients," said Laurent Ferreira, CEO. "In a context of heightened
macroeconomic and geopolitical uncertainty and an evolving credit cycle, we
remain committed to maintaining our usual discipline regarding credit, capital
and costs," concluded Mr. Ferreira.
Highlights
(millions of Canadian dollars) Quarter ended January 31
2025 2024((2)) % Change
Net income 997 922 8
Diluted earnings per share (dollars) $ 2.78 $ 2.59 7
Income before provisions for credit losses and income taxes 1,537 1,261 22
Return on common shareholders' equity((3)) 16.7 % 17.1 %
Dividend payout ratio((3)) 40.1 % 43.1 %
Operating results - Adjusted((1))
Net income - Adjusted 1,050 922 14
Diluted earnings per share - Adjusted (dollars) $ 2.93 $ 2.59 13
Income before provisions for credit losses and income taxes - Adjusted 1,610 1,261 28
As at As at
January 31, October 31, 2024
2025
CET1 capital ratio under Basel III((4)) 13.6 % 13.7 %
Leverage ratio under Basel III((4)(5)) 4.3 % 4.4 %
(1) See the Financial Reporting Method section on pages 4 to 9 for
additional information on non-GAAP financial measures.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes. For additional information, see the Financial Reporting Method section.
(3) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
(4) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(5) Ratio as at January 31, 2025 includes the redemption of Series
32 preferred shares completed on February 17, 2025.
Report to Shareholders First Quarter 2025
Personal and Commercial
- Net income totalled $290 million in the first quarter of 2025
versus $339 million in the first quarter of 2024, a 14% decrease due to a
significant increase in provisions for credit losses.
- At $1,204 million, first-quarter total revenues rose $50 million
or 4% year over year, mainly due to an increase in net interest income (driven
by growth in loan and deposit volumes), partly offset by a lower net interest
margin.
- Compared to a year ago, personal lending grew 4% and commercial
lending grew 13%.
- The net interest margin((1)) stood at 2.28% in the first quarter
of 2025, down from 2.36% in the first quarter of 2024.
- First-quarter non-interest expenses stood at $641 million, up 4%
year over year.
- Provisions for credit losses rose $91 million year over year,
mainly due to an increase in provisions for credit losses on impaired loans.
- At 53.2%, the first-quarter efficiency ratio((1)) was relatively
stable compared to 53.3% in the first quarter of 2024.
Wealth Management
- Net income totalled $242 million in the first quarter of 2025, a
23% increase from $196 million in the first quarter of 2024.
- First-quarter total revenues amounted to $776 million compared to
$660 million in first-quarter 2024, a $116 million or 18% increase driven
mainly by growth in fee-based revenues and net interest income.
- First-quarter non-interest expenses stood at $441 million versus
$390 million in first-quarter 2024, a 13% increase associated with revenue
growth.
- At 56.8%, the first-quarter efficiency ratio((1)) improved from
59.1% in the first quarter of 2024.
Financial Markets
- Net income totalled $417 million in the first quarter of 2025, up
35% from $308 million in the first quarter of 2024.
- First-quarter total revenues amounted to $907 million, a 40%
increase that was mainly due to growth in global markets revenues.
- First-quarter non-interest expenses stood at $367 million compared
to $313 million in first-quarter 2024, an increase that was mainly due to the
increase in variable compensation.
- First-quarter provisions for credit losses stood at $36 million
compared to $17 million in the first quarter of 2024, due to the provisions
for credit losses on impaired loans.
- At 40.5%, the efficiency ratio((1)) improved from 48.4% in the
first quarter of 2024.
U.S. Specialty Finance and International
- Net income totalled $183 million in the first quarter of 2025, up
22% from $150 million in the first quarter of 2024.
- First-quarter total revenues amounted to $405 million, a 24%
year-over-year increase driven mainly by revenue growth at both the Credigy
and ABA Bank subsidiaries.
- First-quarter non-interest expenses stood at $123 million, a 23%
year-over-year increase mainly attributable to business growth at ABA Bank.
- First-quarter provisions for credit losses were up $15 million
year over year, with the increase being attributable to both Credigy and ABA
Bank.
- At 30.4%, the efficiency ratio((1)) improved from 30.7% in the
first quarter of 2024.
Other
- There was a net loss of $135 million in the first quarter of 2025
compared to a net loss of $71 million in the same quarter of 2024, a change
that essentially came from a smaller contribution from Treasury activities, a
year-over-year increase in non-interest expenses (notably due to higher
compensation and employee benefits), as well as the unfavourable impact of
specified items((2)) on net loss in the first quarter of 2025.
CWB Acquisition
- On February 3, 2025, the Bank completed its acquisition of CWB, a
diversified financial services institution based in Edmonton, Alberta, in
which the Bank already held a 5.9% stake. This transaction will enable the
Bank to accelerate its growth across Canada. This business combination
brings together two complementary Canadian banks with growing businesses,
thereby enhancing customer service by offering a full range of products and
services nationwide, with a regionally focused service model.
Capital Management
- As at January 31, 2025, the Common Equity Tier 1 (CET1) capital
ratio under Basel III((3)) stood at 13.6%, a decrease from 13.7% as at October
31, 2024.
- As at January 31, 2025, the Basel III((3)(4)) leverage ratio was
4.3%, a decrease from 4.4% as at October 31, 2024.
(1) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
(2) See the Financial Reporting Method section on pages 4 to 9 for
additional information on non-GAAP financial measures.
(3) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(4) Ratio as at January 31, 2025 includes the redemption of Series
32 preferred shares completed on February 17, 2025.
Management's Discussion
and Analysis
February 25, 2025
The following Management's Discussion and Analysis (MD&A) presents the
financial condition and operating results of National Bank of Canada (the
Bank). This analysis was prepared in accordance with the requirements set out
in National Instrument 51-102, Continuous Disclosure Obligations, released by
the Canadian Securities Administrators (CSA). It is based on the unaudited
interim condensed consolidated financial statements (the consolidated
financial statements) for the quarter ended January 31, 2025 and prepared in
accordance with International Financial Reporting Standards (IFRS® Accounting
Standards) as issued by the International Accounting Standards Board (IASB),
unless otherwise indicated. IFRS Accounting Standards represent Canadian
generally accepted accounting principles (GAAP). This MD&A should be read
in conjunction with the consolidated financial statements and accompanying
notes for the quarter ended January 31, 2025 and with the 2024 Annual
Report. All amounts are presented in Canadian dollars. Additional information
about the Bank, including the Annual Information Form, can be obtained from
the Bank's website at nbc.ca and SEDAR+'s website at sedarplus.ca. The
information found in the various documents and reports published by the Bank
or the information available on the Bank's website and mentioned herein is not
and should not be considered incorporated by reference into the Report to
Shareholders, the Management's Discussion and Analysis, or the consolidated
financial statements, unless expressly stated otherwise.
Financial Reporting Method 4 Capital Management 21
Economic Review and Outlook 10 Risk Management 28
Highlights 11 Risk Disclosures 44
Financial Analysis 12 Accounting Policies and Financial Disclosure 45
Consolidated Results 12 Material Accounting Policies and Accounting Estimates 45
Results by Segment 14 Future Accounting Policy Changes 45
Consolidated Balance Sheet 18 Financial Disclosure 45
Events After the Consolidated Balance Sheet Date 20 Quarterly Financial Information 46
Related Party Transactions 21 Glossary 47
Securitization and Off-Balance-Sheet Arrangements 21
Income Taxes 21
Caution Regarding Forward-Looking Statements
Certain statements in this document are forward-looking statements. These
statements are made in accordance with applicable securities legislation in
Canada and the United States. The forward-looking statements in this document
may include, but are not limited to, statements in the messages from
management, as well as other statements about the economy, market changes, the
Bank's objectives, outlook, and priorities for fiscal 2025 and beyond, the
strategies or actions that the Bank will take to achieve them, expectations
for the Bank's financial condition and operations, the regulatory environment
in which it operates, its environmental, social, and governance targets and
commitments, the impacts and benefits of the acquisition of Canadian Western
Bank (CWB), and certain risks to which the Bank is exposed. The Bank may also
make forward-looking statements in other documents and regulatory filings, as
well as orally. These forward-looking statements are typically identified by
verbs or words such as "outlook", "believe", "foresee", "forecast",
"anticipate", "estimate", "project", "expect", "intend" and "plan", the use of
future or conditional forms, notably verbs such as "will", "may", "should",
"could" or "would", as well as similar terms and expressions.
These forward-looking statements are intended to assist the security holders
of the Bank in understanding the Bank's financial position and results of
operations as at the dates indicated and for the periods then ended, as well
as the Bank's vision, strategic objectives, and performance targets, and may
not be appropriate for other purposes. These forward-looking statements are
based on current expectations, estimates, assumptions and intentions that the
Bank deems reasonable as at the date thereof and are subject to inherent
uncertainty and risks, many of which are beyond the Bank's control. There is a
strong possibility that the Bank's express or implied predictions, forecasts,
projections, expectations, or conclusions will not prove to be accurate, that
its assumptions will not be confirmed, and that its vision, strategic
objectives, and performance targets will not be achieved. The Bank cautions
investors that these forward-looking statements are not guarantees of future
performance and that actual events or results may differ materially from these
statements due to a number of factors. Therefore, the Bank recommends that
readers not place undue reliance on these forward-looking statements, as a
number of factors could cause actual results to differ materially from the
expectations, estimates, or intentions expressed in these forward-looking
statements. Investors and others who rely on the Bank's forward-looking
statements should carefully consider the factors listed below as well as other
uncertainties and potential events and the risk they entail. Except as
required by law, the Bank does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to time, by it
or on its behalf.
Assumptions about the performance of the Canadian and U.S. economies in 2025
and how that performance will affect the Bank's business are among the factors
considered in setting the Bank's strategic priorities and objectives,
including allowances for credit losses. These assumptions appear in the 2024
Annual Report in the Economic Review and Outlook section and, for each
business segment, in the Economic and Market Review sections of the
2024 Annual Report and the Economic Review and Outlook section of this
document, and may be updated in the quarterly reports to shareholders filed
thereafter.
The forward-looking statements made in this document are based on a number of
assumptions and their future outcome is subject to a variety of risk factors,
many of which are beyond the Bank's control and the impacts of which are
difficult to predict. These risk factors include, among others, the general
economic environment and business and financial market conditions in Canada,
the United States, and the other countries where the Bank operates; the
measures affecting trade relations between Canada and its partners, including
the imposition of tariffs and any measures taken in response to such tariffs,
as well as the possible impacts on our clients, our operations and, more
generally, the economy; exchange rate and interest rate fluctuations;
inflation; global supply chain disruptions; higher funding costs and greater
market volatility; changes to fiscal, monetary, and other public policies;
regulatory oversight and changes to regulations that affect the Bank's
business; geopolitical and sociopolitical uncertainty; the Bank's ability to
successfully integrate CWB and the undisclosed costs or liability associated
with the acquisition; climate change, including physical risks and risks
related to the transition to a low-carbon economy; the Bank's ability to meet
stakeholder expectations on environmental and social issues, the need for
active and continued stakeholder engagement; the availability of comprehensive
and high-quality information from customers and other third parties, including
greenhouse gas emissions; the ability of the Bank to develop indicators to
effectively monitor our progress; the development and deployment of new
technologies and sustainable products; the ability of the Bank to identify
climate-related opportunities as well as to assess and manage climate-related
risks; significant changes in consumer behaviour; the housing situation, real
estate market, and household indebtedness in Canada; the Bank's ability to
achieve its key short-term priorities and long-term strategies; the timely
development and launch of new products and services; the ability of the Bank
to recruit and retain key personnel; technological innovation, including open
banking and the use of artificial intelligence; heightened competition from
established companies and from competitors offering non-traditional services;
model risk; changes in the performance and creditworthiness of the Bank's
clients and counterparties; the Bank's exposure to significant regulatory
issues or litigation; changes made to the accounting policies used by the Bank
to report its financial position, including the uncertainty related to
assumptions and significant accounting estimates; changes to tax legislation
in the countries where the Bank operates; changes to capital and liquidity
guidelines as well as to the instructions related to the presentation and
interpretation thereof; changes to the credit ratings assigned to the Bank by
financial and extra-financial rating agencies; potential disruptions to key
suppliers of goods and services to the Bank; third-party risk, including
failure by third parties to fulfil their obligations to the Bank; the
potential impacts of disruptions to the Bank's information technology systems
due to cyberattacks and theft or disclosure of data, including personal
information and identity theft; the risk of fraudulent activity; and possible
impacts of major events on the economy, market conditions, or the Bank's
outlook, including international conflicts, natural disasters, public health
crises, and the measures taken in response to these events; and the ability of
the Bank to anticipate and successfully manage risks arising from all of the
foregoing factors.
The foregoing list of risk factors is not exhaustive, and the forward-looking
statements made in this document are also subject to credit risk, market risk,
liquidity and funding risk, operational risk, regulatory compliance risk,
reputation risk, strategic risk, and social and environmental risk as well as
certain emerging risks or risks deemed significant. Additional information
about these factors is provided in the Risk Management section of the
2024 Annual Report as well as in the Risk Management section of this Report
to Shareholders for the first quarter of 2025 and may be updated in the
quarterly reports to shareholders filed thereafter.
Financial Reporting Method
The Bank's Consolidated Financial Statements are prepared in accordance with
IFRS Accounting Standards, as issued by the IASB. The financial statements
also comply with section 308(4) of the Bank Act (Canada), which states that,
except as otherwise specified by the Office of the Superintendent of Financial
Institutions (Canada) (OSFI), the Consolidated Financial Statements are to be
prepared in accordance with IFRS Accounting Standards, which represent
Canadian GAAP. None of the OSFI accounting requirements are exceptions to IFRS
Accounting Standards.
Effective November 1, 2024, the Bank discontinued taxable equivalent basis
(TEB) reporting for revenues and income taxes. Using the TEB method is less
relevant since the introduction of the Pillar 2 rules (global minimum tax)
during the first quarter of 2025 and Bill C-59 in relation to the taxation of
certain Canadian dividends during fiscal 2024. This change has no impact on
net income previously disclosed. Data for the 2024 periods were adjusted to
reflect this change.
Non-GAAP and Other Financial Measures
The Bank uses a number of financial measures when assessing its results and
measuring overall performance. Some of these financial measures are not
calculated in accordance with GAAP. Regulation 52-112 Respecting Non-GAAP and
Other Financial Measures Disclosure (Regulation 52-112) prescribes disclosure
requirements that apply to the following measures used by the Bank:
· non-GAAP financial measures;
· non-GAAP ratios;
· supplementary financial measures;
· capital management measures.
Non-GAAP Financial Measures
The Bank uses non-GAAP financial measures that do not have standardized
meanings under GAAP and that therefore may not be comparable to similar
measures used by other companies. Presenting non-GAAP financial measures helps
readers to better understand how management analyzes results, shows the
impacts of specified items on the results of the reported periods, and allows
readers to better assess results without the specified items if they consider
such items not to be reflective of the underlying performance of the Bank's
operations.
The key non-GAAP financial measures used by the Bank to analyze its results
are described below, and a quantitative reconciliation of these measures is
presented in the tables in the Reconciliation of Non-GAAP Financial Measures
section on pages 8 and 9 and in the Consolidated Results table on page 12. It
should be noted that, for the quarter ended January 31, 2025, after the
acquisition of Canadian Western Bank (CWB) was completed, several
acquisition-related items have been excluded from results since, in the
opinion of management, they are not reflective of the underlying performance
of the Bank's operations, in particular, the amortization of the subscription
receipt issuance costs of $28 million ($20 million net of income taxes); a
gain of $4 million ($3 million net of income taxes) resulting from the
remeasurement at fair value of the CWB common shares already held by the Bank;
the impact of managing fair value changes, which is a loss of $23 million
($17 million net of income taxes), and acquisition and integration charges of
$26 million ($19 million net of income taxes). For the quarter ended January
31, 2024, no specified items had been excluded from results.
Adjusted Net Interest Income
This item represents net interest income excluding specified items. Specified
items are excluded so that net interest income can be better evaluated by
excluding items that management believes do not reflect the underlying
financial performance of the Bank's operations.
Adjusted Non-Interest Income
This item represents non-interest income excluding specified items. Specified
items are excluded so that non‑interest income can be better evaluated by
excluding items that management believes do not reflect the underlying
financial performance of the Bank's operations.
Adjusted Total Revenues
This item represents total revenues excluding specified items. It consists of
adjusted net interest income and adjusted non-interest income. Specified items
are excluded so that total revenues can be better evaluated by excluding items
that management believes do not reflect the underlying financial performance
of the Bank's operations.
Adjusted Non-Interest Expenses
This item represents non-interest expenses excluding specified items.
Specified items are excluded so that non-interest expenses can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Income Before Provisions for Credit Losses and Income Taxes
This item represents income before provisions for credit losses and income
taxes excluding specified items. It also represents the difference between
adjusted total revenues and adjusted non-interest expenses. Specified items
are excluded so that income before provisions for credit losses and income
taxes can be better evaluated by excluding items that management believes do
not reflect the underlying financial performance of the Bank's operations.
Adjusted Income Taxes
This item represents income taxes excluding income taxes on specified items.
Adjusted Net Income
This item represents net income excluding specified items. Specified items are
excluded so that net income can be better evaluated by excluding items that
management believes do not reflect the underlying financial performance of the
Bank's operations.
Adjusted Net income Attributable to Common Shareholders
This item represents net income attributable to common shareholders excluding
specified items. Specified items are excluded so that net income attributable
to common shareholders can be better evaluated by excluding items that
management believes do not reflect the underlying financial performance of the
Bank's operations.
Adjusted Basic Earnings Per Share
This item represents basic earnings per share excluding specified items.
Specified items are excluded so that basic earnings per share can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Diluted Earnings Per Share
This item represents diluted earnings per share excluding specified items.
Specified items are excluded so that diluted earnings per share can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
The Bank also uses the below-described measures to assess its results, and a
quantitative reconciliation of these non-GAAP financial measures is presented
on page 7 of the document entitled Supplementary Financial Information - First
Quarter 2025 available on the Bank's website at nbc.ca.
Adjusted Non-Trading Net Interest Income
This item represents non-trading net interest income excluding specified
items. It includes revenues related to financial assets and financial
liabilities associated with non-trading activities, net of interest expenses
and interest income related to the financing of these financial assets and
financial liabilities, and is used to calculate adjusted non-trading net
interest margin. Specified items are excluded so that adjusted non-trading net
interest income can be better evaluated by excluding items that management
believes do not reflect the underlying financial performance of the Bank's
operations.
Net Interest Income Related to Trading Activities
This item represents net interest income related to trading activities which
comprises dividends related to financial assets and liabilities associated
with trading activities and certain interest income related to the financing
of these financial assets and liabilities, net of interest expenses.
Non-Interest Income Related to Trading Activities
This item represents non-interest income related to trading activities which
consists of realized and unrealized gains and losses as well as interest
income on securities measured at fair value through profit or loss, income
from held-for-trading derivative financial instruments, changes in the fair
value of loans at fair value through profit or loss, changes in the fair value
of financial instruments designated at fair value through profit or loss,
realized and unrealized gains and losses as well as interest expense on
obligations related to securities sold short, certain commission income as
well as other trading activity revenues, and any applicable transaction costs.
Trading Activity Revenues
This item represents trading activity revenues which comprise dividends
related to financial assets and financial liabilities associated with trading
activities; certain interest income related to the financing of these
financial assets and liabilities, net of interest expenses; realized and
unrealized gains and losses as well as interest income on securities measured
at fair value through profit or loss; income from held-for-trading derivative
financial instruments; changes in the fair value of loans at fair value
through profit or loss; changes in the fair value of financial instruments
designated at fair value through profit or loss; realized and unrealized gains
and losses as well as interest expense on obligations related to securities
sold short; certain commission income as well as other trading activity
revenues, and any applicable transaction costs.
Non-GAAP Ratios
The Bank uses non-GAAP ratios that do not have standardized meanings under
GAAP and that may therefore not be comparable to similar measures used by
other companies. A non-GAAP ratio is a ratio in which at least one component
is a non-GAAP financial measure. The Bank uses non-GAAP ratios to present
aspects of its financial performance or financial position.
The key non-GAAP ratios used by the Bank are described below.
Adjusted Return on Common Shareholders' Equity (ROE)
This item represents ROE excluding specified items. It is adjusted net income
attributable to common shareholders expressed as a percentage of average
equity attributable to common shareholders. It is a general measure of the
Bank's efficiency in using equity. Specified items are excluded so that ROE
can be better evaluated by excluding items that management believes do not
reflect the underlying financial performance of the Bank's operations.
Adjusted Dividend Payout Ratio
This item represents the dividend payout ratio excluding specified items. It
is dividends on common shares (per share amount) expressed as a percentage of
adjusted basic earnings per share. This ratio is a measure of the proportion
of earnings that is paid out to shareholders in the form of dividends.
Specified items are excluded so that the dividend payout ratio can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Operating Leverage
This item represents operating leverage excluding specified items. It is the
difference between the growth rate of adjusted total revenues and the growth
rate of adjusted non-interest expenses, and it measures the sensitivity of the
Bank's results to changes in its revenues. Specified items are excluded so
that the operating leverage can be better evaluated by excluding items that
management believes do not reflect the underlying financial performance of the
Bank's operations.
Adjusted Efficiency Ratio
This item represents the efficiency ratio excluding specified items. The ratio
represents adjusted non-interest expenses expressed as a percentage of
adjusted total revenues. It measures the efficiency of the Bank's operations.
Specified items are excluded so that the efficiency ratio can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Net Interest Margin, Non-Trading
This item represents the non-trading net interest margin excluding specified
items. It is calculated by dividing adjusted non-trading net interest income
by average non-trading interest-bearing assets. This ratio is a measure of the
profitability of non-trading activities. Specified items are excluded so that
the net interest margin, non-trading can be better evaluated by excluding
items that management believes do not reflect the underlying financial
performance of the Bank's operations.
Supplementary Financial Measures
A supplementary financial measure is a financial measure that: (a) is not
reported in the Bank's consolidated financial statements, and (b) is, or is
intended to be, reported periodically to represent historical or expected
financial performance, financial position, or cash flows. The composition of
these supplementary financial measures is presented in table footnotes or in
the Glossary section on pages 47 to 50 of this MD&A.
Capital Management Measures
The financial reporting framework used to prepare the financial statements
requires disclosure that helps readers assess the Bank's capital management
objectives, policies, and processes, as set out in IFRS Accounting Standards
in IAS 1 - Presentation of Financial Statements. The Bank has its own methods
for managing capital and liquidity, and IFRS Accounting Standards do not
prescribe any particular calculation method. These measures are calculated
using various guidelines and advisories issued by OSFI, which are based on the
standards, recommendations, and best practices of the Basel Committee on
Banking Supervision (BCBS), as presented in the following table.
OSFI guideline or advisory Measure
Capital Adequacy Requirements Common Equity Tier 1 (CET1) capital ratio
Tier 1 capital ratio
Total capital ratio
CET1 capital
Tier 1 capital
Tier 2 capital
Total capital
Risk-weighted assets
Maximum credit risk exposure under the Basel asset classes
Leverage Requirements Leverage ratio
Total exposure
Total Loss Absorbing Capacity (TLAC) Key indicators - TLAC requirements
Available TLAC
TLAC ratio
TLAC leverage ratio
Liquidity Adequacy Requirements Liquid asset portfolio
Encumbered assets and unencumbered assets
Liquidity coverage ratio (LCR)
High-quality liquid assets (HQLA)
Cash inflows/outflows and net cash outflows
Net stable funding ratio (NSFR)
Available stable funding items
Required stable funding items
Global Systemically Important Banks (G-SIBs) - G-SIB indicators
Public Disclosure Requirements
Reconciliation of Non-GAAP Financial Measures
Presentation of Results - Adjusted
(millions of Canadian dollars) Quarter ended January 31
2025 2024((1))
Personal and Commercial Wealth Management Financial Markets USSF&I Other
Total Total
Operating results
Net interest income 944 227 (509) 370 (60) 972 751
Non-interest income 260 549 1,416 35 (49) 2,211 1,959
Total revenues 1,204 776 907 405 (109) 3,183 2,710
Non-interest expenses 641 441 367 123 74 1,646 1,449
Income before provisions for credit losses and income taxes 563 335 540 282 (183) 1,537 1,261
Provisions for credit losses 162 2 36 51 3 254 120
Income before income taxes (recovery) 401 333 504 231 (186) 1,283 1,141
Income taxes (recovery) 111 91 87 48 (51) 286 219
Net income 290 242 417 183 (135) 997 922
Items that have an impact on results
Net interest income
Amortization of the subscription receipt issuance costs((2)) − − − − (28) (28) −
Impact on net interest income − − − − (28) (28) −
Non-interest income
Gain on the fair value remeasurement of an equity interest((3)) − − − − 4 4 −
Management of the fair value changes related to the CWB acquisition((4)) − − − − (23) (23) −
Impact on non-interest income − − − − (19) (19) −
Non-interest expenses
CWB acquisition and integration charges((5)) − − − − 26 26 −
Impact on non-interest expenses − − − − 26 26 −
Income taxes
Income taxes on the amortization of the subscription receipt issuance − − − − (8) (8) −
costs((2))
Income taxes on the gain on the fair value remeasurement − − − − 1 1 −
of an equity interest((3))
Income taxes on management of the fair value changes related to the − − − − (6) (6) −
CWB acquisition((4))
Income taxes on the CWB acquisition and integration charges((5)) − − − − (7) (7) −
Impact on income taxes − − − − (20) (20) −
Impact on net income − − − − (53) (53) −
Operating results - Adjusted
Net interest income - Adjusted 944 227 (509) 370 (32) 1,000 751
Non-interest income - Adjusted 260 549 1,416 35 (30) 2,230 1,959
Total revenues - Adjusted 1,204 776 907 405 (62) 3,230 2,710
Non-interest expenses - Adjusted 641 441 367 123 48 1,620 1,449
Income before provisions for credit losses and income taxes - Adjusted 563 335 540 282 (110) 1,610 1,261
Provisions for credit losses 162 2 36 51 3 254 120
Income before income taxes (recovery) - Adjusted 401 333 504 231 (113) 1,356 1,141
Income taxes (recovery) - Adjusted 111 91 87 48 (31) 306 219
Net income - Adjusted 290 242 417 183 (82) 1,050 922
(1) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(2) During the quarter ended January 31, 2025, the Bank recorded
an amount of $28 million ($20 million net of income taxes) to reflect the
amortization of the issuance costs of the subscription receipts issued as part
of the agreement to acquire CWB (for additional information, see Notes 8 and
10 to the Consolidated Financial Statements).
(3) During the quarter ended January 31, 2025, the Bank recorded a
gain of $4 million ($3 million net of income taxes) upon the remeasurement at
fair value of the interest already held in CWB as at January 31, 2025.
(4) During the quarter ended January 31, 2025, the Bank recorded a
mark-to-market loss of $23 million ($17 million net of income taxes) on
interest rate swaps used to manage the fair value changes of CWB's assets and
liabilities that resulted in volatility of goodwill and capital on closing of
the transaction. For additional information, see the Events After the
Consolidated Balance Sheet Date section.
(5) During the quarter ended January 31, 2025, the Bank recorded
acquisition and integration charges of $26 million ($19 million net of income
taxes) related to the CWB transaction.
Presentation of Basic and Diluted Earnings Per Share - Adjusted
(Canadian dollars) Quarter ended January 31
2025 2024
Basic earnings per share $ 2.81 $ 2.61
Amortization of the subscription receipt issuance costs((1)) 0.06 −
Gain on the fair value remeasurement of an equity interest((2)) (0.01) −
Management of the fair value changes related to the CWB acquisition((3)) 0.05 −
CWB acquisition and integration charges((4)) 0.05 −
Basic earnings per share - Adjusted $ 2.96 $ 2.61
Diluted earnings per share $ 2.78 $ 2.59
Amortization of the subscription receipt issuance costs((1)) 0.06 −
Gain on the fair value remeasurement of an equity interest((2)) (0.01) −
Management of the fair value changes related to the CWB acquisition((3)) 0.05 −
CWB acquisition and integration charges((4)) 0.05 −
Diluted earnings per share - Adjusted $ 2.93 $ 2.59
(1) During the quarter ended January 31, 2025, the Bank recorded
an amount of $28 million ($20 million net of income taxes) to reflect the
amortization of the issuance costs of the subscription receipts issued as part
of the agreement to acquire CWB (for additional information, see Notes 8 and
10 to the Consolidated Financial Statements).
(2) During the quarter ended January 31, 2025, the Bank recorded a
gain of $4 million ($3 million net of income taxes) upon the remeasurement at
fair value of the interest already held in CWB as at January 31, 2025.
(3) During the quarter ended January 31, 2025, the Bank recorded a
mark-to-market loss of $23 million ($17 million net of income taxes) on
interest rate swaps used to manage the fair value changes of CWB's assets and
liabilities that resulted in volatility of goodwill and capital on closing of
the transaction. For additional information, see the Events After the
Consolidated Balance Sheet Date section.
(4) During the quarter ended January 31, 2025, the Bank recorded
acquisition and integration charges of $26 million ($19 million net of income
taxes) related to the CWB transaction.
Economic Review and Outlook
Global Economy
The global economic outlook is certainly not poor across the board at this
juncture. The political impasses in France and Germany could lift, and the
conflicts in Eastern Europe and the Middle East could subside. This would
certainly be good for growth, as would a continued healthy expansion in the
U.S. More monetary easing, as indicated by many central banks for 2025, would
also be welcome. But all this could fade in importance should uncertainties
gain in importance. If the election of Donald Trump as President of the United
States proves to be a real turning point in modern economic history, and if
the globalization process of the last 70 years should stagnate, or worse, be
reversed, then many economies would be very poorly placed to deal with the
many challenges that would inevitably follow. Manufacturing powers such as
China and Germany are already struggling to find their footing, and the public
finances of other countries are in poor shape. Fortunately, this is not yet
our base scenario. We continue to believe that Washington's protectionist
instincts will be relatively contained, and that the worst of the trade war
can be avoided. This does not mean, however, that global growth will be
robust. It is just that the threat of tariffs is likely to hang over our heads
for the next four years, and this is unlikely to stimulate business
investment. And when businesses are less confident, the labour market tends to
be less buoyant, and consumption less vigorous. Even so, global gross domestic
product (GDP) is set to grow 3.0%((1)) in 2025, according to our base
scenario.
The year 2024 ended on a positive note in the United States, with real GDP
growing at an annualized rate of 2.3% in the fourth quarter of 2024. These
results topped off a very good 2024, during which GDP grew by no less than
2.8%, far more than economists had initially forecast. This is because
population growth, government deficits and rising household wealth were all
underestimated. Barely a month ago, the outlook for 2025 looked rather
positive. While there are aspects of the new administration's program that are
likely to slow economic expansion, such as tariffs and mass expulsions of
migrants, most economists nevertheless believed that these measures would be
kept to a minimum and would be largely offset by pro-growth policies, such as
tax cuts and deregulation. Unfortunately, recent events have chipped away at
our conviction that Washington's protectionist instincts will be contained.
The new administration has already announced additional 10% tariffs on China,
and it is threatening to do the same to Europe. For the time being, we
anticipate growth of 2.2%((1)) in 2025, due to good momentum at the start of
the year. The second half of the year could be less dynamic, due to a still
restrictive monetary policy intended to curb excessively high inflation. The
strength of the U.S. dollar could also dampen exports.
Canadian Economy
In Canada, weak economic growth and rising unemployment over the past two
years helped contain inflation. In response, the Bank of Canada has been
rapidly easing monetary policy since June to give the economy some breathing
room. This strategy seems to have paid off, as evidenced by accelerating
growth in the last quarter of the year, to 1.8% on an annualized basis
(compared to 1.1% in the third quarter of 2024). As a result, GDP per capita
rose for the first time in seven quarters. At the same time, the unemployment
rate has fallen by 0.3 percentage points over the past two months, to 6.6% in
January. Hiring in the private sector has improved recently, but this does not
necessarily mark the start of a trend. In fact, the latest Bank of Canada
survey reveals that few companies are reporting labour shortages, and job
vacancy rates in the private sector remain low. On the strength of interest
rate cuts, economic conditions looked set to improve over the course of the
year. According to our calculations, the savings realized by variable-rate
borrowers could, on a macroeconomic level, offset the financial shock suffered
by those whose mortgages are up for renewal this year. Government measures
such as the goods and services tax (GST) exemption and the mailing of $200
cheques to Ontarians could also stimulate consumption. However, tariffs remain
a threat to the Canadian economy. Even if these measures are never
implemented, the mere spectre of them is slowing investment, with many
projects now on hold. We expect GDP to grow 1.2%((1)) in 2025 and 1.5%((1)) in
2026, while we estimate potential economic growth at approximately 1.2%((1)),
held back by a gloomy demographic outlook. Of course, this outlook will need
to be revised downward in the event that tariffs are imposed by the new
American president.
Quebec Economy
Quebec's real GDP per capita has been stable over the last three quarters and
in line with its pre-pandemic level, while real GDP for the country as a whole
has remained below its pre-pandemic level. This greater relative resilience is
also reflected in the labour market, which remains stronger with an
unemployment rate of just 5.4% in January, the lowest provincial rate, shared
with Saskatchewan. This outperformance is the result of solid economic
fundamentals. The level of indebtedness of Quebec households is lower than the
Canadian average, and this served Quebecers well during the post-pandemic
monetary tightening. This is why the province has the highest proportion of
households describing their financial situation as good. What is more, in
recent months the Quebec real estate market has rallied more strongly than
that of the country as a whole. The much higher savings rate than the national
average provides a cushion that can ease the shock to consumption should the
economic backdrop further deteriorate. Like Canada as a whole, Quebec is
vulnerable to new tariffs, as exports to the U.S. account for 15% of GDP
(compared to 19% for Canada). However, the province's economy is less
vulnerable to sectoral shocks. In fact, Quebec is the third most diversified
jurisdiction in North America, after Manitoba and Pennsylvania. In terms of
exports, Quebec is the most diversified province. We expect slow growth of
1.0%((1)) in 2025. Considering that the province's population growth is lower
than the Canadian average, this would be sufficient to allow Quebec to
maintain an unemployment rate that is comfortably below the national average,
namely 5.7%((1)) in 2025 (compared to 6.9%((1)) for Canada).
(1) Forecasts of real GDP or unemployment rate, National Bank
Financial's Economics and Strategy group
Highlights
(millions of Canadian dollars, except per share amounts) Quarter ended January 31
2025 2024((1)) % Change
Operating results
Total revenues 3,183 2,710 17
Income before provisions for credit losses and income taxes 1,537 1,261 22
Net income 997 922 8
Return on common shareholders' equity((2)) 16.7 % 17.1 %
Operating leverage((2)) 3.9 % 1.6 %
Efficiency ratio((2)) 51.7 % 53.5 %
Earnings per share
Basic $ 2.81 $ 2.61 8
Diluted $ 2.78 $ 2.59 7
Operating results - Adjusted((3))
Total revenues - Adjusted((3)) 3,230 2,710 19
Income before provisions for credit losses 1,610 1,261 28
and income taxes - Adjusted((3))
Net income - Adjusted((3)) 1,050 922 14
Return on common shareholders' equity - Adjusted((4)) 17.6 % 17.1 %
Operating leverage - Adjusted((4)) 7.4 % 1.6 %
Efficiency ratio - Adjusted((4)) 50.2 % 53.5 %
Diluted earnings per share - Adjusted((3)) $ 2.93 $ 2.59 13
Common share information
Dividends declared $ 1.14 $ 1.06 8
Book value((2)) $ 68.15 $ 61.18
Share price
High $ 140.76 $ 103.38
Low $ 128.79 $ 86.50
Close $ 128.99 $ 102.83
Number of common shares (thousands) 341,085 339,166
Market capitalization 43,997 34,876
(millions of Canadian dollars) As at As at % Change
January 31, October 31,
2025 2024
Balance sheet and off-balance-sheet
Total assets 483,833 462,226 5
Loans, net of allowances 246,620 243,032 1
Deposits 351,095 333,545 5
Equity attributable to common shareholders 23,245 22,400 4
Assets under administration((2)) 820,125 766,082 7
Assets under management((2)) 165,502 155,900 6
Regulatory ratios under Basel III((5))
Capital ratios
Common Equity Tier 1 (CET1) 13.6 % 13.7 %
Tier 1((6)) 15.5 % 15.9 %
Total((6)) 17.1 % 17.0 % ( )
Leverage ratio((6)) 4.3 % 4.4 % ( )
TLAC ratio((5)) 31.2 % 31.2 % ( )
TLAC leverage ratio((5)) 8.7 % 8.6 % ( )
Liquidity coverage ratio (LCR)((5)) 154 % 150 % ( )
Net stable funding ratio (NSFR)((5)) 123 % 122 %
Other information ( )
Number of employees - Worldwide (full-time equivalent) 29,508 29,196 1
Number of branches in Canada 362 368 (2)
Number of banking machines in Canada 937 940 −
(1) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(2) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
(3) See the Financial Reporting Method section on pages 4 to 9 for
additional information on non-GAAP financial measures.
(4) See the Financial Reporting Method section on pages 4 to 9 for
additional information on non-GAAP ratios.
(5) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(6) Ratios as at January 31, 2025 include the redemption of the
Series 32 preferred shares completed on February 17, 2025.
Financial Analysis
Consolidated Results
(millions of Canadian dollars) Quarter ended January 31
2025 2024((1)) ( ) % Change
Operating results
Net interest income 972 751 29
Non-interest income 2,211 1,959 13
Total revenues 3,183 2,710 17
Non-interest expenses 1,646 1,449 14
Income before provisions for credit losses and income taxes 1,537 1,261 22
Provisions for credit losses 254 120
Income before income taxes 1,283 1,141 12
Income taxes 286 219 31
Net income 997 922 8
Diluted earnings per share (dollars) 2.78 2.59 7
Specified items((2))
Amortization of the subscription receipt issuance costs (28) −
Gain on the fair value remeasurement of an equity interest 4 −
Management of the fair value changes related to the CWB acquisition (23) −
acquisition
CWB acquisition and integration charges (26) −
Specified items before income taxes (73) −
Income taxes related to specified items (20) −
Specified items after income taxes (53) −
Operating results - Adjusted((2))
Net interest income - Adjusted 1,000 751 33
Non-interest income - Adjusted 2,230 1,959 14
Total revenues - Adjusted 3,230 2,710 19
Non-interest expenses - Adjusted 1,620 1,449 12
Income before provisions for credit losses and income taxes - Adjusted 1,610 1,261 28
Provisions for credit losses 254 120
Income before income taxes - Adjusted 1,356 1,141 19
Income taxes - Adjusted 306 219 40
Net income - Adjusted 1,050 922 14
Diluted earnings per share - Adjusted (dollars) 2.93 2.59 13
Average assets((3)) 488,208 442,666 10
Average loans((3)(4)) 244,706 228,161 7
Average deposits((3)) 349,630 301,533 16
Operating leverage((5)) 3.9 % 1.6 %
Operating leverage - Adjusted((6)) 7.4 % 1.6 %
Efficiency ratio((5)) 51.7 % 53.5 %
Efficiency ratio - Adjusted((6)) 50.2 % 53.5 %
(1) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(2) See the Financial Reporting Method section on pages 4 to 9 for
additional information on non-GAAP financial measures.
(3) Represents an average of the daily balances for the period.
(4) Including customers' liability under acceptances for the
quarter ended January 31, 2024.
(5) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
(6) See the Financial Reporting Method section on pages 4 to 9 for
additional information on non-GAAP ratios.
Financial Results
For the first quarter of 2025, the Bank reported net income of $997 million,
up 8% from $922 million in the first quarter of 2024. First-quarter diluted
earnings per share stood at $2.78 compared to $2.59 in the first quarter of
2024. These increases were driven by total revenue growth in all of the
business segments, partly offset by increases in non-interest expenses and
provisions for credit losses. The Bank's income before provisions for credit
losses and income taxes totalled $1,537 million in first-quarter 2025 compared
to $1,261 million in first-quarter 2024, a 22% increase owing to good
performance in all of the business segments, in particular in Financial
Markets and Wealth Management. Adjusted net income, which excludes specified
items related to the acquisition of CWB, totalled $1,050 million in the first
quarter of 2025, up 14% from $922 million in the same quarter of 2024.
Adjusted diluted earnings per share stood at $2.93, up 13% compared to $2.59
in the first quarter of 2024.
Return on common shareholders' equity was 16.7% for the quarter ended January
31, 2025 compared to 17.1% in the same quarter of 2024.
Total Revenues
For the first quarter of 2025, the Bank's total revenues amounted to $3,183
million, up $473 million or 17% compared to the corresponding quarter of 2024.
In the Personal and Commercial segment, total revenues rose 4% due to growth
in personal and commercial loans and deposits (including the transition from
bankers' acceptances to loans referencing the Canadian Overnight Repo Rate
Average (CORRA)), which more than offset the impact of the narrower net
interest margin, as well as to the increase in internal commission revenues
related to the distribution of Wealth Management products. These increases
were offset by lower credit fees related to the transition of bankers'
acceptances to CORRA loans. In the Wealth Management segment, total revenues
grew 18%, mainly attributable to increases in fee-based revenues, notably
revenues from investment management and trust service fees as well as mutual
fund revenues. This growth was also due to an increase in net interest income
and securities brokerage commissions, which was driven by an increase in
client activity. In the Financial Markets segment, total revenues were up 40%
in the first quarter of 2025 compared to the first quarter of 2024 due to a
significant increase in global markets revenues. In the USSF&I segment,
total revenues were up 24% compared to the first quarter of 2024 as a result
of revenue growth at ABA Bank, stemming from business growth, as well as an
increase in Credigy's revenues. Total revenues for the Other heading were
lower than in the corresponding quarter of 2024, primarily due to a lower
contribution from Treasury activities and the unfavourable impact of specified
items related to the acquisition of CWB. Excluding specified items recorded in
the first quarter of 2025, adjusted total revenues amounted to $3,230 million
for the quarter ended January 31, 2025, up 19% from $2,710 million in the
corresponding quarter in 2024.
Non-Interest Expenses
For the first quarter of 2025, non-interest expenses stood at $1,646 million,
up $197 million or 14% from the corresponding quarter in 2024. This increase
was due to higher compensation and employee benefits owing to salary growth as
well as higher variable compensation related to revenue growth. Occupancy
expenses, including depreciation expense, were up compared to the first
quarter in 2024, due in part to expenses related to the Bank's new head office
building and the expansion of the banking network at the ABA Bank subsidiary.
The increase in technology expenses, including depreciation expense, is
attributable to significant investments made to support the Bank's
technological evolution and business development plan, as well as expenses
recorded during the quarter ended January 31, 2025 related to the integration
of CWB. Professional fees also rose, notably due to expenses related to the
acquisition and integration of CWB recorded during the first quarter of 2025.
Lastly, communication expenses were higher compared to the corresponding
quarter of 2024, while other expenses were down. Adjusted non-interest
expenses stood at $1,620 million in the first quarter of 2025, up 12% from
$1,449 million in the first quarter of 2024.
Provisions for Credit Losses
For the first quarter of 2025, the Bank recorded provisions for credit losses
of $254 million compared to $120 million in the corresponding quarter in 2024.
Provisions for credit losses on impaired loans excluding purchased or
originated credit-impaired (POCI) loans((1)) rose $97 million compared to the
first quarter of 2024. This increase came from Personal Banking (including
credit card receivables), Commercial Banking, the Financial Markets segment as
well as the Credigy and ABA Bank subsidiaries. Provisions for credit losses on
non-impaired loans increased by $27 million compared to the corresponding
quarter in 2024, mainly due to the less favourable impact of updated
macroeconomic scenarios, a more significant deterioration in credit risk than
in the first quarter of 2024, as well as uncertainties related to new tariffs
on imports. Furthermore, provisions for credit losses on POCI loans rose $10
million, mainly due to credit loss recoveries recorded in the first quarter of
2024 following repayments of POCI loans in Commercial Banking.
Income Taxes
For the first quarter of 2025, income taxes stood at $286 million compared to
$219 million in the corresponding quarter in 2024. The 2025 first-quarter
effective income tax rate was 22% compared to 19% in the corresponding quarter
in 2024. This was mainly due to a lower level of tax-exempt income in the
first quarter of 2025 and the impact of applying Pillar 2 rules (for
additional information, see the Income Taxes section).
(1) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
Results by Segment
The Bank carries out its activities in four business segments: Personal and
Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance
and International, which mainly comprises the activities of the Credigy Ltd.
(Credigy) and Advanced Bank of Asia Limited (ABA Bank) subsidiaries. Other
operating activities, certain specified items, Treasury activities, and the
operations of the Flinks Technology Inc. (Flinks) subsidiary are grouped in
the Other heading of segment disclosures. Each business segment is
distinguished by services offered, type of clientele, and marketing strategy.
Personal and Commercial
(millions of Canadian dollars) Quarter ended January 31
2025 2024 % Change
Operating results
Net interest income 944 870 9
Non-interest income 260 284 (8)
Total revenues 1,204 1,154 4
Non-interest expenses 641 615 4
Income before provisions for credit losses and income taxes 563 539 4
Provisions for credit losses 162 71
Income before income taxes 401 468 (14)
Income taxes 111 129 (14)
Net income 290 339 (14)
Net interest margin((1)) 2.28 % 2.36 %
Average interest-bearing assets((1)) 164,340 146,700 12
Average assets((2)) 165,861 155,031 7
Average loans((2)(3)) 164,097 153,291 7
Net impaired loans((1)) 557 323 72
Net impaired loans as a % of total loans and acceptances((1)) 0.3 % 0.2 %
Average deposits((2)) 92,032 88,949 3
Efficiency ratio((1)) 53.2 % 53.3 %
(1) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
(2) Represents an average of the daily balances for the period.
(3) Including customers' liability under acceptances for the
quarter ended January 31, 2024.
In the Personal and Commercial segment, net income totalled $290 million in
the first quarter of 2025, down 14% from $339 million in the corresponding
quarter in 2024 due to a significant increase in provisions for credit losses,
that more than offset the growth in the segment's total revenues. Income
before provisions for credit losses and income taxes stood at $563 million, up
4% from the first quarter of 2024. The 9% increase in net interest income in
the first quarter of 2025 was driven by growth in personal and commercial
loans and deposits (including the transition of bankers' acceptances to loans
at the CORRA rate), which more than offset the impact of the decrease in the
net interest margin to 2.28% compared to 2.36% in the first quarter of 2024.
In addition, non-interest income decreased by 8% compared to the corresponding
quarter in 2024, notably due to the transition of bankers' acceptances to
loans at the CORRA rate.
Personal Banking's total revenues increased by $22 million compared to the
first quarter of 2024. This increase was driven by higher net interest income,
attributable to growth in loans and deposits, as well as increases in internal
commission revenues related to the distribution of Wealth Management products.
Commercial Banking's total revenues grew $28 million compared to the
corresponding quarter in 2024, mainly due to an increase in net interest
income that was driven by loan growth (including the transition of bankers'
acceptances to loans at the CORRA rate) and deposit growth, partly offset by a
lower net interest margin on loans.
For the first quarter of 2025, the segment's non-interest expenses stood at
$641 million, up 4% compared to the corresponding quarter in 2024. This
increase was mainly due to higher compensation and employee benefits, mainly
resulting from salary increases, and greater investments made as part of the
segment's technological evolution. The efficiency ratio of 53.2% in the first
quarter of 2025 improved by 0.1 percentage point compared to the first
quarter of 2024.
The segment recorded provisions for credit losses of $162 million compared to
$71 million in the first quarter of 2024, up $91 million. This increase was
mainly due to higher provisions for credit losses on impaired loans in
Personal Banking (including credit card receivables) and in Commercial
Banking. In addition, provisions for credit losses on non-impaired loans
increased compared to the corresponding quarter of 2024, and credit loss
recoveries were recorded in the first quarter of 2024 following repayments of
Commercial Banking POCI loans.
Wealth Management
(millions of Canadian dollars) Quarter ended January 31
2025 2024 % Change
Operating results
Net interest income 227 198 15
Fee-based revenues 450 375 20
Transaction-based and other revenues 99 87 14
Total revenues 776 660 18
Non-interest expenses 441 390 13
Income before provisions for credit losses and income taxes 335 270 24
Provisions for credit losses 2 −
Income before income taxes 333 270 23
Income taxes 91 74 23
Net income 242 196 23
Average assets((1)) 10,611 8,708 22
Average loans((1)(2)) 9,443 7,713 22
Net impaired loans((3)) 17 5
Average deposits((1)) 43,463 41,216 5
Assets under administration((3)) 820,125 712,488 15
Assets under management((3)) 165,502 132,822 25
Efficiency ratio((3)) 56.8 % 59.1 %
(1) Represents an average of the daily balances for the period.
(2) Including customers' liability under acceptances for the
quarter ended January 31, 2024.
(3) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
In the Wealth Management segment, net income totalled $242 million in the
first quarter of 2025, a 23% increase from $196 million in the corresponding
quarter in 2024. The segment's total revenues amounted to $776 million, up
$116 million or 18% from $660 million in the first quarter of 2024. The 15%
increase in net interest income compared to the corresponding quarter in 2024
was due to higher loan and deposit volumes and a more favourable impact of a
change in the composition of deposits. The 20% increase in fee-based revenues
was due to the rise in stock markets compared to the corresponding quarter in
2024 and positive net inflows for the various solutions. Transaction and other
revenues rose 14% compared to the corresponding quarter in 2024 due to
increased client activity.
Non-interest expenses stood at $441 million in the first quarter of 2025, up
13% from $390 million in the first quarter of 2024. This increase was due to
higher compensation and employee benefits, due in particular to variable
compensation in line with revenue growth, as well as higher technology
expenses related to the segment's initiatives. At 56.8% in the first quarter
of 2025, the efficiency ratio had improved from 59.1% in the corresponding
quarter in 2024. Wealth Management recorded provisions for credit losses of $2
million in the first quarter of 2025, while they were negligible in the first
quarter of 2024.
Financial Markets
(millions of Canadian dollars) Quarter ended January 31
2025 2024((1)) % Change
Operating results
Global markets
Equities 367 130 182
Interest rate and credit 170 142 20
Commodities and foreign exchange 58 71 (18)
595 343 73
Corporate and investment banking 312 304 3
Total revenues 907 647 40
Non-interest expenses 367 313 17
Income before provisions for credit losses and income taxes 540 334 62
Provisions for credit losses 36 17
Income before income taxes 504 317 59
Income taxes 87 9
Net income 417 308 35
Average assets((2)) 211,793 190,443 11
Average loans((2)(3)) (Corporate Banking only) 31,472 31,659 (1)
Net impaired loans((4)) 129 20
Net impaired loans as a % of total loans and acceptances((4)) 0.4 % 0.1 %
Average deposits((2)) 74,330 63,335 17
Efficiency ratio((4)) 40.5 % 48.4 %
(1) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(2) Represents an average of the daily balances for the period.
(3) Including customers' liability under acceptances for the
quarter ended January 31, 2024.
(4) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
In the Financial Markets segment, net income totalled $417 million in the
first quarter of 2025, up 35% from $308 million in the corresponding quarter
in 2024. Total revenues amounted to $907 million, compared to $647 million in
the first quarter of 2024, a significant increase of $260 million or 40%.
Global markets revenues were up 73% due to equities revenues and interest rate
and credit revenues, partly offset by a decline in commodities and foreign
exchange revenues. Corporate and investment banking revenues for the first
quarter of 2025 increased 3% compared to the corresponding quarter in 2024 due
to growth in banking service revenues and capital markets activity, partly
offset by lower merger and acquisition revenues.
Non-interest expenses stood at $367 million in the first quarter of 2025, a
17% increase compared to the first quarter of 2024, attributable to higher
compensation and employee benefits, notably caused by variable compensation
resulting from revenue growth, as well as the increase in technology
investment expenses and other expenses related to the segment's business
growth. The efficiency ratio was 40.5% in the first quarter of 2025, an
improvement of 7.9 percentage points from 48.4% in the first quarter of 2024,
with the improvement owing to a sharp increase in the segment's revenues. For
the quarter ended January 31, 2025, provisions for credit losses were up
$19 million compared to the first quarter of 2024. This increase was
essentially due to provisions for credit losses on impaired loans of $18
million recorded in the first quarter of 2025, while recoveries of credit
losses on impaired loans of $2 million were recorded in the corresponding
quarter of 2024.
U.S. Specialty Finance and International (USSF&I)
(millions of Canadian dollars) Quarter ended January 31
2025 2024 % Change
Total revenues
Credigy 145 125 16
ABA Bank 248 194 28
International 12 7
405 326 24
Non-interest expenses
Credigy 40 35 14
ABA Bank 83 65 28
International − −
123 100 23
Income before provisions for credit losses and income taxes 282 226 25
Provisions for credit losses
Credigy 30 25 20
ABA Bank 21 11 91
International − −
51 36 42
Income before income taxes 231 190 22
Income taxes
Credigy 16 14 14
ABA Bank 30 25 20
International 2 1
48 40 20
Net income
Credigy 59 51 16
ABA Bank 114 93 23
International 10 6
183 150 22
Average assets((1)) 31,197 26,025 20
Average loans and receivables((1)) 23,428 20,787 13
Purchased or originated credit-impaired (POCI) loans 353 457 (23)
Net impaired loans excluding POCI loans((2)) 663 329 102
Average deposits((1)) 15,145 12,174 24
Efficiency ratio((2)) 30.4 % 30.7 %
(1) Represents an average of the daily balances for the period.
(2) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
In the USSF&I segment, net income totalled $183 million in the first
quarter of 2025, up 22% from $150 million in the corresponding quarter in
2024. The 24% growth in the segment's total revenues came from the Credigy and
ABA Bank subsidiaries and was partly offset by the increase in non-interest
expenses and provisions for credit losses.
Credigy
For the first quarter of 2025, Credigy reported net income of $59 million, up
$8 million or 16% compared to the corresponding quarter in 2024. Total
revenues amounted to $145 million in the first quarter of 2025 compared to
$125 million in the first quarter of 2024, an increase that was driven by
growth in loan volumes and the impact of exchange rate fluctuations.
Non-interest expenses stood at $40 million in the first quarter of 2025, a $5
million increase from the corresponding quarter in 2024 due to compensation
and employee benefits, professional fees as well as the impact of exchange
rate fluctuations. Provisions for credit losses rose $5 million compared to
the first quarter of 2024, due to higher provisions for credit losses on
impaired loans, attributable to the normal maturation of loan portfolios, and
provisions for credit losses on non-impaired loans, partly offset by the
decrease in provisions for credit losses on POCI loans.
ABA Bank
For the first quarter of 2025, ABA Bank recorded net income totalling $114
million, up $21 million or 23% from the corresponding quarter in 2024. Total
revenues rose 28%, mainly attributable to sustained growth in assets, lower
interest expenses on deposits, as well as the impact of exchange rate
fluctuations. Non-interest expenses for the first quarter of 2025 stood at $83
million, an $18 million or 28% increase compared to the first quarter of 2024
due to higher compensation and employee benefits, higher occupancy expenses
driven by the subsidiary's business growth and the opening of new branches,
and the impact of exchange rate fluctuations. The subsidiary reported
provisions for credit losses totalling $21 million in the first quarter of
2025, up $10 million compared to the first quarter of 2024. This increase was
due to higher provisions for credit losses on impaired loans and the change in
provisions for credit losses on non-impaired loans.
Other
(millions of Canadian dollars) Quarter ended January 31
2025 2024((1))
Operating results
Net interest income (60) (65)
Non-interest income (49) (12)
Total revenues (109) (77)
Non-interest expenses 74 31
Income before provisions for credit losses and income taxes (183) (108)
Provisions for credit losses 3 (4)
Income before income taxes (186) (104)
Income taxes (recovery) (51) (33)
Net loss (135) (71)
Non-controlling interests − −
Net loss attributable to the Bank's shareholders and holders of (135) (71)
other equity instruments
Less: Specified items after income taxes((2)) (53) −
Net loss - Adjusted((2)) (82) (71)
Average assets((3)) 68,746 62,459
(1) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(2) See the Financial Reporting Method section on pages 4 to 9 for
additional information on non-GAAP financial measures.
(3) Represents an average of the daily balances for the period.
For the Other heading of segment results, a net loss of $135 million was
posted in the first quarter of 2025 compared to a net loss of $71 million in
the corresponding quarter in 2024. The change in net loss was due to the
amortization of subscription receipt issue costs of $20 million, net of income
taxes, as well as a lower contribution from Treasury operations, in particular
because of a loss of $17 million, net of income taxes, in connection with the
management of fair value changes related to the acquisition of CWB. In
addition, non-interest expenses were higher compared to the first quarter of
2024, mainly due in part to higher compensation and employee benefits and the
CWB acquisition and integration charges. The specified items recorded in the
first quarter of 2025, related to the acquisition of CWB, had an unfavourable
impact of $53 million on net loss. The adjusted net loss stood at $82 million
for the quarter ended January 31, 2025, compared to $71 million in the
corresponding quarter in 2024.
Consolidated Balance Sheet
Consolidated Balance Sheet Summary
(millions of Canadian dollars) As at January 31, 2025 As at October 31, 2024 % Change
Assets
Cash and deposits with financial institutions 34,608 31,549 10
Securities 159,086 145,165 10
Securities purchased under reverse repurchase agreements and securities 15,229 16,265 (6)
borrowed
Loans, net of allowances 246,620 243,032 1
Other 28,290 26,215 8
483,833 462,226 5
Liabilities and equity
Deposits 351,095 333,545 5
Other 104,077 101,873 2
Subordinated debt 2,265 1,258 80
Equity attributable to the Bank's shareholders and holders of other equity 26,395 25,550 3
instruments
Non-controlling interests 1 −
483,833 462,226 5
Assets
As at January 31, 2025, the Bank had total assets of $483.8 billion, up $21.6
billion or 5% from $462.2 billion as at October 31, 2024. Cash and deposits
with financial institutions as at January 31, 2025, stood at $34.6 billion, up
$3.1 billion, owing primarily to an increase in deposits with regulated
financial institutions, including the U.S. Federal Reserve, partly offset by a
decrease in deposits with the Bank of Canada.
Securities have risen $13.9 billion since October 31, 2024, owing to a $10.6
billion or 9% increase in securities at fair value through profit or loss
driven mainly by equity securities. Securities other than those measured at
fair value through profit or loss were up $3.3 billion. Securities purchased
under reverse repurchase agreements and securities borrowed decreased by $1.1
billion since October 31, 2024, driven primarily by the Financial Markets
segment activities.
As at January 31, 2025, loans, net of allowances for credit losses, totalled
$246.6 billion, up $3.6 billion or 1% since October 31, 2024. The following
table provides a breakdown of the main loan portfolios.
(millions of Canadian dollars) As at January 31, 2025 As at October 31, 2024 As at January 31, 2024
Loans
Residential mortgage and home equity lines of credit 126,916 124,431 117,883
Personal 17,495 17,461 16,948
Credit card 2,710 2,761 2,541
Business and government((1)) 100,982 99,720 93,996
248,103 244,373 231,368
Allowances for credit losses (1,483) (1,341) (1,211)
246,620 243,032 230,157
(1) Including customers' liability under acceptances as at
January 31, 2024.
Since October 31, 2024, residential mortgages (including home equity lines of
credit) rose $2.5 billion or 2% given the business activities of the Personal
and Commercial segment, the Financial Markets segment, and the Credigy and ABA
Bank subsidiaries. Also since October 31, 2024, personal loans were relatively
stable, credit card receivables were down slightly. Business and government
loans rose $1.3 billion or 1%, mainly due to business growth in Commercial
Banking, in the Wealth Management segment, and at the Credigy and ABA Bank
subsidiaries. These increases were partly offset by a decline in the Financial
Markets segment activities.
Since January 31, 2024, loans, net of allowances for credit losses, grew $16.4
billion or 7%. Residential mortgages (including home equity lines of credit)
rose $9.0 billion or 8% due to sustained demand for mortgage credit in the
Personal and Commercial segment and to business growth in the Financial
Markets segment and at the ABA Bank and Credigy subsidiaries. Also since
January 31, 2024, personal loans rose $0.6 billion, credit card receivables
were up $0.2 billion. Business and government loans grew $7.0 billion or 7%,
owing essentially to greater business activity in Commercial Banking, in the
Financial Markets and Wealth Management segments, and at the ABA Bank and
Credigy subsidiaries, partly offset by a decrease in Treasury activities.
Impaired loans include all loans classified in Stage 3 of the expected credit
loss model and POCI loans. As at January 31, 2025, gross impaired loans stood
at $2,341 million compared to $2,043 million as at October 31, 2024. As for
net impaired loans, they totalled $1,836 million as at January 31, 2025,
compared to $1,629 million as at October 31, 2024. Net impaired loans
excluding POCI loans amounted to $1,366 million as at January 31, 2025, rising
$222 million from $1,144 million as at October 31, 2024. This increase was
mainly due to an increase in net impaired loans in the loan portfolios of
Commercial Banking, the Financial Markets segment, and the ABA Bank
subsidiary. Net POCI loans stood at $470 million as at January 31, 2025
compared to $485 million as at October 31, 2024, a decrease due to the
maturities of certain portfolios and to loan repayments.
As at January 31, 2025, other assets totalled $28.3 billion, a $2.1 billion
increase since October 31, 2024 that resulted mainly from an increase in
derivative financial instruments.
Liabilities
As at January 31, 2025, the Bank had total liabilities of $457.4 billion
compared to $436.7 billion as at October 31, 2024.
The Bank's total deposits stood at $351.1 billion as at January 31, 2025,
rising $17.6 billion or 5% from $333.5 billion as at October 31, 2024. As at
January 31, 2025, personal deposits stood at $98.9 billion, rising $3.7
billion since October 31, 2024. This increase was driven by business growth in
Personal Banking, in both the Financial Markets and Wealth Management
segments, and at the ABA Bank subsidiary.
Business and government deposits stood at $246.5 billion as at January 31,
2025, rising $13.8 billion since October 31, 2024. The increase came from
Treasury funding activities (including $0.3 billion in deposits subject to
bank recapitalization (bail-in) conversion regulations), and from the
activities of the Financial Markets and Wealth Management segments. As at
January 31, 2025, deposits from deposit-taking institutions stood at $5.8
billion, an increase of $0.2 billion since October 31, 2024 arising from
Treasury funding activities.
As at January 31, 2025, other liabilities stood at $104.1 billion, up $2.2
billion since October 31, 2024, essentially due a $2.9 billion increase in
derivative financial instruments and a $0.7 billion increase in obligations
related to securities sold short. These increases were partly offset by a $0.8
billion decrease in obligations related to securities sold under repurchase
agreements and securities loaned and a $0.3 billion decrease in liabilities
related to transferred receivables.
Subordinated debt increased since October 31, 2024, as a result of the $1.0
billion issuance of medium-term notes on January 13, 2025.
Equity
As at January 31, 2025, equity attributable to the Bank's shareholders and
holders of other equity instruments was $26.4 billion, rising $0.8 billion
since October 31, 2024. This increase was due to net income net of dividends,
issuances of common shares under the Stock Option Plan, and foreign currency
translation adjustments. These increases were partly offset by the net change
in gains (losses) on cash flow hedges.
Events After the Consolidated Balance Sheet Date
Canadian Western Bank (CWB) Acquisition
On February 3, 2025, the Bank completed the acquisition of CWB, a diversified
financial services institution based in Edmonton, Alberta, in which the Bank
had already been holding a 5.9% equity interest. This transaction will enable
the Bank to accelerate its growth across Canada. The business combination
brings together two complementary Canadian banks with growing businesses,
thereby enhancing customer service by offering a full range of products and
services nationwide, with a regionally focused service model.
The total consideration transferred of $6.8 billion included $5.3 billion for
100% of the common shares of CWB acquired by way of a share exchange at an
exchange ratio of 0.450 of a common share of the National Bank for each CWB
common share, other than those held by the National Bank, $1.4 billion for the
settlement of pre-existing relationships and $0.1 billion for the issuance of
replacement share-based payment awards. The fair value of the Bank's common
shares issued was determined on the basis of the share price on the Toronto
Stock Exchange (TSX) at closing on January 31, 2025 being a price of $128.99
per share. At acquisition date, the Bank obtained a 100% interest in the CWB
voting shares and the 5.9% previously held interest was remeasured to its fair
value of $0.3 billion. The non-controlling interest in CWB recognized at
acquisition date was measured at a fair value of $0.6 billion and represents
CWB's preferred shares and Limited Recourse Capital Notes (LRCN) outstanding
on that date. Total purchase consideration amounted to $7.7 billion.
Based on the estimated fair values, the preliminary purchase price allocation
assigns $45.5 billion to assets and $37.8 billion to liabilities at
acquisition date. Estimated goodwill of $1.6 billion reflects the expected
expense synergies from our Personal and Commercial and Wealth Management
banking services operations and the expected growth of the technology
platforms. Goodwill is not deductible for tax purposes. The results of CWB
will be consolidated in the Bank's financial statements as of February 3,
2025.
Prior to the closing of the CWB acquisition, the Bank had entered into
interest rate swaps to hedge its exposure to changes in goodwill and capital
due to changes in interest rates. On the closing date, swaps that were not
designated in hedging relationships were neutralized while others were
de-designated from hedging relationships. These operations economically offset
the changes in fair value of the assets and liabilities of CWB and resulted in
the subsequent amortization of the hedges.
Issuance of Common Shares
On February 3, 2025, the Bank issued a total of 50,272,878 common shares, for
a total proceed of $6.3 billion, which increased Common share capital by
$6.3 billion. This issuance includes 41,010,378 common shares at a price of
$128.99 per share from the share exchange and 9,262,500 common shares at a
price of $112.30 per share from the automatic exchange of subscription
receipts. For additional information on subscription receipts, see Note 10 to
the Consolidated Financial Statements.
Exchange of Preferred Shares and Redemption of Other Equity Instruments
As of February 4, 2025, certain amendments previously approved by the holders
of the outstanding first preferred shares and LRCN of CWB, which permit the
exchange of the first preferred shares of CWB for substantially equivalent
first preferred shares of National Bank and the early redemption of the LRCN,
were implemented.
On February 20, 2025, all the issued and outstanding Series 5 and Series 9
First Preferred Shares of CWB were exchanged for substantially equivalent
Series 47 and Series 49 First Preferred Shares of National Bank, which are
non-cumulative 5-year rate-reset bearing interest at 6.371% and 7.651%. The
Bank exchanged 10,000,000 preferred shares for a total amount of
$268 million, which reduced the Non-controlling interest by $268 million,
increased Preferred Share capital by $264 million and increased Retained
earnings by $4 million. Consent fees related to the exchange amounting to $2
million, net of income taxes, were recorded in Retained earnings. Given the
Series 47 and Series 49 preferred shares meet the non-viability contingent
capital requirements (NVCC), these shares are eligible for regulatory capital
purposes under the Basel III rules. Also, the Bank redeemed 175,000 LRCN -
Series 1 and 150,000 LRCN - Series 2 of CWB for a total amount of
$335 million, including consent fees, which reduced the Non-controlling
interest by $325 million and decreased Retained earnings by $7 million, net
of income taxes.
Redemption of Preferred Shares
On February 17, 2025, the first business day after the February 15, 2025 set
redemption date, the Bank redeemed all of the issued and outstanding
Non-Cumulative 5-Year Rate Reset Series 32 First Preferred Shares. Pursuant to
the share conditions, the redemption price was $25.00 per share plus the
periodic dividends declared and unpaid. The Bank redeemed 12,000,000 Series 32
preferred shares for a total amount of $300 million which reduced Preferred
share capital.
Related Party Transactions
The Bank's policies and procedures regarding related party transactions have
not significantly changed since October 31, 2024. For additional information,
see Note 30 to the audited annual Consolidated Financial Statements for the
year ended October 31, 2024.
Securitization and Off-Balance-Sheet Arrangements
In the normal course of business, the Bank is party to various financial
arrangements that, under IFRS Accounting Standards, are not required to be
recorded on the Consolidated Balance Sheet or are recorded under amounts other
than their notional or contractual values. These arrangements include, among
others, transactions with structured entities, derivative financial
instruments, the issuance of guarantees, credit instruments, and financial
assets received as collateral. A complete analysis of these types of
arrangements, including their nature, business purpose, and importance, is
provided on pages 53 and 54 of the 2024 Annual Report.
For additional information on financial assets transferred but not
derecognized, guarantees, commitments, and structured entities, see Notes 9,
28, and 29 to the audited annual Consolidated Financial Statements for the
year ended October 31, 2024.
Income Taxes
Pillar 2 Rules
On June 20, 2024, Bill C-69 - An Act to implement certain provisions of the
budget tabled in Parliament on April 16, 2024 received royal assent. The bill
included the Pillar 2 rules (global minimum tax) published by the Organisation
for Economic Co-operation and Development (OECD) that are applicable to fiscal
years beginning on or after December 31, 2023 (November 1, 2024, for the
Bank). To date, the Pillar 2 rules have been included in a bill or enacted in
certain jurisdictions where the Bank operates. For the quarter ended January
31, 2025, the Bank estimates that the application of the Pillar 2 rules
represents an increase in the effective tax rate of 1.9%. For the quarter
ended January 31, 2025, the Bank continues to apply the exception to the
recognition and disclosure of information of deferred tax assets and
liabilities arising from the Pillar 2 rules in the jurisdictions where they
have been included in a bill or enacted.
Capital Management
Capital management has a dual role of ensuring a competitive return to the
Bank's shareholders while maintaining a solid capital foundation that covers
the risks inherent to the Bank's business activities, supports its business
segments, and protects its clients. The Bank's capital management policy
defines the guiding principles as well as the roles and responsibilities of
its internal capital adequacy assessment process. This process aims to
determine the capital that the Bank needs to maintain to pursue its business
activities and accommodate unexpected losses arising from extremely adverse
economic and operational conditions. For additional information on the capital
management framework, see the Capital Management section on pages 55 to 64 of
the Bank's 2024 Annual Report.
Basel Accord
The Bank and all other major Canadian banks have to maintain the following
minimum capital ratios established by OSFI: a CET1 capital ratio of at least
11.5%, a Tier 1 capital ratio of at least 13.0%, and a Total capital ratio of
at least 15.0%. For additional information on the ratio calculations, see
pages 56 to 58 of the 2024 Annual Report. All of these ratios include a
capital conservation buffer of 2.5% established by the BCBS and OSFI, a 1.0%
surcharge applicable solely to Domestic Systemically Important
Banks (D‑SIBs), and a 3.5% domestic stability buffer (DSB) established by
OSFI. The DSB, which can vary from 0% to 4.0% of risk-weighted assets (RWA),
consists exclusively of CET1 capital. A D-SIB that fails to meet this buffer
requirement will not be subject to automatic constraints to reduce capital
distributions but will have to provide a remediation plan to OSFI. The Bank
must also meet the requirements of the capital output floor that will ensure
that its total calculated RWA is not below 72.5% of the total RWA as
calculated under the Basel III Standardized Approaches. OSFI had planned a
phase-in of the floor factor, starting at 65.0% in the second quarter of 2023,
and rising to reach 72.5% in fiscal 2027. On February 12, 2025, OSFI deferred
any additional increases until further notice. As a result, the floor factor,
currently set at 67.5%, will remain at this level for an undetermined period.
If the capital requirement is less than the capital output floor requirement
after applying the floor factor, the difference is added to the total RWA.
Lastly, OSFI requires D‑SIBs to maintain a Basel III leverage ratio of at
least 3.5%, which includes a Tier 1 capital buffer of 0.5% applicable only to
D-SIBs. For additional information on the leverage ratio calculation, see page
58 of the 2024 Annual Report.
In addition, OSFI requires that regulatory capital instruments other than
common equity must have a non-viability contingent capital (NVCC) clause to
ensure that investors bear losses before taxpayers should the government
determine that rescuing a non-viable financial institution is in the public
interest. The Bank's regulatory capital instruments, other than common shares,
all have an NVCC clause.
OSFI's Total Loss Absorbing Capacity (TLAC) Guideline, which applies to all
D-SIBs under the federal government's bail-in regulations, is intended to
ensure that a D-SIB has sufficient loss-absorbing capacity to support its
internal recapitalization in the unlikely event it becomes non-viable.
Available TLAC includes total capital as well as certain senior unsecured
debts that satisfy all of the eligibility criteria of OSFI's TLAC guideline.
OSFI requires D-SIBs to maintain a risk-based TLAC ratio of at least 25.0%
(including the DSB) of RWA and a TLAC leverage ratio of at least 7.25%. The
TLAC ratio is calculated by dividing available TLAC by RWA, and the TLAC
leverage ratio is calculated by dividing available TLAC by total exposure. As
at January 31, 2025, outstanding liabilities of $23.8 billion
($23.5 billion as at October 31, 2024) were subject to conversion under the
bail-in regulations.
Requirements - Regulatory Capital((1)), Leverage((1)), and TLAC((2)) Ratios
Requirements as at January 31, 2025 Ratios as at January 31, 2025
Minimum Capital Minimum D-SIB surcharge Minimum Domestic Minimum set by OSFI, including the domestic stability buffer
conservation set by set by stability
buffer BCBS OSFI buffer((3))
Capital ratios
CET1 4.5 % 2.5 % 7.0 % 1.0 % 8.0 % 3.5 % 11.5 % 13.6 %
Tier 1((4)) 6.0 % 2.5 % 8.5 % 1.0 % 9.5 % 3.5 % 13.0 % 15.5 %
Total((4)) 8.0 % 2.5 % 10.5 % 1.0 % 11.5 % 3.5 % 15.0 % 17.1 %
Leverage ratio((4)) 3.0 % n.a. 3.0 % 0.5 % 3.5 % n.a. 3.5 % 4.3 %
TLAC ratio 21.5 % n.a. 21.5 % n.a. 21.5 % 3.5 % 25.0 % 31.2 %
TLAC leverage ratio 6.75 % n.a. 6.75 % 0.5 % 7.25 % n.a. 7.25 % 8.7 %
n.a. Not applicable
(1) The capital ratios and the leverage ratio are calculated in
accordance with the Basel III rules, as set out in OSFI's Capital Adequacy
Requirements Guideline and Leverage Requirements Guideline.
(2) The TLAC ratio and the TLAC leverage ratio are calculated in
accordance with OSFI's Total Loss Absorbing Capacity Guideline.
(3) On December 17, 2024, OSFI confirmed that the domestic
stability buffer was being maintained at 3.5%.
(4) Figures as at January 31, 2025 include the redemption of the
Series 32 preferred shares completed on February 17, 2025.
The Bank ensures that its capital levels are always above the minimum capital
requirements set by OSFI, including the DSB. By maintaining a strong capital
structure, the Bank can cover the risks inherent to its business activities,
support its business segments, and protect its clients.
Other disclosure requirements pursuant to Pillar 3 of the Basel Accord and a
set of recommendations defined by the Enhanced Disclosure Task Force (EDTF)
are presented in the Supplementary Regulatory Capital and Pillar 3 Disclosure
report published quarterly and available on the Bank's website at nbc.ca.
Furthermore, a complete list of capital instruments and their main features is
also available on the Bank's website.
Regulatory Developments
The Bank closely monitors regulatory developments and participates actively in
various consultative processes. For additional information about the
regulatory context as at October 31, 2024, refer to page 59 of the Capital
Management section in the 2024 Annual Report. Since November 1, 2024, there
have been no new regulatory developments to be considered.
Management Activities
On January 13, 2025, the Bank issued medium-term notes for a total amount of
$1.0 billion bearing interest at 4.260% and maturing on February 15, 2035.
Given that the medium-term notes satisfy the NVCC requirements, they qualify
for the purposes of calculating regulatory capital under the Basel III rules.
On February 17, 2025, i.e., the first business day after the February 15, 2025
redemption date the Bank redeemed all the issued and outstanding
Non-Cumulative 5-Year Rate-Reset Series 32 First Preferred Shares. Pursuant to
the share conditions, the redemption price was $25.00 per share plus the
periodic dividends declared and unpaid. The Bank redeemed 12,000,000 Series 32
First Preferred Shares for a total amount of $300 million. These instruments
were excluded from the capital ratio calculations as at January 31, 2025.
Dividends
On February 25, 2025, the Board of Directors declared regular dividends on the
various series of first preferred shares and a dividend of $1.14 per common
share, payable on May 1, 2025 to shareholders of record on March 31, 2025.
Shares, Other Equity Instruments, and Stock Options
As at January 31, 2025
Number of shares or $ million
LRCN((1))
First preferred shares
Series 30 14,000,000 350
Series 32 12,000,000 300
Series 38 16,000,000 400
Series 40 12,000,000 300
Series 42 12,000,000 300
66,000,000 1,650
Other equity instruments
LRCN - Series 1 500,000 500
LRCN - Series 2 500,000 500
LRCN - Series 3 500,000 500
1,500,000 1,500
67,500,000 3,150
Common shares 341,085,205 3,485
Stock options 11,061,775
(1) Limited Recourse Capital Notes (LRCN).
As at February 21, 2025, there were 391,216,059 common shares and 11,778,661
stock options outstanding. The number of common shares and options outstanding
reflects the closing of the CWB transaction. NVCC provisions require the
conversion of capital instruments into a variable number of common shares
should OSFI deem a bank to be non-viable or should the government publicly
announce that a bank has accepted or agreed to accept a capital injection. If
an NVCC trigger event were to occur, all of the Bank's preferred shares,
LRCNs, and medium-term notes maturing on August 16, 2032, February 15, 2034,
and February 15, 2035, which are NVCC capital instruments, would be converted
into common shares of the Bank according to an automatic conversion formula at
a conversion price corresponding to the greater of the following amounts: (i)
a $5.00 contractual floor price; or (ii) the market price of the Bank's
common shares on the date of the trigger event (10-day weighted average
price). Based on a $5.00 floor price and including an estimate for accrued
dividends and interest, these NVCC capital instruments would be converted into
a maximum of 1,264 million Bank common shares, which would have a 78.7%
dilutive effect based on the number of Bank common shares outstanding as at
January 31, 2025. The Series 32 preferred shares redeemed on February 17,
2025 for a total amount of $300 million were excluded from the calculation.
Movement in Regulatory Capital((1))
(millions of Canadian dollars) Quarter ended
January 31, 2025
Common Equity Tier 1 (CET1) capital
Balance at beginning 19,321
Issuance of common shares (including Stock Option Plan) 25
Impact of shares purchased or sold for trading (6)
Repurchase of common shares −
Other contributed surplus 2
Dividends on preferred and common shares and distributions on other equity (434)
instruments
Net income attributable to the Bank's shareholders and holders of other equity 997
instruments
Removal of own credit spread (net of income taxes) (20)
Other 45
Movements in accumulated other comprehensive income
Translation adjustments 249
Debt securities at fair value through other comprehensive income 4
Other −
Change in goodwill and intangible assets (net of related tax liability) (1)
Other, including regulatory adjustments
Change in defined benefit pension plan asset (net of related tax liability) (25)
Change in amount exceeding 15% threshold
Deferred tax assets −
Significant investment in common shares of financial institutions −
Deferred tax assets, unless they result from temporary differences (net of (6)
related tax liability)
Other deductions or regulatory adjustments to CET1 implemented by OSFI (16)
Change in other regulatory adjustments 6
Balance at end 20,141
Additional Tier 1 capital
Balance at beginning 3,149
New Tier 1 eligible capital issuances −
Redeemed capital((2)) (300)
Other, including regulatory adjustments (4)
Balance at end 2,845
Total Tier 1 capital 22,986
Tier 2 capital
Balance at beginning 1,531
New Tier 2 eligible capital issuances 1,000
Redeemed capital −
Tier 2 instruments issued by subsidiaries and held by third parties −
Change in certain allowances for credit losses 57
Other, including regulatory adjustments (141)
Balance at end 2,447
Total regulatory capital 25,433
(1) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(2) Figures as at January 31, 2025 include the redemption of the
Series 32 preferred shares completed on February 17, 2025.
Risk-Weighted Assets by Key Risk Drivers
Risk-weighted assets (RWA) amounted to $148.5 billion as at January 31, 2025
compared to $141.0 billion as at October 31, 2024, a $7.5 billion increase
resulting mainly from organic growth in RWA, foreign exchange movements and a
deterioration in the credit quality of the loan portfolio. The changes in the
Bank's RWA by risk type are presented in the following table.
Movement of Risk-Weighted Assets by Key Drivers((1))
(millions of Canadian dollars) Quarter ended
January 31, October 31,
2025 2024
Non-counterparty Counterparty Total Total
credit risk credit risk
Credit risk - Risk-weighted assets at beginning 112,005 6,445 118,450 116,684
Book size 3,073 374 3,447 1,067
Book quality 768 17 785 (70)
Model updates − − − 439
Methodology and policy − − − −
Acquisitions and disposals − − − −
Foreign exchange movements 1,607 154 1,761 330
Credit risk - Risk-weighted assets at end 117,453 6,990 124,443 118,450
Market risk - Risk-weighted assets at beginning 8,002 8,066
Movement in risk levels((2)) 1,144 (64)
Model updates − −
Methodology and policy − −
Acquisitions and disposals − −
Market risk - Risk-weighted assets at end 9,146 8,002
Operational risk - Risk-weighted assets at beginning 14,523 14,168
Movement in risk levels 352 355
Methodology and policy − −
Acquisitions and disposals − −
Operational risk - Risk-weighted assets at end 14,875 14,523
Risk-weighted assets at end 148,464 140,975
(1) See the Financial Reporting Method section on pages 4 to 9
for additional information on capital management measures.
(2) Also includes foreign exchange rate movements that are not
considered material.
The table above provides risk-weighted asset movements by the key drivers
underlying the different risk categories.
The Book size item reflects organic changes in book size and composition
(including new loans and maturing loans). RWA movements attributable to book
size include increases or decreases in exposures, measured by exposure at
default, assuming a stable risk profile.
The Book quality item is the Bank's best estimate of changes in book quality
related to experience, such as underlying customer behaviour or demographics,
including changes resulting from model recalibrations or realignments and also
including risk mitigation factors.
The Model updates item is used to reflect implementations of new models,
changes in model scope, or any other change applied to address model
malfunctions.
The Methodology and policy item presents the impact of changes in calculation
methods resulting from changes in regulatory policies or from new regulations.
Regulatory Capital Ratios, Leverage Ratio, and TLAC Ratios
As at January 31, 2025, the Bank's CET1, Tier 1, and Total capital ratios
were, respectively, 13.6%, 15.5%, and 17.1% compared to ratios of,
respectively, 13.7%, 15.9%, and 17.0% as at October 31, 2024. The CET1 ratio
and the Tier 1 capital ratio decreased since October 31, 2024, whereas the
Total capital ratio increased slightly. The growth in RWA had an unfavourable
impact on the ratios, partly offset by net income, net of dividends. The $300
million redemption of preferred shares on February 17, 2025, which is already
excluded from the capital ratio calculations as at January 31, 2025, had
negatively affected the Tier 1 capital ratio, while the $1.0 billion issuance
of medium-term notes, on January 13, 2025, had a favourable impact on the
Total capital ratio.
As at January 31, 2025, the leverage ratio was 4.3% compared to 4.4% as at
October 31, 2024. The decrease in the leverage ratio was essentially due to
growth in total exposure, partly offset by growth in Tier 1 capital.
As at January 31, 2025, the Bank's TLAC ratio and TLAC leverage ratio were,
respectively, 31.2% and 8.7% compared to 31.2% and 8.6%, respectively, as at
October 31, 2024. The TLAC ratio remained stable and the increase in TLAC
leverage ratio is primarily explained by the net issuances of instruments that
met all of the TLAC eligibility criteria during the first quarter of 2025.
During the quarter ended January 31, 2025, the Bank was compliant with all of
OSFI's regulatory capital, leverage, and TLAC requirements.
Regulatory Capital((1)), Leverage Ratio((1)) and TLAC((2))
(millions of Canadian dollars) As at January 31, 2025 As at October 31, 2024
Capital
CET1 20,141 19,321
Tier 1((3)) 22,986 22,470
Total((3)) 25,433 24,001
Risk-weighted assets 148,464 140,975
Total exposure 534,461 511,160
Capital ratios
CET1 13.6 % 13.7 %
Tier 1((3)) 15.5 % 15.9 %
Total((3)) 17.1 % 17.0 %
Leverage ratio((3)) 4.3 % 4.4 %
Available TLAC 46,331 44,040
TLAC ratio 31.2 % 31.2 %
TLAC leverage ratio 8.7 % 8.6 %
(1) Capital, risk-weighted assets, total exposure, the capital
ratios, and the leverage ratio are calculated in accordance with the Basel III
rules, as set out in OSFI's Capital Adequacy Requirements Guideline and
Leverage Requirements Guideline.
(2) Available TLAC, the TLAC ratio, and the TLAC leverage ratio
are calculated in accordance with OSFI's Total Loss Absorbing Capacity
Guideline.
(3) Figures as at January 31, 2025 include the redemption of the
Series 32 preferred shares completed on February 17, 2025.
Public Disclosure Requirements for Global Systemically Important Banks
The BCBS developed an assessment methodology and additional loss absorbency
requirements as well as indicators to be used by the BCBS and the Financial
Stability Board to evaluate Global Systemically Important Banks (G-SIBs). The
annual public disclosure requirements apply to large, globally active banks.
The most recent version of OSFI's advisory entitled Global Systemically
Important Banks - Public Disclosure Requirements regarding implementation of
public disclosure requirements for G-SIBs in Canada took effect in 2022.
Canadian banks, including the Bank, that have not been designated as G‑SIBs
and that have total exposure (as calculated using the Basel III leverage
ratio) greater than 200 billion euros at fiscal year-end must publish the
indicators annually. The indicators are calculated and presented in accordance
with specific BCBS guidelines, which are updated annually. Consequently, the
values obtained may not be comparable to the other measures presented in this
report. The following table presents the indicators used in the BCBS's
assessment methodology for evaluating G-SIBs.
Indicators - Global Systemically Important Banks (G-SIBs)((1))
(millions of Canadian dollars) As at October 31
Category Indicators 2024 2023
Cross-jurisdictional activity((2)) Cross-jurisdictional claims 139,164 117,016
Cross-jurisdictional liabilities 138,198 90,476
Size((3)) Total exposures as defined for use in the Basel III leverage ratio((4)) 513,566 459,090
Interconnectedness((5)) Intra-financial system assets((4)) 74,527 73,022
Intra-financial system liabilities((4)) 41,491 38,238
Securities outstanding((4)) 150,887 109,831
Substitutability / financial institutions infrastructure((6)) Payment activity((7)) 14,480,595 16,801,902
Assets under custody 765,929 652,463
Underwritten transactions in debt and equity markets 46,856 31,821
Trading volume((8))
Fixed-income securities((8)) 924,734 845,554
Equities and other securities((8)) 1,513,131 1,124,984
Complexity((9)) Notional amount of over-the-counter derivative financial instruments((4)) 2,261,187 1,847,636
Trading and investment securities 67,274 54,740
Level 3 financial assets((4)) 1,360 1,226
(1) The G-SIB indicators are prepared using the methodology
prescribed in the BCBS guidelines published in July 2018 and are calculated
using the specific instructions updated by the BCBS each year.
(2) Represents the Bank's level of interaction outside Canada.
(3) Represents the Bank's total on-and-off balance sheet
exposures, as determined by OSFI's Basel III leverage ratio rules before
regulatory adjustments.
(4) Includes insurance activities.
(5) Represents transactions with other financial institutions.
(6) Represents the extent to which the Bank's services could be
substituted by other institutions.
(7) For the fiscal years ended October 31, 2024 and 2023.
(8) This indicator consists of two sub-indicators: fixed-income
securities as well as equities and other securities.
(9) Includes the level of complexity and volume of the Bank's
trading activities represented through derivative financial instruments,
trading securities, investment securities, and Level 3 financial assets.
Risk Management
Risk-taking is intrinsic to a financial institution's business. The Bank views
risk as an integral part of its development and the diversification of its
activities. It advocates a risk management approach that is consistent with
its business strategy. The Bank voluntarily exposes itself to certain risk
categories, particularly credit and market risk, in order to generate revenue.
It also assumes certain risks that are inherent to its activities-to which it
does not choose to expose itself-and that do not generate revenue, i.e.,
mainly operational risks.
Emerging risks - Tariffs on imports
In recent weeks, the new U.S administration issued executive orders directing
the United States to impose new tariffs on imports from certain countries,
including Canada. Such announcements and a potential tariff response strategy
may create uncertainty, which has permeated the economic and investment
outlook, impacting current economic conditions, including such issues as the
inflation rate and the global supply chain. Aside from its impact on the
global economy, the new tariff conflict may continue to have repercussions on
the Bank and its clients. In light of these recent developments, the Bank is
closely monitoring the impacts and potential consequences on its financial
position and that of its clients. Given these circumstances, this conflict may
put into perspective many of the top and emerging risks to which the Bank is
exposed, including credit risk, market risk, liquidity and funding risk,
operational risk, strategic risk and third-party risk. The extent to which
entities will be affected depends largely on the nature and duration of
uncertain and unpredictable events, such as the duration or escalation of the
tariffs, the evolution of retaliatory measures, possible fiscal or monetary
policy responses, and reactions to ongoing changes by global financial
markets.
Despite the exercise of stringent risk management and existing mitigation
measures, risk cannot be eliminated entirely, and residual risks may
occasionally cause losses. Certain risks are discussed hereafter. For
additional information, see the Risk Management section on pages 65 to 112 of
the 2024 Annual Report. Risk management information is also provided in Note
6 to the consolidated financial statements, which covers loans.
Credit Risk
Credit risk is the risk of incurring a financial loss if an obligor does not
fully honour its contractual commitments to the Bank. Obligors may be
borrowers, issuers, guarantors or counterparties. General economic and market
conditions in Canada, the U.S. and other countries in which the Bank operates
are currently difficult to predict due in part to measures affecting trade
relations between Canada and its partners. The imposition of tariffs and the
measures taken in response, as well as the possible impacts on our customers,
could have an impact on a debtor's ability to repay. Credit risk is the most
significant risk facing the Bank in the normal course of its business.
Between March 2, 2022 and July 12, 2023, the Bank of Canada raised its policy
rate ten times; the rate has thus risen from 0.25% to 5%. This rapid increase
in rates, undertaken primarily to counter inflation in Canada, continues to
put pressure on the ability of borrowers to make payments, notably borrowers
with variable-rate mortgages or for whom the mortgage term is up for renewal.
Over the course of its last six announcements, from June 5, 2024 to January
29, 2025, the Bank of Canada lowered its policy rate from 5% to 3%.
Regulatory Developments
The Bank closely monitors regulatory developments and is actively involved in
the various consultation processes. For additional information about the
regulatory context as at October 31, 2024, see page 81 of the Risk Management
section of the 2024 Annual Report. In addition, since November 1, 2024, there
have been no new regulatory developments to consider.
The amounts in the following tables represent the Bank's maximum exposure to
credit risk as at the financial reporting date without considering any
collateral held or any other credit enhancements. These amounts do not include
allowances for credit losses nor amounts pledged as collateral. The tables
also exclude equity securities.
Maximum Credit Risk Exposure Under the Basel Asset Categories((1))
(millions of Canadian dollars) As at January 31, 2025
Drawn((2)) Undrawn Repo-style Derivative Other Total Standardized Approach((5)) IRB
commitments transactions((3)) financial off-balance- Approach
instruments sheet items((4))
Retail
Residential mortgages 81,492 8,956 − − − 90,448 13 % 87 %
Qualifying revolving retail 4,123 12,179 − − − 16,302 − % 100 %
Other retail 17,309 2,619 − − 37 19,965 14 % 86 %
102,924 23,754 − − 37 126,715
Non-retail
Corporate 98,286 32,540 52,635 195 9,610 193,266 21 % 79 %
Sovereign 70,699 8,765 92,338 − 300 172,102 3 % 97 %
Financial institutions 10,288 1,089 148,520 3,221 1,853 164,971 23 % 77 %
179,273 42,394 293,493 3,416 11,763 530,339
Trading portfolio − − − 18,137 − 18,137 3 % 97 %
Securitization 3,766 − − − 6,856 10,622 100 % − %
Total - Gross credit risk 285,963 66,148 293,493 21,553 18,656 685,813 16 % 84 %
Standardized Approach((5)) 42,889 1,268 54,635 3,485 7,583 109,860
IRB Approach 243,074 64,880 238,858 18,068 11,073 575,953
Total - Gross credit risk 285,963 66,148 293,493 21,553 18,656 685,813 16 % 84 %
(millions of Canadian dollars) As at October 31, 2024
Drawn((2)) Undrawn Repo-style Derivative Other Total Standardized Approach((5)) IRB
commitments transactions((3)) financial off-balance- Approach
instruments sheet items((4))
Retail
Residential mortgages 80,861 8,905 − − − 89,766 13 % 87 %
Qualifying revolving retail 3,335 11,867 − − − 15,202 − % 100 %
Other retail 17,237 2,526 − − 37 19,800 13 % 87 %
101,433 23,298 − − 37 124,768
Non-retail
Corporate 96,023 31,921 42,395 234 8,813 179,386 21 % 79 %
Sovereign 65,758 5,982 79,859 − 283 151,882 3 % 97 %
Financial institutions 8,797 1,095 133,787 2,640 1,700 148,019 22 % 78 %
170,578 38,998 256,041 2,874 10,796 479,287
Trading portfolio − − − 17,507 − 17,507 3 % 97 %
Securitization 4,885 − − − 6,480 11,365 93 % 7 %
Total - Gross credit risk 276,896 62,296 256,041 20,381 17,313 632,927 16 % 84 %
Standardized Approach((5)) 39,868 1,209 47,241 2,870 7,015 98,203
IRB Approach 237,028 61,087 208,800 17,511 10,298 534,724
Total - Gross credit risk 276,896 62,296 256,041 20,381 17,313 632,927 16 % 84 %
(1) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(2) Excludes equity securities and certain other assets such as
investments in deconsolidated subsidiaries and joint ventures, right-of-use
properties and assets, goodwill, deferred tax assets, and intangible assets.
(3) Securities purchased under reverse repurchase agreements and
sold under repurchase agreements as well as securities loaned and borrowed.
(4) Letters of guarantee, documentary letters of credit, and
securitized assets that represent the Bank's commitment to make payments in
the event that an obligor cannot meet its financial obligations to third
parties.
(5) Includes exposures to qualifying central counterparties
(QCCP).
To meet OSFI's mortgage loan disclosure requirements, additional information
has been provided in the documents Supplementary Financial Information -
First Quarter 2025 and Supplementary Regulatory Capital and Pillar 3
Disclosure - First Quarter 2025, which are available on the Bank's website at
nbc.ca.
Market Risk
Market risk is the risk of financial losses arising from movements in market
prices. The Bank is exposed to market risk through its participation in
trading, investment, and asset/liability management activities. In recent
years, the Bank has been operating in a volatile environment. The geopolitical
landscape, notably the measures affecting trade relations between Canada and
its partners, including the imposition of tariffs and any measures taken in
response to such tariffs, the Russia-Ukraine war and clashes between Israel
and Hamas, inflation, climate change, and high interest rates continue to
create uncertainty.
The following tables provide a breakdown of the Bank's Consolidated Balance
Sheet into financial assets and liabilities by those that carry market risk
and those that do not carry market risk, distinguishing between trading
positions whose main risk measures are Value-at-Risk (VaR) and non-trading
positions that use other risk measures.
Reconciliation of Market Risk With Consolidated Balance Sheet Items
(millions of Canadian dollars) As at January 31, 2025
Market risk measures
Balance Trading((1)) Non-trading((2)) Not subject to market risk Non-traded risk
sheet primary risk sensitivity
Assets
Cash and deposits with financial institutions 34,608 375 26,986 7,247 Interest rate((3))
Securities
At fair value through profit or loss 126,536 123,617 2,919 − Interest rate((3)) and equity
At fair value through other comprehensive income 16,428 − 16,428 − Interest rate((3)) and equity((4))
At amortized cost 16,122 − 16,122 − Interest rate((3))
Securities purchased under reverse repurchase
agreements and securities borrowed 15,229 − 15,229 − Interest rate((3)(5))
Loans, net of allowances 246,620 15,227 231,393 − Interest rate((3))
Derivative financial instruments 14,164 13,614 550 − Interest rate and exchange rate
Defined benefit asset 518 − 518 − Other
Other 13,608 521 − 13,087
483,833 153,354 310,145 20,334
Liabilities
Deposits 351,095 32,952 318,143 − Interest rate((3))
Obligations related to securities sold short 11,575 11,575 − −
Obligations related to securities sold under repurchase
agreements and securities loaned 37,359 − 37,359 − Interest rate((3)(5))
Derivative financial instruments 18,724 17,819 905 − Interest rate and exchange rate
Liabilities related to transferred receivables 28,112 10,118 17,994 − Interest rate((3))
Defined benefit liability 105 − 105 − Other
Other 8,202 − − 8,202 Interest rate((3))
Subordinated debt 2,265 − 2,265 − Interest rate((3))
457,437 72,464 376,771 8,202
(1) Trading positions whose risk measure is total VaR. For
additional information, see the table in the pages ahead and in the Market
Risk section of the 2024 Annual Report that shows the VaR distribution of the
trading portfolios by risk category and their diversification effect.
(2) Non-trading positions that use other risk measures.
(3) For additional information, see the table in the pages ahead
and in the Market Risk section of the 2024 Annual Report that shows the VaR
distribution of the trading portfolios by risk category and their
diversification effect, as well as the interest rate sensitivity table.
(4) The fair value of equity securities designated at fair value
through other comprehensive income is presented in Notes 3 and 5 to these
Consolidated Financial Statements.
(5) These instruments are recorded at amortized cost and are
subject to credit risk for capital management purposes. For trading-related
transactions with maturities of more than one day, interest rate risk is
included in the VaR measures.
(millions of Canadian dollars) As at October 31, 2024
Market risk measures
Balance Trading((1)) Non-trading((2)) Not subject to market risk Non-traded risk primary
sheet risk sensitivity
Assets
Cash and deposits with financial institutions 31,549 257 20,440 10,852 Interest rate((3))
Securities
At fair value through profit or loss 115,935 113,445 2,490 − Interest rate((3)) and equity((4))
At fair value through other comprehensive income 14,622 − 14,622 − Interest rate((3)) and equity((5))
Amortized cost 14,608 − 14,608 − Interest rate((3))
Securities purchased under reverse repurchase
agreements and securities borrowed 16,265 − 16,265 − Interest rate((3)(6))
Loans, net of allowances 243,032 14,572 228,460 − Interest rate((3))
Derivative financial instruments 12,309 11,686 623 − Interest rate((7)) and exchange rate((7))
Defined benefit asset 487 − 487 − Other((8))
Other 13,419 573 − 12,846
462,226 140,533 297,995 23,698
Liabilities
Deposits 333,545 30,429 303,116 − Interest rate((3))
Obligations related to securities sold short 10,873 10,873 − −
Obligations related to securities sold under repurchase
agreements and securities loaned 38,177 − 38,177 − Interest rate((3)(6))
Derivative financial instruments 15,760 15,240 520 − Interest rate((7)) and exchange rate((7))
Liabilities related to transferred receivables 28,377 10,564 17,813 − Interest rate((3))
Defined benefit liability 103 − 103 − Other((8))
Other 8,583 − 49 8,534 Interest rate((3))
Subordinated debt 1,258 − 1,258 − Interest rate((3))
436,676 67,106 361,036 8,534
(1) Trading positions whose risk measure is total VaR. For
additional information, see the table on the following page and in the Market
Risk section of the 2024 Annual Report that shows the VaR distribution of the
trading portfolios by risk category and their diversification effect.
(2) Non-trading positions that use other risk measures.
(3) For additional information, see the table in the pages ahead
and in the Market Risk section of the 2024 Annual Report that shows the VaR
distribution of the trading portfolios by risk category and their
diversification effect and the interest rate sensitivity table.
(4) For additional information, see Note 7 to the audited annual
Consolidated Financial Statements for the year ended October 31, 2024.
(5) The fair value of equity securities designated at fair value
through other comprehensive income is presented in Notes 3 and 5 to these
Consolidated Financial Statements.
(6) These instruments are recorded at amortized cost and are
subject to credit risk for capital management purposes. For trading-related
transactions with maturities of more than one day, interest rate risk is
included in the VaR measure.
(7) For additional information, see Notes 18 and 19 to the audited
annual Consolidated Financial Statements for the year ended October 31, 2024.
(8) For additional information, see Note 25 to the audited annual
Consolidated Financial Statements for the year ended October 31, 2024.
Trading Activities
The table below shows the VaR distribution of trading portfolios by risk
category and their diversification effect.
VaR of Trading Portfolios((1)(2))
(millions of Canadian dollars) Quarter ended
January 31, 2025 October 31, 2024 January 31, 2024
Low High Average Period end Average Period end Average Period end
Interest rate (9.3) (15.5) (12.8) (13.0) (7.9) (8.8) (8.0) (8.5)
Exchange rate (0.8) (4.3) (2.0) (0.9) (1.4) (1.1) (2.5) (1.0)
Equity (3.0) (7.3) (4.8) (6.5) (3.4) (5.3) (6.2) (6.1)
Commodity (1.1) (2.1) (1.6) (1.2) (1.0) (1.2) (1.8) (1.7)
Diversification effect((3)) n.m. n.m. 9.1 8.0 5.8 6.3 8.3 7.2
Total trading VaR (8.9) (16.0) (12.1) (13.6) (7.9) (10.1) (10.2) (10.1)
n.m. Computation of a diversification effect for the high and low is not
meaningful, as highs and lows may occur on different days and be attributable
to different types of risk.
(1) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
(2) Amounts are presented on a pre-tax basis and represent one-day
VaR using a 99% confidence level.
(3) The total trading VaR is less than the sum of the individual
risk factor VaR results due to the diversification effect.
The average total VaR of the trading portfolios increased from $7.9 million to
$12.1 million from the fourth quarter of 2024 to the first quarter of 2025,
mainly due to an increase in interest rate risk.
Daily Trading and Underwriting Revenues
The following chart shows daily trading and underwriting revenues and VaR.
Daily trading and underwriting revenues were positive for 89% of the quarter
ended January 31, 2025. In addition, six days were marked by net daily
trading and underwriting losses in excess of $1 million. None of these losses
exceeded VaR.
Quarter Ended January 31, 2025
(millions of Canadian dollars)
Interest Rate Sensitivity - Non-Trading Activities (Before Tax)
The following table presents the potential before-tax impact of an immediate
and sustained 100-basis-point increase or of an immediate and sustained
100‑basis-point decrease in interest rates on the economic value of equity
and on the net interest income of the Bank's non-trading portfolios for the
next 12 months, assuming no further hedging is undertaken.
(millions of Canadian dollars) As at January 31, 2025 As at October 31, 2024
Canadian dollar Other currencies Total Canadian dollar Other currencies Total
Impact on equity
100-basis-point increase in the interest rate (406) (52) (458) (378) (57) (435)
100-basis-point decrease in the interest rate 386 49 435 352 48 400
Impact on net interest income
100-basis-point increase in the interest rate 138 (39) 99 121 (22) 99
100-basis-point decrease in the interest rate (159) 31 (128) (161) 25 (136)
Liquidity and Funding Risk
Liquidity and funding risk is the risk that the Bank will be unable to honour
daily cash and financial obligations without resorting to costly and untimely
measures. Liquidity and funding risk arises when sources of funds become
insufficient to meet scheduled payments under the Bank's commitments.
Liquidity risk refers to the possibility that an institution may not be able
to meet its financial obligations as they fall due, due to a mismatch between
cash inflows and outflows, without incurring unacceptable losses.
Funding risk is defined as the risk to the Bank's ongoing ability to raise
sufficient funds to finance actual or proposed business activities on an
unsecured or secured basis at an acceptable price. The funding management
priority is to achieve an optimal balance between deposits, securitization,
secured funding, and unsecured funding. This brings optimal stability to the
funding and reduces vulnerability to unpredictable events.
Regulatory Developments
The Bank continues to closely monitor regulatory developments and participates
actively in various consultative processes. For additional information about
the regulatory context as at October 31, 2024, refer to pages 95 and 96 of
the Risk Management section in the 2024 Annual Report. Since November 1,
2024, the new regulatory development below is to be considered.
On November 21, 2024, OSFI published an amended version of the Liability
Adequacy Requirement (LAR) Guideline. The LAR Guideline incorporates two sets
of revisions related to intraday liquidity and the treatment of bankers'
acceptances. The revisions relating to intraday liquidity affect Chapters 1
and 7 of the LAR Guideline, while those relating to the processing of bankers'
acceptances affect Chapters 3 and 4. No changes were made to Chapters 2, 5 and
6. Implementation of the new intraday liquidity rules is scheduled for
November 2025, and is limited to the direct clearers of Lynx, Canada's
high-value payment system.
Liquidity Management
Liquid Assets
To protect depositors and creditors from unexpected crisis situations, the
Bank holds a portfolio of unencumbered liquid assets that can be readily
liquidated to meet financial obligations. The majority of the unencumbered
liquid assets are held in Canadian or U.S. dollars. Moreover, all assets that
can be quickly monetized are considered liquid assets. The Bank's liquidity
reserves do not factor in the availability of the emergency liquidity
facilities of central banks. The following tables provide information on the
Bank's encumbered and unencumbered assets.
Liquid Asset Portfolio((1))
(millions of Canadian dollars) As at January 31, As at October 31,
2025 2024
Bank-owned Liquid assets Total Encumbered Unencumbered Unencumbered
liquid assets((2))
liquid assets
received((3)) liquid assets liquid assets((4))
liquid assets
Cash and deposits with financial institutions 34,608 − 34,608 14,276 20,332 19,819
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments 39,229 55,339 94,568 56,766 37,802 41,541
Issued or guaranteed by Canadian provincial and
municipal governments 14,746 10,159 24,905 14,520 10,385 10,669
Other debt securities 6,531 4,951 11,482 3,372 8,110 7,305
Equity securities 98,580 56,987 155,567 98,098 57,469 40,972
Loans
Securities backed by insured residential mortgages 17,722 − 17,722 7,879 9,843 8,471
As at January 31, 2025 211,416 127,436 338,852 194,911 143,941
As at October 31, 2024 192,169 117,906 310,075 181,298 128,777
(millions of Canadian dollars) As at January 31, 2025 As at October 31, 2024
Unencumbered liquid assets by entity
National Bank (parent) 93,950 80,768
Domestic subsidiaries 9,166 12,023
Foreign subsidiaries and branches 40,825 35,986
143,941 128,777
(millions of Canadian dollars) As at January 31, 2025 As at October 31, 2024
Unencumbered liquid assets by currency
Canadian dollar 67,988 66,970
U.S. dollar 69,109 53,960
Other currencies 6,844 7,847
143,941 128,777
Liquid Asset Portfolio((1)) - Average((5))
(millions of Canadian dollars) Quarter ended
January 31, 2025 October 31, 2024
Bank-owned Liquid assets Total Encumbered Unencumbered Unencumbered
liquid
liquid assets((2)) received((3)) liquid assets liquid assets((4)) assets
liquid assets
Cash and deposits with financial institutions 33,867 − 33,867 13,169 20,698 20,762
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments 38,467 60,331 98,798 56,815 41,983 40,832
Issued or guaranteed by Canadian provincial and
municipal governments 13,782 10,576 24,358 14,949 9,409 9,063
Other debt securities 7,599 4,717 12,316 3,595 8,721 8,244
Equity securities 103,289 56,738 160,027 104,326 55,701 45,621
Loans
Securities backed by insured residential mortgages 17,152 − 17,152 7,603 9,549 8,486
214,156 132,362 346,518 200,457 146,061 133,008
(1) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(2) Bank-owned liquid assets include assets for which there are no
legal or geographic restrictions.
(3) Securities received as collateral with respect to securities
financing and derivative transactions and securities purchased under reverse
repurchase agreements and securities borrowed.
(4) In the normal course of its funding activities, the Bank
pledges assets as collateral in accordance with standard terms. Encumbered
liquid assets include assets used to cover short sales, obligations related to
securities sold under repurchase agreements and securities loaned, guarantees
related to security-backed loans and borrowings, collateral related to
derivative financial instrument transactions, asset-backed securities, and
liquid assets legally restricted from transfers.
(5) The average is based on the sum of the end-of-period balances
of the three months of the quarter divided by three.
Summary of Encumbered and Unencumbered Assets((1))
(millions of Canadian dollars) As at January 31, 2025
Encumbered Unencumbered Total Encumbered
assets((2)) assets assets as a %
of total assets
Pledged as Other((3)) Available as Other((4))
collateral collateral
Cash and deposits with financial institutions 713 13,563 20,332 − 34,608 3.0
Securities 48,974 − 110,112 − 159,086 10.1
Securities purchased under reverse repurchase
agreements and securities borrowed − 11,575 3,654 − 15,229 2.4
Loans, net of allowances 40,166 − 9,843 196,611 246,620 8.3
Derivative financial instruments − − − 14,164 14,164 −
Premises and equipment − − − 1,917 1,917 −
Goodwill − − − 1,530 1,530 −
Intangible assets − − − 1,222 1,222 −
Other assets − − − 9,457 9,457 −
89,853 25,138 143,941 224,901 483,833 23.8
(millions of Canadian dollars) As at October 31, 2024
Encumbered Unencumbered Total Encumbered
assets((2)) assets assets as a %
of total assets
Pledged as Other((3)) Available as Other((4))
collateral collateral
Cash and deposits with financial institutions 697 11,033 19,819 − 31,549 2.5
Securities 50,071 − 95,094 − 145,165 10.8
Securities purchased under reverse repurchase
agreements and securities borrowed − 10,872 5,393 − 16,265 2.4
Loans, net of allowances 40,296 − 8,471 194,265 243,032 8.7
Derivative financial instruments − − − 12,309 12,309 −
Premises and equipment − − − 1,868 1,868 −
Goodwill − − − 1,522 1,522 −
Intangible assets − − − 1,233 1,233 −
Other assets − − − 9,283 9,283 −
91,064 21,905 128,777 220,480 462,226 24.4
(1) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(2) In the normal course of its funding activities, the Bank
pledges assets as collateral in accordance with standard terms. Encumbered
assets include assets used to cover short sales, obligations related to
securities sold under repurchase agreements and securities loaned, guarantees
related to security-backed loans and borrowings, collateral related to
derivative financial instrument transactions, asset-backed securities,
residential mortgage loans securitized and transferred under the Canada
Mortgage Bond program, assets held in consolidated trusts supporting the
Bank's funding activities, and mortgage loans transferred under the covered
bond program.
(3) Other encumbered assets include assets for which there are
restrictions and that cannot therefore be used for collateral or funding
purposes as well as assets used to cover short sales.
(4) Other unencumbered assets are assets that cannot be used for
collateral or funding purposes in their current form. This category includes
assets that are potentially eligible as funding program collateral (e.g.,
mortgages insured by the Canada Mortgage and Housing Corporation that can be
securitized into mortgage-backed securities under the National Housing Act
(Canada)).
Liquidity Coverage Ratio
The liquidity coverage ratio (LCR) was introduced primarily to ensure that
banks could withstand periods of severe short-term stress. LCR is calculated
by dividing the total amount of high-quality liquid assets (HQLA) by the total
amount of net cash outflows. OSFI has been requiring Canadian banks to
maintain a minimum LCR of 100%. An LCR above 100% ensures that banks are
holding sufficient high-quality liquid assets to cover net cash outflows given
a severe, 30‑day liquidity crisis. The assumptions underlying the LCR
scenario are established by the BCBS and OSFI's Liquidity Adequacy
Requirements Guideline.
The table on the following page provides average LCR data calculated using the
daily figures in the quarter. For the quarter ended January 31, 2025, the
Bank's average LCR was 154%, well above the 100% regulatory requirement and
demonstrating the Bank's solid short-term liquidity position.
LCR Disclosure Requirements((1)(2))
(millions of Canadian dollars) Quarter ended
January 31, 2025 October 31, 2024
Total unweighted Total weighted Total weighted
value((3)) (average) value((4)) (average) value((4)) (average)
High-quality liquid assets (HQLA)
Total HQLA n.a. 89,902 86,929
Cash outflows
Retail deposits and deposits from small business customers, of which: 68,137 6,204 5,858
Stable deposits 28,502 856 834
Less stable deposits 39,635 5,348 5,024
Unsecured wholesale funding, of which: 118,390 66,110 65,742
Operational deposits (all counterparties) and deposits in networks of 37,067 9,057 8,660
cooperative banks
Non-operational deposits (all counterparties) 75,448 51,063 51,612
Unsecured debt 5,875 5,990 5,470
Secured wholesale funding n.a. 28,831 25,691
Additional requirements, of which: 82,128 21,391 19,479
Outflows related to derivative exposures and other collateral requirements 28,400 12,029 11,228
Outflows related to loss of funding on secured debt securities 1,999 1,977 1,394
Backstop liquidity and credit enhancement facilities and commitments to extend 51,729 7,385 6,857
credit
Other contractual commitments to extend credit 2,331 655 791
Other contingent commitments to extend credit 167,582 2,158 2,117
Total cash outflows n.a. 125,349 119,678
Cash inflows
Secured lending (e.g., reverse repos) 154,311 28,898 29,105
Inflows from fully performing exposures 13,752 9,630 8,794
Other cash inflows 27,728 27,537 23,262
Total cash inflows 195,791 66,065 61,161
Total adjusted Total adjusted
value((5)) value((5))
Total HQLA 89,902 86,929
Total net cash outflows 59,284 58,517
Liquidity coverage ratio (%)((6)) 154 % 150 %
n.a. Not applicable
(1) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(2) OSFI prescribed a table format in order to standardize
disclosure throughout the banking industry.
(3) Unweighted values are calculated as outstanding balances
maturing or callable within 30 days (for cash inflows and outflows).
(4) Weighted values are calculated after the application of
respective haircuts (for HQLA) or inflow and outflow rates.
(5) Total adjusted values are calculated after the application of
both haircuts and inflow and outflow rates and any applicable caps.
(6) The data in this table is calculated using averages of the
daily figures in the quarter.
As at January 31, 2025, Level 1 liquid assets represented 84% of the Bank's
HQLA, which includes cash, central bank deposits, and bonds issued or
guaranteed by the Canadian government and Canadian provincial governments.
Cash outflows arise from the application of OSFI-prescribed assumptions on
deposits, debt, secured funding, commitments and additional collateral
requirements. The cash outflows are partly offset by cash inflows, which come
mainly from secured loans and performing loans. The Bank expects some
quarter-over-quarter variation between reported LCRs without such variation
being necessarily indicative of a trend. The variation between the quarter
ended January 31, 2025 and the preceding quarter was a result of normal
business operations. The Bank's liquid asset buffer is well in excess of its
total net cash outflows.
The LCR assumptions differ from the assumptions used for the liquidity
disclosures presented in the tables on the previous pages or those used for
internal liquidity management rules. While the liquidity disclosure framework
is prescribed by the EDTF, the Bank's internal liquidity metrics use
assumptions that are calibrated according to its business model and
experience.
Net Stable Funding Ratio
The BCBS has developed the net stable funding ratio (NSFR) to promote a more
resilient banking sector. The NSFR requires institutions to maintain a stable
funding profile in relation to the composition of their assets and
off-balance-sheet activities. A viable funding structure is intended to reduce
the likelihood that disruptions to an institution's regular sources of funding
would erode its liquidity position in a way that would increase the risk of
its failure and potentially lead to broader systemic stress. The NSFR is
calculated by dividing available stable funding by required stable funding.
OSFI has been requiring Canadian banks to maintain a minimum NSFR of 100%.
The following table provides the available stable funding and required stable
funding in accordance with OSFI's Liquidity Adequacy Requirements Guideline.
As at January 31, 2025, the Bank's NSFR was 123%, well above the 100%
regulatory requirement and demonstrating the Bank's solid long-term liquidity
position.
NSFR Disclosure Requirements((1)(2))
(millions of Canadian dollars) As at January 31, As at October 31,
2025 2024
Unweighted value by residual maturity Weighted
value((3))
No 6 months Over Over Weighted
maturity or less 6 months 1 year value((3))
to 1 year
Available Stable Funding (ASF) Items
Capital: 26,124 − − 2,265 28,389 26,798
Regulatory capital 26,124 − − 2,265 28,389 26,798
Other capital instruments − − − − − −
Retail deposits and deposits from small business customers: 63,912 14,835 8,771 26,708 105,964 103,782
Stable deposits 27,154 5,024 4,030 7,983 42,381 42,111
Less stable deposits 36,758 9,811 4,741 18,725 63,583 61,671
Wholesale funding: 80,811 97,656 25,102 65,373 131,403 126,339
Operational deposits 36,588 − − − 18,294 18,370
Other wholesale funding 44,223 97,656 25,102 65,373 113,109 107,969
Liabilities with matching interdependent assets((4)) − 3,218 2,401 22,493 − −
Other liabilities((5)): 15,401 9,607 789 760
NSFR derivative liabilities((5)) n.a. 6 n.a. n.a.
All other liabilities and equity not included in the above categories 15,401 3,681 151 5,769 789 760
Total ASF n.a. n.a. n.a. n.a. 266,545 257,679
Required Stable Funding (RSF) Items
Total NSFR high-quality liquid assets (HQLA) n.a. n.a. n.a. n.a. 8,064 9,827
Deposits held at other financial institutions for operational purposes − − − − − −
Performing loans and securities: 64,897 101,407 31,174 102,686 174,271 167,755
Performing loans to financial institutions secured by Level 1 HQLA 139 2,586 − − 136 228
Performing loans to financial institutions secured by non-Level-1 7,271 60,336 1,687 6,940 16,526 11,137
HQLA and unsecured performing loans to financial institutions
Performing loans to non-financial corporate clients, loans to retail 31,957 28,576 18,563 35,556 84,068 83,705
and small business customers, and loans to sovereigns, central
banks and PSEs, of which:
With a risk weight of less than or equal to 35% under the Basel II 656 2,854 582 57 2,182 1,959
Standardized Approach for credit risk
Performing residential mortgages, of which: 8,979 8,436 9,828 58,536 56,697 56,547
With a risk weight of less than or equal to 35% under the Basel II 8,979 8,436 9,828 58,536 56,697 56,547
Standardized Approach for credit risk
Securities that are not in default and do not qualify as HQLA, including 16,551 1,473 1,096 1,654 16,844 16,138
exchange-traded equities
Assets with matching interdependent liabilities((4)) − 3,218 2,401 22,493 − −
Other assets((5)): 9,412 32,975 28,723 28,191
Physical traded commodities, including gold 712 n.a. n.a. n.a. 712 696
Assets posted as initial margin for derivative contracts and n.a. 12,356 10,503 10,960
contributions to default funds of CCPs((5))
NSFR derivative assets((5)) n.a. 3,857 3,851 3,136
NSFR derivative liabilities before deduction of the variation n.a. 11,008 550 488
margin posted((5))
All other assets not included in the above categories 8,700 3,267 616 1,871 13,107 12,911
Off-balance-sheet items((5)) n.a. 129,890 4,954 4,845
Total RSF n.a. n.a. n.a. n.a. 216,012 210,618
Net Stable Funding Ratio (%) n.a. n.a. n.a. n.a. 123 % 122 %
n.a. Not applicable
(1) See the Financial Reporting Method section on pages 4 to 9 for
additional information on capital management measures.
(2) OSFI prescribed a table format in order to standardize
disclosure throughout the banking industry.
(3) Weighted values are calculated after application of the
weightings set out in OSFI's Liquidity Adequacy Requirements Guideline.
(4) As per OSFI's specifications, liabilities arising from
transactions involving the Canada Mortgage Bond program and their
corresponding encumbered mortgages are given ASF and RSF weights of 0%,
respectively.
(5) As per OSFI's specifications, there is no need to
differentiate by maturities.
The NSFR represents the amount of ASF relative to the amount of RSF. ASF is
defined as the portion of capital and liabilities expected to be reliable over
the time horizon considered by the NSFR, which extends to one year. The amount
of RSF of a specific institution is a function of the liquidity
characteristics and residual maturities of the various assets held by that
institution as well as those of its off-balance-sheet exposures. The ASF and
RSF amounts are calibrated to reflect the degree of stability of liabilities
and liquidity of assets. The Bank expects some quarter-over-quarter variation
between reported NSFRs without such variation being necessarily indicative of
a long-term trend.
The NSFR assumptions differ from the assumptions used for the liquidity
disclosures provided in the tables on the preceding pages or those used for
internal liquidity management rules. While the liquidity disclosure framework
is prescribed by the EDTF, the Bank's internal liquidity metrics use
assumptions that are calibrated according to its business model and
experience.
Funding
The Bank continuously monitors and analyzes market trends as well as
possibilities for accessing less expensive and more flexible funding,
considering both the risks and opportunities observed. The deposit strategy
remains a priority for the Bank, which continues to prefer deposits to
institutional funding.
The table below presents the residual contractual maturities of the Bank's
wholesale funding. The information has been presented in accordance with the
categories recommended by the EDTF working group for comparison purposes with
other banks.
Residual Contractual Maturities of Wholesale Funding
(millions of Canadian dollars) As at January 31, 2025
1 month or less Over 1 Over 3 Over 6 Subtotal Over 1 Over 2 Total
month to months to months to 1 year year to years
3 months 6 months 12 months or less 2 years
Deposits from banks((1)) 788 73 150 412 1,423 − − 1,423
Certificates of deposit and commercial paper((2)) 5,473 7,963 7,102 12,796 33,334 145 − 33,479
Senior unsecured medium-term notes((3)) 1,655 452 2,683 8,646 13,436 4,981 12,951 31,368
Senior unsecured structured notes − 6 − 122 128 1,541 3,592 5,261
Covered bonds and asset-backed securities
Mortgage securitization − 1,275 1,822 2,395 5,492 3,183 19,437 28,112
Covered bonds − 1,508 − − 1,508 3,938 5,613 11,059
Subordinated liabilities((4)) − − − − − − 2,265 2,265
7,916 11,277 11,757 24,371 55,321 13,788 43,858 112,967
Secured funding − 2,783 1,822 2,395 7,000 7,121 25,050 39,171
Unsecured funding 7,916 8,494 9,935 21,976 48,321 6,667 18,808 73,796
7,916 11,277 11,757 24,371 55,321 13,788 43,858 112,967
As at October 31, 2024 3,200 11,456 15,080 16,669 46,405 12,239 44,588 103,232
(1) Deposits from banks include all non-negotiable term deposits
from banks.
(2) Includes bearer deposit notes.
(3) Includes debts subject to bank recapitalization (bail-in)
conversion regulations.
(4) Subordinated debt is presented in this table, but the Bank
does not consider it as part of its wholesale funding.
As part of a comprehensive liquidity management framework, the Bank regularly
reviews its contracts that stipulate that additional collateral could be
required in the event of a downgrade of the Bank's credit rating. The Bank's
liquidity position management approach already incorporates additional
collateral requirements in the event of a one-notch to three-notch downgrade
in credit rating. The table below presents the additional collateral
requirements in the event of a one-, two-, or three-notch credit rating
downgrade.
(millions of Canadian dollars) As at January 31, 2025
One-notch Two-notch Three-notch
downgrade downgrade downgrade
Derivatives((1)) 22 44 89
(1) Contractual requirements related to agreements known as
initial margins and variation margins.
Residual Contractual Maturities of Balance Sheet Items and Off-Balance-Sheet
Commitments
The following tables present balance sheet items and off-balance-sheet
commitments by residual contractual maturity as at January 31, 2025 with
comparative figures as at October 31, 2024. The information gathered from
this maturity analysis is a component of liquidity and funding management.
However, this maturity profile does not represent how the Bank manages its
interest rate risk or its liquidity risk and funding needs. The Bank considers
factors other than contractual maturity when assessing liquid assets or
determining expected future cash flows.
In the normal course of business, the Bank enters into various
off-balance-sheet commitments. The credit instruments used to meet the
financing needs of its clients represent the maximum amount of additional
credit the Bank could be obligated to extend if the commitments were fully
drawn.
The Bank also has future minimum commitments under leases for premises as well
as under other contracts, mainly commitments to purchase loans and contracts
for outsourced information technology services. Most of the lease commitments
are related to operating leases.
(millions of Canadian dollars) As at January 31, 2025
1 Over 1 Over 3 Over 6 Over 9 Over 1 Over 2 Over 5 years No Total
month
month to months to months to months to year to years to specified
3 months 6 months 9 months 12 months 2 years 5 years maturity
or less
Assets
Cash and deposits
with financial institutions 20,493 837 871 152 858 − − − 11,397 34,608
Securities
At fair value through
profit or loss 106 614 739 624 709 5,045 10,645 10,037 98,017 126,536
At fair value through
other comprehensive income 36 101 60 255 467 1,087 6,862 6,997 563 16,428
At amortized cost 139 385 907 561 973 2,307 7,809 3,041 − 16,122
281 1,100 1,706 1,440 2,149 8,439 25,316 20,075 98,580 159,086
Securities purchased under
reverse repurchase
agreements and
securities borrowed 7,335 2,130 1,826 − − 363 − − 3,575 15,229
Loans((1))
Residential mortgage 1,613 2,303 4,490 4,704 5,045 23,604 44,623 10,686 571 97,639
Personal 836 1,118 1,852 1,881 1,852 7,627 12,090 5,924 13,592 46,772
Credit card 2,710 2,710
Business and government 12,515 6,433 5,073 7,049 4,560 11,463 17,597 6,813 29,479 100,982
Allowances for credit losses (1,483) (1,483)
14,964 9,854 11,415 13,634 11,457 42,694 74,310 23,423 44,869 246,620
Other
Derivative financial instruments 2,595 2,049 1,675 701 931 1,743 1,894 2,576 − 14,164
Premises and equipment 1,917 1,917
Goodwill 1,530 1,530
Intangible assets 1,222 1,222
Other assets((1)) 1,719 212 1,368 514 102 929 414 58 4,141 9,457
4,314 2,261 3,043 1,215 1,033 2,672 2,308 2,634 8,810 28,290
47,387 16,182 18,861 16,441 15,497 54,168 101,934 46,132 167,231 483,833
(1) Amounts collectible on demand are considered to have no
specified maturity.
(millions of Canadian dollars) As at January 31, 2025
1 Over Over Over Over Over Over 2 Over No Total
month 1 3 6 9 1 years 5
or month months to months months to years specified
less to 6 to to 5
3 months months 9 12 months years maturity
months
year to
2
years
Liabilities and equity
Deposits((1)(2))
Personal 3,350 3,387 5,513 5,316 3,855 7,244 14,249 7,768 48,179 98,861
Business and government 40,740 15,928 15,031 11,196 13,461 11,724 37,789 6,132 94,449 246,450
Deposit-taking institutions 1,246 984 1,252 418 84 − 13 29 1,758 5,784
45,336 20,299 21,796 16,930 17,400 18,968 52,051 13,929 144,386 351,095
Other
Obligations related
to securities sold short((3)) 226 390 620 436 236 916 2,837 3,597 2,317 11,575
Obligations related to
securities sold under
repurchase agreements and
securities loaned 22,245 2,893 1,090 3 − 4,056 − − 7,072 37,359
Derivative financial
instruments 2,512 2,595 1,569 717 1,307 3,121 2,030 4,873 − 18,724
Liabilities related to transferred
receivables((4)) − 1,275 1,822 196 2,199 3,183 8,993 10,444 − 28,112
Lease liabilities((5)) 6 13 19 19 19 74 177 170 − 497
Other liabilities - Other items((1)(5)) 1,765 530 106 71 42 61 116 116 5,003 7,810
26,754 7,696 5,226 1,442 3,803 11,411 14,153 19,200 14,392 104,077
Subordinated debt − − − − − − − 2,265 − 2,265
Equity 26,396 26,396
72,090 27,995 27,022 18,372 21,203 30,379 66,204 35,394 185,174 483,833
Off-balance-sheet commitments
Letters of guarantee and
documentary letters of credit 100 1,050 891 1,455 4,855 1,572 208 21 − 10,152
Credit card receivables((6)) 10,758 10,758
Backstop liquidity and credit
enhancement facilities((7)) − − 15 − 15 5,552 − − 5,822 11,404
Commitments to extend credit((8)) 3,256 12,742 11,747 5,787 6,307 5,242 3,076 90 54,407 102,654
Obligations related to:
Lease commitments((9)) 1 1 1 1 1 5 3 2 − 15
Other contracts 4 8 12 12 12 49 256 8 160 521
(1) Amounts payable upon demand or notice are considered to have
no specified maturity.
(2) The Deposits item is presented in greater detail than it is on
the Consolidated Balance Sheet.
(3) Amounts are disclosed according to the remaining contractual
maturity of the underlying security.
(4) These amounts mainly include liabilities related to the
securitization of mortgage loans.
(5) The Other liabilities item is presented in greater detail than
it is on the Consolidated Balance Sheet.
(6) These amounts are unconditionally revocable at the Bank's
discretion at any time.
(7) In the event of payment on one of the backstop liquidity
facilities, the Bank will receive as collateral government bonds in an amount
up to $5.6 billion.
(8) These amounts include $49.3 billion that is unconditionally
revocable at the Bank's discretion at any time.
(9) These amounts include leases for which the underlying asset is
of low value and leases other than for real estate of less than one year.
(millions of Canadian dollars) As at October 31, 2024
1 Over 1 Over 3 months to 6 months Over 6 months to 9 months Over 9 months to 12 months Over Over Over 5 years No Total
month month 1 2
or less to year years
3 to to
months 2 5
years years
specified
maturity
Assets
Cash and deposits
with financial institutions 20,300 868 458 395 146 − − − 9,382 31,549
Securities
At fair value through
profit or loss 155 179 692 1,173 1,691 4,018 10,420 9,930 87,677 115,935
At fair value through
other comprehensive income 14 97 263 33 34 2,863 5,688 4,964 666 14,622
At amortized cost 232 756 545 931 629 2,748 7,170 1,597 − 14,608
401 1,032 1,500 2,137 2,354 9,629 23,278 16,491 88,343 145,165
Securities purchased under
reverse repurchase
agreements and
securities borrowed 5,525 2,900 2,222 881 − 696 − − 4,041 16,265
Loans((1))
Residential mortgage 1,901 2,012 3,466 4,431 4,762 23,671 44,223 9,993 550 95,009
Personal 861 865 1,648 1,843 1,890 7,957 12,050 6,086 13,683 46,883
Credit card 2,761 2,761
Business and government 12,533 5,621 4,733 4,747 5,588 10,704 18,364 6,545 30,885 99,720
Allowances for credit losses (1,341) (1,341)
15,295 8,498 9,847 11,021 12,240 42,332 74,637 22,624 46,538 243,032
Other
Derivative financial instruments 2,619 1,950 1,187 643 375 1,707 1,576 2,252 − 12,309
Premises and equipment 1,868 1,868
Goodwill 1,522 1,522
Intangible assets 1,233 1,233
Other assets((1)) 3,080 213 757 1,298 221 855 426 102 2,331 9,283
5,699 2,163 1,944 1,941 596 2,562 2,002 2,354 6,954 26,215
47,220 15,461 15,971 16,375 15,336 55,219 99,917 41,469 155,258 462,226
(1) Amounts collectible on demand are considered to have no
specified maturity.
(millions of Canadian dollars) As at October 31, 2024
1 Over 1 Over Over Over 9 Over Over Over No Total
month month 3 6 months 1 2 5
or less to months months to year years years
3 to to 12 to to
months 6 9 months months 2 5 years
months years
specified
maturity
Liabilities and equity
Deposits((1)(2))
Personal 4,022 3,808 4,840 5,342 4,810 6,856 13,857 7,170 44,476 95,181
Business and government 34,782 14,521 18,716 10,445 6,927 9,649 37,905 6,273 93,512 232,730
Deposit-taking institutions 803 101 364 1,188 401 11 2 26 2,738 5,634
39,607 18,430 23,920 16,975 12,138 16,516 51,764 13,469 140,726 333,545
Other
Obligations related
to securities sold short((3)) 124 260 396 113 64 1,141 2,323 4,354 2,098 10,873
Obligations related to
securities sold under
repurchase agreements and
securities loaned 19,554 2,510 3,915 3,481 − 1,073 − − 7,644 38,177
Derivative financial
instruments 1,875 3,134 2,183 509 372 1,844 1,886 3,957 − 15,760
Liabilities related to transferred
receivables((4)) − 1,897 1,216 1,543 197 4,169 8,872 10,483 − 28,377
Securitization - Credit card((5)) 49 − − − − − − − − 49
Lease liabilities((5)) 6 13 19 19 18 72 176 149 − 472
Other liabilities - Other items((1)(5)) 1,674 199 238 10 51 65 79 170 5,679 8,165
23,282 8,013 7,967 5,675 702 8,364 13,336 19,113 15,421 101,873
Subordinated debt − − − − − − − 1,258 − 1,258
Equity 25,550 25,550
62,889 26,443 31,887 22,650 12,840 24,880 65,100 33,840 181,697 462,226
Off-balance-sheet commitments
Letters of guarantee and
documentary letters of credit 80 1,861 1,914 1,420 1,456 2,506 203 20 − 9,460
Credit card receivables((6)) 10,515 10,515
Backstop liquidity and credit
enhancement facilities((7)) − 15 5,552 15 − − − − 5,483 11,065
Commitments to extend credit((8)) 3,243 12,896 9,811 8,121 4,600 5,248 3,635 114 52,612 100,280
Obligations related to:
Lease commitments((9)) 1 1 2 1 1 5 4 2 − 17
Other contracts((10)) 5 10 14 12 12 48 244 9 161 515
(1) Amounts payable upon demand or notice are considered to have
no specified maturity.
(2) The Deposits item is presented in greater detail than it is on
the Consolidated Balance Sheet.
(3) Amounts are disclosed according to the remaining contractual
maturity of the underlying security.
(4) These amounts mainly include liabilities related to the
securitization of mortgage loans.
(5) The Other liabilities item is presented in greater detail than
it is on the Consolidated Balance Sheet.
(6) These amounts are unconditionally revocable at the Bank's
discretion at any time.
(7) In the event of payment on one of the backstop liquidity
facilities, the Bank will receive as collateral government bonds in an amount
up to $5.6 billion.
(8) These amounts include $48.6 billion that is unconditionally
revocable at the Bank's discretion at any time.
(9) These amounts include leases for which the underlying asset is
of low value and leases other than for real estate of less than one year.
(10) These amounts include $5 million in contractual commitments
related to the head office building.
Environmental and Social Risk
Environmental and social risk is the possibility that environmental and social
matters would result in a financial loss for the Bank or affect its business
activities. For additional information on the ways the Bank addresses and
mitigates this risk, see the Environmental and Social Risk section on pages
110 to 112 of the Bank's 2024 Annual Report.
Regulatory Developments
The Bank continues to closely monitor regulatory developments and participates
actively in various consultative processes. Since November 1, 2024, the new
regulatory development below is to be considered.
On December 18, 2024, the Canadian Sustainability Standards Board (CSSB)
published its first Canadian Sustainability Disclosure Standards (CSDS).
CSDS 1 - General Requirements for Disclosure of Sustainability-related
Financial Information, and CSDS 2 - Climate-related Disclosures, which are
aligned with IFRS S1 - General Requirements for Disclosure of
Sustainability-related financial Information and IFRS S2 - Climate-related
Disclosures, retain the proposals included in the exposure drafts published on
March 13, 2024, and include additional transition relief measures for certain
disclosure requirements. CSDS will be applicable to D-SIBs at the end of
fiscal 2026, and transitional relief measures will postpone certain disclosure
requirements until the end of fiscal 2029. Disclosure under CSDS will be
voluntary until mandated by the CSA.
Risk Disclosures
One of the purposes of the 2024 Annual Report, the Report to Shareholders -
First Quarter 2025, and the related supplementary information documents is to
provide transparent, high-quality risk disclosures in accordance with the
recommendations made by the Financial Stability Board's EDTF group. The
following table lists the references where users can find information that
responds to the EDTF's 32 recommendations.
Pages
2024 Report to Supplementary
Annual Report Shareholders((1)) Regulatory Capital
and Pillar 3 Disclosure((1))
General
1 Location of risk disclosures 12 44
Management's Discussion and Analysis 55 to 112, 125 and 127 to 129 21 to 43
Consolidated Financial Statements Notes 1, 8, 18, 25 and 31 Notes 6 and 13
Supplementary Financial Information 23 to 33((2))
Supplementary Regulatory Capital and Pillar 3 Disclosure 5 to 62
2 Risk terminology and risk measures 65 to 112
3 Top and emerging risks 24 and 70 to 77 10, 28 to 43
4 New key regulatory ratios 56 to 59, 95, 96 and 99 to 102 21, 22, 33 and 35 to 38
Risk governance and risk management
5 Risk management organization, processes and key functions 65 to 89, 95 to 97 and 102
6 Risk management culture 65 and 66
7 Key risks by business segment, risk management 64 to 66 and 70
and risk appetite
8 Stress testing 55, 66, 83, 93, 94 and 97
Capital adequacy and risk-weighted assets (RWA)
9 Minimum Pillar 1 capital requirements 56 to 59 21 and 22
10 Reconciliation of the accounting balance sheet to
the regulatory balance sheet 11 to 17, 20 and 21
11 Movements in regulatory capital 62 24
12 Capital planning 55 to 64
13 RWA by business segment and by risk type 64 7
14 Capital requirements by risk and the RWA calculation method 78 to 82 7
15 Banking book credit risk 7
16 Movements in RWA by risk type 63 25 7
17 Assessment of credit risk model performance 69, 79 to 82 and 88 41
Liquidity
18 Liquidity management and components of the liquidity buffer 95 to 102 33 to 38
Funding
19 Summary of encumbered and unencumbered assets 98 and 99 35
20 Residual contractual maturities of balance sheet items and
off-balance-sheet commitments 230 to 234 39 to 42
21 Funding strategy and funding sources 102 to 104 38
Market risk
22 Linkage of market risk measures to balance sheet 90 and 91 30 and 31
23 Market risk factors 88 to 94, 218 and 219 30 to 33
24 VaR: Assumptions, limitations and validation procedures 92
25 Stress tests and backtesting 88 to 94
Credit risk
26 Credit risk exposures 87 and 179 to 191 29 and 66 to 74 22 to 50 and 23 to 31((2))
27 Policies for identifying impaired loans 84, 85, 152 and 153
28 Movements in impaired loans and allowances for credit losses 125, 128, 129 and 179 to 191 66 to 74 28 to 31((2))
29 Counterparty credit risk relating to derivative transactions 83 to 86 and 198 to 201 42 to 50, 32((2)) and 33((2))
30 Credit risk mitigation 81 to 86, 176 and 184 24, 28, 29 and 48 to 58
Other risks
31 Other risks: Governance, measurement and management 76, 77 and 104 to 112
32 Publicly known risk events 24, 104 and 105 10, 28 and 43
(1) First quarter 2025.
(2) These pages are included in the document entitled
Supplementary Financial Information - First Quarter 2025.
Accounting Policies and Financial Disclosure
Material Accounting Policies and Accounting Estimates
The Bank's Consolidated Financial Statements are prepared in accordance with
International Financial Reporting Standards (IFRS Accounting Standards), as
issued by the International Accounting Standards Board (IASB). The financial
statements also comply with section 308(4) of the Bank Act (Canada), which
states that, except as otherwise specified by OSFI, the consolidated financial
statements are to be prepared in accordance with IFRS Accounting Standards.
IFRS Accounting Standards represent Canadian generally accepted accounting
principles (GAAP). None of the OSFI accounting requirements are exceptions to
IFRS Accounting Standards. The unaudited interim condensed consolidated
financial statements for the quarter ended January 31, 2025 were prepared in
accordance with IAS 34 - Interim Financial Reporting using the same
accounting policies as those described in Note 1 to the audited annual
Consolidated Financial Statements for the year ended October 31, 2024.
In preparing consolidated financial statements in accordance with IFRS
Accounting Standards, management must exercise judgment and make estimates and
assumptions that affect the reporting date carrying amounts of assets and
liabilities, net income, and related information. Some accounting policies are
considered critical given their importance to the presentation of the Bank's
financial position and operating results and require subjective and complex
judgments and estimates on matters that are inherently uncertain. Any change
in these judgments and estimates could have a significant impact on the Bank's
consolidated financial statements. The material accounting policies and
accounting estimates are the same as those described on pages 113 to 118 of
the 2024 Annual Report.
The geopolitical landscape, notably the measures affecting trade relations
between Canada and its partners, including the imposition of tariffs and any
measures taken in response to such tariffs, the Russia-Ukraine war and clashes
between Israel and Hamas, inflation, climate change, and high interest rates
continue to create uncertainty. Some of the Bank's accounting policies, such
as measurement of expected credit losses (ECLs), require particularly complex
judgments and estimates. See Note 1 to the audited annual Consolidated
Financial Statements for the year ended October 31, 2024 for a summary of the
most significant estimation processes used to prepare the consolidated
financial statements in accordance with IFRS Accounting Standards and for the
valuation techniques used to determine the carrying values and fair values of
assets and liabilities. The uncertainty regarding certain key inputs used in
measuring ECLs is described in Note 6 to these unaudited interim condensed
consolidated financial statements.
Future Accounting Policy Changes
The Bank closely monitors both new accounting standards and amendments to
existing accounting standards issued by the IASB. There have been no
significant updates to the future accounting policy changes disclosed in Note
3 to the audited annual Consolidated Financial Statements for the year ended
October 31, 2024. The Bank is currently assessing the impact of applying these
standards on the Consolidated Financial Statements.
Financial Disclosure
During the first quarter of 2025, no changes were made to the policies,
procedures, and other processes that comprise the Bank's internal control over
financial reporting that had or could reasonably have a significant impact on
the internal control over financial reporting.
Quarterly Financial Information
(millions of Canadian dollars,
except per share amounts) 2025 2024 2023 2024 2023
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Total Total
Total revenues 3,183 2,944 2,996 2,750 2,710 2,560 2,490 2,446 11,400 10,058
Net income 997 955 1,033 906 922 751 830 832 3,816 3,289
Earnings per share ($)
Basic 2.81 2.69 2.92 2.56 2.61 2.11 2.35 2.37 10.78 9.33
Diluted 2.78 2.66 2.89 2.54 2.59 2.09 2.33 2.34 10.68 9.24
Dividends per common share ($) 1.14 1.10 1.10 1.06 1.06 1.02 1.02 0.97 4.32 3.98
Return on common
shareholders' equity (%)((1)) 16.7 16.4 18.4 16.9 17.1 14.1 16.1 17.2 17.2 16.3
Total assets 483,833 462,226 453,933 441,690 433,927 423,477 425,936 417,614
Net impaired loans excluding POCI loans((1)) 1,366 1,144 959 864 677 606 537 477
Per common share ($)
Book value((1)) 68.15 65.74 64.64 62.28 61.18 60.40 58.53 57.45
Share price
High 140.76 134.23 118.17 114.68 103.38 103.58 103.28 103.45
Low 128.79 111.98 106.21 101.24 86.50 84.97 94.62 92.67
(1) See the Glossary section on pages 47 to 50 for details on the
composition of these measures.
Glossary
Acceptances
Acceptances and the customers' liability under acceptances constitute a
guarantee of payment by a bank and can be traded in the money market. The Bank
earns a "stamping fee" for providing this guarantee.
Allowances for credit losses
Allowances for credit losses represent management's unbiased estimate of
expected credit losses as at the balance sheet date. These allowances are
primarily related to loans and off-balance-sheet items such as loan
commitments and financial guarantees.
Assets under administration
Assets in respect of which a financial institution provides administrative
services on behalf of the clients who own the assets. Such services include
custodial services, collection of investment income, settlement of purchase
and sale transactions, and record-keeping. Assets under administration are not
reported on the balance sheet of the institution offering such services.
Assets under management
Assets managed by a financial institution and that are beneficially owned by
clients. Management services are more comprehensive than administrative
services and include selecting investments or offering investment advice.
Assets under management, which may also be administered by the financial
institution, are not reported on the balance sheet of the institution offering
such services.
Available TLAC
Available TLAC includes total capital as well as certain senior unsecured debt
subject to the federal government's bail-in regulations that satisfy all of
the eligibility criteria in OSFI's Total Loss Absorbing Capacity (TLAC)
Guideline.
Average interest-bearing assets
Average interest-bearing assets include interest-bearing deposits with
financial institutions and certain cash items, securities, securities
purchased under reverse repurchase agreements and securities borrowed, and
loans, while excluding customers' liability under acceptances and other
assets. The average is calculated based on the daily balances for the period.
Average interest-bearing assets, non-trading
Average interest-bearing assets, non-trading, include interest-bearing
deposits with financial institutions and certain cash items, securities
purchased under reverse repurchase agreements and securities borrowed, and
loans, while excluding other assets and assets related to trading activities.
The average is calculated based on the daily balances for the period.
Average volumes
Average volumes represent the average of the daily balances for the period of
the consolidated balance sheet items.
Basic earnings per share
Basic earnings per share is calculated by dividing net income attributable to
common shareholders by the weighted average basic number of common shares
outstanding.
Basis point (bps)
Unit of measure equal to one one-hundredth of a percentage point (0.01%).
Book value of a common share
The book value of a common share is calculated by dividing common
shareholders' equity by the number of common shares on a given date.
Common Equity Tier 1 (CET1) capital ratio
CET1 capital consists of common shareholders' equity less goodwill, intangible
assets, and other capital deductions. The CET1 capital ratio is calculated by
dividing total CET1 capital by the corresponding risk-weighted assets.
Compound annual growth rate (CAGR)
CAGR is a rate of growth that shows, for a period exceeding one year, the
annual change as though the growth had been constant throughout the period.
Derivative financial instruments
Derivative financial instruments are financial contracts whose value is
derived from an underlying interest rate, exchange rate, equity price,
commodity price, credit instrument or index. Examples of derivatives include
swaps, options, forward rate agreements, and futures. The notional amount of
the derivative is the contract amount used as a reference point to calculate
the payments to be exchanged between the two parties, and the notional amount
itself is generally not exchanged by the parties.
Diluted earnings per share
Diluted earnings per share is calculated by dividing net income attributable
to common shareholders by the weighted average number of common shares
outstanding after taking into account the dilution effect of stock options
using the treasury stock method and any gain (loss) on the redemption of
preferred shares.
Dividend payout ratio
The dividend payout ratio represents the dividends of common shares (per share
amount) expressed as a percentage of basic earnings per share.
Economic capital
Economic capital is the internal measure used by the Bank to determine the
capital required for its solvency and to pursue its business operations.
Economic capital takes into consideration the credit, market, operational,
business and other risks to which the Bank is exposed as well as the risk
diversification effect among them and among the business segments. Economic
capital thus helps the Bank to determine the capital required to protect
itself against such risks and ensure its long-term viability.
Efficiency ratio
The efficiency ratio represents non-interest expenses expressed as a
percentage of total revenues. It measures the efficiency of the Bank's
operations.
Fair value
The fair value of a financial instrument is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction in
the principal market at the measurement date under current market conditions
(i.e., an exit price).
Gross impaired loans as a percentage of total loans and acceptances
This measure represents gross impaired loans expressed as a percentage of the
balance of loans and acceptances.
Gross impaired loans excluding POCI loans
Gross impaired loans excluding POCI loans are all loans classified in Stage 3
of the expected credit loss model excluding POCI loans.
Gross impaired loans excluding POCI loans as a percentage of total loans and
acceptances
This measure represents gross impaired loans excluding POCI loans expressed as
a percentage of the balance of loans and acceptances.
Hedging
The purpose of a hedging transaction is to modify the Bank's exposure to one
or more risks by creating an offset between changes in the fair value of, or
the cash flows attributable to, the hedged item and the hedging instrument.
Impaired loans
The Bank considers a financial asset, other than a credit card receivable, to
be credit-impaired when one or more events that have a detrimental impact on
the estimated future cash flows of the financial asset have occurred or when
contractual payments are 90 days past due. Credit card receivables are
considered credit-impaired and are fully written off at the earlier of the
following dates: when a notice of bankruptcy is received, a settlement
proposal is made, or contractual payments are 180 days past due.
Leverage ratio
The leverage ratio is calculated by dividing Tier 1 capital by total exposure.
Total exposure is defined as the sum of on-balance-sheet assets (including
derivative financial instrument exposures and securities financing transaction
exposures) and off-balance-sheet items.
Liquidity coverage ratio (LCR)
The LCR is a measure designed to ensure that the Bank has sufficient
high-quality liquid assets to cover net cash outflows given a severe, 30‑day
liquidity crisis.
Loans and acceptances
Loans and acceptances represent the sum of loans and of the customers'
liability under acceptances.
Loan-to-value ratio
The loan-to-value ratio is calculated according to the total facility amount
for residential mortgages and home equity lines of credit divided by the value
of the related residential property.
Master netting agreement
Legal agreement between two parties that have multiple derivative contracts
with each other that provides for the net settlement of all contracts through
a single payment, in the event of default, insolvency or bankruptcy.
Net impaired loans
Net impaired loans are gross impaired loans presented net of allowances for
credit losses on Stage 3 loan amounts drawn.
Net impaired loans as a percentage of total loans and acceptances
This measure represents net impaired loans as a percentage of the balance of
loans and acceptances.
Net impaired loans excluding POCI loans
Net impaired loans excluding POCI loans are gross impaired loans excluding
POCI loans presented net of allowances for credit losses on amounts drawn on
Stage 3 loans granted by the Bank.
Net interest income from trading activities
Net interest income from trading activities comprises dividends related to
financial assets and liabilities associated with trading activities, net of
interest expenses and interest income related to the financing of these
financial assets and liabilities.
Net interest income, non-trading
Net interest income, non-trading, comprises revenues related to financial
assets and liabilities associated with non-trading activities, net of interest
expenses and interest income related to the financing of these financial
assets and liabilities.
Net interest margin
Net interest margin is calculated by dividing net interest income by average
interest-bearing assets.
Net stable funding ratio (NSFR)
The NSFR ratio is a measure that helps guarantee that the Bank is maintaining
a stable funding profile to reduce the risk of funding stress.
Net write-offs as a percentage of average loans and acceptances
This measure represents the net write-offs (net of recoveries) expressed as a
percentage of average loans and acceptances.
Non-interest income related to trading activities
Non-interest income related to trading activities consists of realized and
unrealized gains and losses as well as interest income on securities measured
at fair value through profit or loss, income from held-for-trading derivative
financial instruments, changes in the fair value of loans at fair value
through profit or loss, changes in the fair value of financial instruments
designated at fair value through profit or loss, certain commission income,
other trading activity revenues, and any applicable transaction costs.
Office of the Superintendent of Financial Institutions (Canada) (OSFI)
The mandate of OSFI is to regulate and supervise financial institutions and
private pension plans subject to federal oversight, to help minimize undue
losses to depositors and policyholders and, thereby, to contribute to public
confidence in the Canadian financial system.
Operating leverage
Operating leverage is the difference between the growth rate for total
revenues and the growth rate for non-interest expenses.
Provisioning rate
This measure represents the allowances for credit losses on impaired loans
expressed as a percentage of gross impaired loans.
Provisioning rate excluding POCI loans
This measure represents the allowances for credit losses on impaired loans
excluding POCI loans expressed as a percentage of gross impaired loans
excluding POCI loans.
Provisions for credit losses
Amount charged to income necessary to bring the allowances for credit losses
to a level deemed appropriate by management and is comprised of provisions for
credit losses on impaired and non-impaired financial assets.
Provisions for credit losses as a percentage of average loans and acceptances
This measure represents the provisions for credit losses expressed as a
percentage of average loans and acceptances.
Provisions for credit losses on impaired loans as a percentage of average
loans and acceptances
This measure represents the provisions for credit losses on impaired loans
expressed as a percentage of average loans and acceptances.
Provisions for credit losses on impaired loans excluding POCI loans
Amount charged to income necessary to bring the allowances for credit losses
to a level deemed appropriate by management and is comprised of provisions for
credit losses on impaired financial assets excluding POCI loans.
Provisions for credit losses on impaired loans excluding POCI loans as a
percentage of average loans and acceptances or provisions for credit losses on
impaired loans excluding POCI loans ratio
This measure represents the provisions for credit losses on impaired loans
excluding POCI loans expressed as a percentage of average loans and
acceptances.
Return on average assets
Return on average assets represents net income expressed as a percentage of
average assets.
Return on common shareholders' equity (ROE)
ROE represents net income attributable to common shareholders expressed as a
percentage of average equity attributable to common shareholders. It is a
general measure of the Bank's efficiency in using equity.
Risk-weighted assets
Assets are risk weighted according to the guidelines established by OSFI. In
the Standardized calculation approach, risk factors are applied directly to
the face value of certain assets in order to reflect comparable risk levels.
In the Advanced Internal Ratings-Based (AIRB) Approach, risk-weighted assets
are derived from the Bank's internal models, which represent the Bank's own
assessment of the risks it incurs. In the Foundation Internal Ratings-Based
(FIRB) Approach, the Bank can use its own estimate of probability of default
but must rely on OSFI estimates for the loss given default and exposure at
default risk parameters. Off-balance-sheet instruments are converted to
balance sheet (or credit) equivalents by adjusting the notional values before
applying the appropriate risk-weighting factors.
Securities purchased under reverse repurchase agreements
Securities purchased by the Bank from a client pursuant to an agreement under
which the securities will be resold to the same client on a specified date and
at a specified price. Such an agreement is a form of short-term collateralized
lending.
Securities sold under repurchase agreements
Financial obligations related to securities sold pursuant to an agreement
under which the securities will be repurchased on a specified date and at a
specified price. Such an agreement is a form of short-term funding.
Structured entity
A structured entity is an entity created to accomplish a narrow and
well-defined objective and is designed so that voting or similar rights are
not the dominant factor in deciding who controls the entity, such as when any
voting rights relate solely to administrative tasks and the relevant
activities are directed by means of contractual arrangements.
Taxable equivalent basis
Taxable equivalent basis is a calculation method that consists of grossing up
certain revenues taxed at lower rates (notably dividends) by the income tax to
a level that would make it comparable to revenues from taxable sources in
Canada, an equivalent amount is recognized in the income taxes.
Tier 1 capital ratio
Tier 1 capital ratio consists of Common Equity Tier 1 capital and Additional
Tier 1 instruments, namely, qualifying non-cumulative preferred shares and the
eligible amount of innovative instruments. The Tier 1 capital ratio is
calculated by dividing Tier 1 capital, less regulatory adjustments, by the
corresponding risk-weighted assets.
TLAC leverage ratio
The TLAC leverage ratio is an independent risk measure that is calculated by
dividing available TLAC by total exposure, as set out in OSFI's Total Loss
Absorbing Capacity (TLAC) Guideline.
TLAC ratio
The TLAC ratio is a measure used to assess whether a non-viable Domestic
Systemically Important Bank (D-SIB) has sufficient loss-absorbing capacity to
support its recapitalization. It is calculated by dividing available TLAC by
risk weighted assets, as set out in OSFI's Total Loss Absorbing Capacity
(TLAC) Guideline.
Total capital ratio
Total capital is the sum of Tier 1 and Tier 2 capital. Tier 2 capital consists
of the eligible portion of subordinated debt and certain allowances for credit
losses. The Total capital ratio is calculated by dividing Total capital, less
regulatory adjustments, by the corresponding risk-weighted assets.
Total shareholder return (TSR)
TSR represents the average total return on an investment in the Bank's common
shares. The return includes changes in share price and assumes that the
dividends received were reinvested in additional common shares of the Bank.
Trading activity revenues
Trading activity revenues consist of the net interest income and the
non-interest income related to trading activities. Net interest income
comprises dividends related to financial assets and liabilities associated
with trading activities, and some interest income related to the financing of
these financial assets and liabilities net of interest expenses and interest
income related to the financing of these financial assets and liabilities.
Non-interest income consists of realized and unrealized gains and losses as
well as interest income on securities measured at fair value through profit or
loss, income from held-for-trading derivative financial instruments, changes
in the fair value of loans at fair value through profit or loss, changes in
the fair value of financial instruments designated at fair value through
profit or loss, realized and unrealized gains and losses as well as interest
expense on obligations related to securities sold short, certain commission
income, other trading activity revenues, and any applicable transaction costs.
Value-at-Risk (VaR)
VaR is a statistical measure of risk that is used to quantify market risks
across products, per types of risks, and aggregate risk on a portfolio basis.
VaR is defined as the maximum loss at a specific confidence level over a
certain horizon under normal market conditions. The VaR method has the
advantage of providing a uniform measurement of financial instrument-related
market risks based on a single statistical confidence level and time horizon.
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