The financial information reported in this document is based on
the unaudited interim condensed consolidated financial statements
for the quarter ended January 31, 2021 and is prepared in
accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB),
unless otherwise indicated. IFRS represent Canadian generally
accepted accounting principles (GAAP). All amounts are presented in
Canadian dollars.
MONTREAL, Feb. 24, 2021 /CNW Telbec/ - For the first
quarter of 2021, National Bank is reporting net income of
$761 million compared to $610 million in the first quarter of 2020,
an increase of 25%. First-quarter diluted earnings per share stood
at $2.15 compared to $1.67 in the first quarter of 2020, an increase
of 29%. These year-over-year increases were driven by net income
growth across all the business segments.
Commenting on the Bank's financial results for the first quarter
of 2021, Louis Vachon, President and
Chief Executive Officer of National Bank of Canada, stated: "I am very satisfied with our
performance, which was driven by strong momentum in all of our
businesses. The Bank generated a strong ROE for the quarter, while
maintaining robust capital levels and significant reserves for
credit losses. This speaks to the adaptability of our franchise and
sound diversification of our earnings stream."
Highlights
(millions of Canadian
dollars)
|
Quarter ended
January 31
|
|
|
2021
|
|
|
2020
|
|
% Change
|
|
|
|
|
|
|
|
|
|
Net income
|
|
761
|
|
|
610
|
|
25
|
Diluted earnings per
share (dollars)
|
$
|
2.15
|
|
$
|
1.67
|
|
29
|
Return on common
shareholders' equity(1)
|
|
21.2
|
%
|
|
18.0
|
%
|
|
Dividend payout
ratio
|
|
45.7
|
%
|
|
41.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Excluding
specified items(1)
|
|
|
|
|
|
|
|
Net income excluding
specified items
|
|
761
|
|
|
620
|
|
23
|
Diluted earnings per
share excluding specified items (dollars)
|
$
|
2.15
|
|
$
|
1.70
|
|
26
|
Return on common
shareholders' equity
|
|
|
|
|
|
|
|
|
excluding specified
items
|
|
21.2
|
%
|
|
18.3
|
%
|
|
Dividend payout ratio
excluding specified items
|
|
43.4
|
%
|
|
41.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at
January 31,
2021
|
|
As at
October 31,
2020
|
|
|
CET1 capital ratio
under Basel III
|
|
11.9
|
%
|
|
11.8
|
%
|
|
Leverage ratio under
Basel III
|
|
4.3
|
%
|
|
4.4
|
%
|
|
(1)
|
See the Financial
Reporting Method section on page 5 for additional information on
non-GAAP financial measures.
|
Personal and Commercial
- Net income totalled $262 million
in the first quarter of 2021 compared to $242 million in the first quarter of 2020, an
increase of 8%.
- Income before provisions for credit losses and income
taxes(1) totalled $412
million in the first quarter of 2021, up 3% from
$400 million in the first quarter of
2020.
- At $902 million, the 2021
first-quarter total revenues were up $23
million or 3% year over year, mainly due to the increase in
net interest income driven by growth in loan and deposit
volumes.
- Compared to a year ago, personal lending grew 6% and commercial
lending grew 3%.
- Net interest margin stood at 2.18% in the first quarter of 2021
versus 2.21% in the first quarter of 2020.
- First-quarter non-interest expenses stood at $490 million, up 2% from the first quarter of
2020.
- At 54.3%, the efficiency ratio(1) improved from
54.5% in the first quarter of 2020.
Wealth Management
- Net income totalled $160 million
in the first quarter of 2021, a 20% increase from $133 million in the first quarter of 2020.
- First-quarter total revenues amounted to $519 million compared to $466 million in the first quarter of 2020, a
$53 million or 11% increase driven
mainly by growth in transaction-based and other revenues as well as
in fee-based revenues.
- First-quarter non-interest expenses stood at $303 million, up 6% from $285 million in the first quarter of 2020.
- At 58.4%, the efficiency ratio(1) improved from
61.2% in the first quarter of 2020.
Financial Markets
- Net income totalled $250 million
in the first quarter of 2021, a 37% increase from $183 million in the first quarter of 2020.
- Total revenues on a taxable equivalent basis(1)
amounted to $577 million, a
$119 million or 26% year-over-year
increase.
- First-quarter non-interest expenses stood at $228 million compared to $200 million in the first quarter of 2020, an
increase in part attributable to variable compensation.
- At 39.5%, the first-quarter efficiency ratio on a taxable
equivalent basis(1) improved from 43.7% in the first
quarter of 2020.
U.S. Specialty Finance and International
- Net income totalled $136 million
in the first quarter of 2021, a 60% increase from $85 million in the same quarter of 2020.
- First-quarter total revenues amounted to $274 million, a 41% year-over-year increase
driven by revenue growth at the Credigy and ABA Bank
subsidiaries.
- First-quarter non-interest expenses stood at $83 million, an increase of 6%.
- At 30.3%, the first-quarter efficiency ratio(1)
improved by almost 10 percentage points compared to the same
quarter in 2020.
Other
- Net loss of $47 million in the
first quarter of 2021 compared to a net loss of $33 million in the first quarter of 2020. This
change came from a lower contribution from Treasury activities and
from an increase in non-interest expenses due to higher variable
compensation, COVID-19 expenses, and technology investment
expenses.
Capital Management
- As at January 31, 2021, the
Common Equity Tier 1 (CET1) capital ratio under Basel III stood at
11.9%, up from 11.8% as at October 31,
2020.
- As at January 31, 2021, the Basel
III leverage ratio was 4.3%, a decrease from 4.4% as at
October 31, 2020.
Dividends
- On February 23, 2021, the Board
of Directors declared regular dividends on the various series of
first preferred shares and a dividend of 71
cents per common share, payable on May 1, 2021 to shareholders of record on
March 29, 2021.
(1)
|
See the Financial
Reporting Method section on page 5 for additional information on
non-GAAP financial measures.
|
COVID-19
Pandemic
On March 11, 2020, the World
Health Organization (WHO) declared that the COVID-19 outbreak
constituted a pandemic, requiring that important protective
measures be taken to prevent overcrowding of health services and to
strengthen preventive hygiene. The global pandemic prompted
many countries, including Canada,
to implement lockdown and social distancing measures designed to
slow down new outbreaks. Those measures included the closing of
borders in many countries. This exceptional situation has led to
significant changes in the overall market environment, including
business closures, temporary layoffs, low interest rates and the
government measures implemented in response to COVID-19.
Certain restrictions imposed at the start of the pandemic were
eased during the summer of 2020, but a second wave of COVID-19 in
early fall forced authorities in a number of countries, including
Canada, to reintroduce some
lockdown measures, effectively shutting down parts of the economy
again. Although the recent introduction of several vaccines against
COVID-19 constitutes an encouraging development, uncertainty
remains as to their effectiveness, their distribution, their
acceptance by the public and the reduction of the anticipated
infection rates, in particular following the multiplication of
cases linked to COVID-19 variants, that appear to be more
contagious. Authorities in a number of countries, including
Canada, are working actively to
ensure that vaccines are administered as quickly as possible. It is
anticipated that certain measures by the public health authorities
in Canada will remain in place
until extensive immunization is achieved in order to continue to
limit the spread of COVID-19 and its variants.
In Canada, banking services are
considered essential services and are therefore being maintained
despite the lockdown and social distancing measures. Given the
current economic and social conditions, the Bank is committed to
supporting its employees, clients, and communities. The Bank
has ensured the continuity of all its activities since the
beginning of this unprecedented crisis. All of its experts have
been mobilized to guide and support clients and answer their
questions during this ongoing period of uncertainty.
In addition to the impacts of the COVID-19 pandemic on the
global economy and in the countries where the Bank conducts
business, the pandemic has affected and may continue to affect the
Bank, the way it conducts business, and its clients. The Bank
continues to closely monitor the effects and potential consequences
of the COVID-19 pandemic. The actual impacts will depend on future
events that are highly uncertain, including the extent, severity
and duration of the COVID-19 pandemic and its variants, as well as
the effectiveness of actions and measures taken by governments,
monetary authorities and regulators over the long term.
For additional information on the impact of the COVID-19 risk
factor, on relief measures offered to the Bank's clients and on the
measures introduced by regulators, see the "COVID-19 Pandemic"
section of the 2020 Annual Report, on pages 16 to 21.
A number of relief measures offered to the Bank's clients ended
at the end of 2020, although some new measures are being offered in
connection with various government programs in which the Bank
continues to participate. These new measures mainly consist of
loans subject to government guarantees, particularly for businesses
in sectors that were among the hardest hit by the pandemic. The
Bank is continuing to address the specific needs of its clients in
the normal course of business to support them during this
unprecedented crisis.
Highlights
(millions of Canadian
dollars, except per share amounts)
|
Quarter ended
January 31
|
|
|
2021
|
|
|
2020
|
|
% Change
|
Operating
results
|
|
|
|
|
|
|
|
Total
revenues
|
|
2,224
|
|
|
1,923
|
|
16
|
Income before provisions for credit losses and income taxes(1)
|
|
1,044
|
|
|
832
|
|
25
|
Net income
|
|
761
|
|
|
610
|
|
25
|
Net income
attributable to the Bank's shareholders and holders of other equity
instruments
|
|
761
|
|
|
594
|
|
28
|
Return on common
shareholders' equity(1)
|
|
21.2
|
%
|
|
18.0
|
%
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.16
|
|
$
|
1.69
|
|
28
|
|
Diluted
|
|
2.15
|
|
|
1.67
|
|
29
|
Operating results
on a taxable equivalent basis and excluding specified
items(1)
|
|
|
|
|
|
|
|
Total revenues on a
taxable equivalent basis
|
|
2,281
|
|
|
2,010
|
|
13
|
Income before
provisions for credit losses and income taxes
|
|
|
|
|
|
|
|
|
on a taxable
equivalent basis and excluding specified items
|
|
1,101
|
|
|
932
|
|
18
|
Net income excluding
specified items
|
|
761
|
|
|
620
|
|
23
|
Return on common
shareholders' equity excluding specified items
|
|
21.2
|
%
|
|
18.3
|
%
|
|
Efficiency ratio on a
taxable equivalent basis and excluding specified items
|
|
51.7
|
%
|
|
53.6
|
%
|
|
Earnings per share
excluding specified items(1)
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.16
|
|
$
|
1.72
|
|
26
|
|
Diluted
|
|
2.15
|
|
|
1.70
|
|
26
|
Common share
information
|
|
|
|
|
|
|
|
Dividends
declared
|
$
|
0.71
|
|
$
|
0.71
|
|
−
|
Book value
|
|
41.48
|
|
|
37.58
|
|
|
Share
price
|
|
|
|
|
|
|
|
|
High
|
|
73.81
|
|
|
74.22
|
|
|
|
Low
|
|
65.54
|
|
|
68.25
|
|
|
|
Close
|
|
71.87
|
|
|
73.43
|
|
|
Number of common
shares (thousands)
|
|
336,770
|
|
|
335,818
|
|
|
Market
capitalization
|
|
24,204
|
|
|
24,659
|
|
|
(millions of Canadian
dollars)
|
As
at
January 31,
2021
|
|
As at
October
31,
2020
|
|
% Change
|
Balance sheet and
off-balance-sheet
|
|
|
|
|
|
Total
assets
|
343,637
|
|
331,625
|
|
4
|
Loans and
acceptances, net of allowances
|
167,690
|
|
164,740
|
|
2
|
Deposits
|
227,677
|
|
215,878
|
|
5
|
Equity attributable
to common shareholders
|
13,970
|
|
13,430
|
|
4
|
Assets under
administration and under management
|
656,263
|
|
596,656
|
|
10
|
Regulatory ratios
under Basel III(2)
|
|
|
|
|
|
Capital
ratios
|
|
|
|
|
|
|
Common Equity Tier 1
(CET1)
|
11.9
|
%
|
11.8
|
%
|
|
|
Tier 1
|
14.9
|
%
|
14.9
|
%
|
|
|
Total
|
16.0
|
%
|
16.0
|
%
|
|
Leverage
ratio
|
4.3
|
%
|
4.4
|
%
|
|
Liquidity coverage
ratio (LCR)
|
154
|
%
|
161
|
%
|
|
Net stable funding
ratio (NSFR)
|
124
|
%
|
|
|
|
Regulatory ratios
under Basel III (adjusted)(3)
|
|
|
|
|
|
Capital
ratios
|
|
|
|
|
|
|
CET1
|
11.7
|
%
|
11.5
|
%
|
|
|
Tier 1
|
14.8
|
%
|
14.6
|
%
|
|
|
Total
|
16.0
|
%
|
16.0
|
%
|
|
Leverage
ratio
|
4.3
|
%
|
4.3
|
%
|
|
Other
information
|
|
|
|
|
|
Number of employees
– Worldwide
|
26,231
|
|
26,517
|
|
(1)
|
Number of branches in
Canada
|
402
|
|
403
|
|
−
|
Number of banking
machines in Canada
|
935
|
|
940
|
|
(1)
|
(1)
|
See the Financial
Reporting Method section on page 5 for additional information on
non-GAAP financial measures.
|
(2)
|
The ratios include
the transitional measures granted by the Office of the
Superintendent of Financial Institutions (Canada) (OSFI). For
additional information, see the section entitled COVID–19 Pandemic
– Key Measures Introduced by the Regulatory Authorities on pages 20
and 21 of the 2020 Annual Report.
|
(3)
|
The adjusted ratios
do not include the transitional measure applicable to expected
credit loss provisioning. For additional information, see the
section entitled COVID-19 Pandemic – Key Measures Introduced by the
Regulatory Authorities on pages 20 and 21 of the 2020 Annual
Report.
|
Financial Reporting
Method
Non-GAAP 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, which are
based on IFRS. 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 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 Bank cautions readers
that it uses non-GAAP financial measures that do not have
standardized meanings under GAAP and therefore may not be
comparable to similar measures used by other companies.
Like many other financial institutions, the Bank uses the
taxable equivalent basis to calculate net interest income,
non-interest income, and income taxes. This calculation method
consists of grossing up certain tax-exempt income (particularly
dividends) by the income tax that would have been otherwise
payable. An equivalent amount is added to income taxes. This
adjustment is necessary in order to perform a uniform comparison of
the return on different assets regardless of their tax treatment.
The Bank also uses the return on common shareholders' equity, which
is a financial performance measure calculated by dividing net
income attributable to common shareholders by the average value of
common shareholders' equity for the period. Finally, the efficiency
ratio is also used to assess the Bank's consolidated results and
results by segment. The efficiency ratio is calculated by dividing
non-interest expenses by total revenues.
Fiscal 2020 was marked by the effects of the COVID-19
pandemic on macroeconomic factors, which resulted in a significant
increase in the Bank's provisions for credit losses. Given the
materiality of the provisions for credit losses recorded in
accordance with IFRS, the Bank believes it is useful to show income
before provisions for credit losses and income taxes, income before
provisions for credit losses and income taxes on a taxable
equivalent basis as well as income before provisions for credit
losses and income taxes on a taxable equivalent basis and excluding
specified items (as presented in the Consolidated Results table on
page 8 and in the Results by Segment tables on pages 10 to 14 of
the Report to Shareholders for the First Quarter of 2021),
thereby providing readers with additional information to help them
better understand the main components of the financial results of
the Bank and its business segments.
Financial Information
(millions of Canadian
dollars, except per share amounts)
|
Quarter ended
January 31
|
|
|
2021
|
|
|
2020
|
|
% Change
|
Net income
excluding specified items(1)
|
|
|
|
|
|
|
|
|
Personal and
Commercial
|
|
262
|
|
|
242
|
|
8
|
|
Wealth
Management
|
|
160
|
|
|
133
|
|
20
|
|
Financial
Markets
|
|
250
|
|
|
183
|
|
37
|
|
U.S. Specialty
Finance and International
|
|
136
|
|
|
85
|
|
60
|
|
Other
|
|
(47)
|
|
|
(23)
|
|
|
Net income
excluding specified items
|
|
761
|
|
|
620
|
|
23
|
|
Charge related to
Maple(2)
|
|
−
|
|
|
(10)
|
|
|
Net
income
|
|
761
|
|
|
610
|
|
25
|
Diluted earnings
per share excluding specified items
|
$
|
2.15
|
|
$
|
1.70
|
|
26
|
|
Charge related to
Maple(2)
|
|
−
|
|
|
(0.03)
|
|
|
Diluted earnings
per share
|
$
|
2.15
|
|
$
|
1.67
|
|
29
|
Return on common
shareholders' equity
|
|
|
|
|
|
|
|
|
Including specified
items
|
|
21.2
|
%
|
|
18.0
|
%
|
|
|
Excluding specified
items
|
|
21.2
|
%
|
|
18.3
|
%
|
|
(1)
|
For the quarter ended
January 31, 2020, certain amounts have been
reclassified.
|
(2)
|
During the quarter
ended January 31, 2020, the Bank had recorded a charge of $13
million ($10 million net of income taxes) related to the company
Maple Financial Group Inc. (Maple) following the event in December
2019, as described in the Contingent Liabilities section on page
111 of the 2020 Annual Report.
|
Caution Regarding Forward-Looking Statements
From time to time, the Bank makes written forward-looking
statements such as those contained in this document, in other
filings with Canadian securities regulators, and in other
communications. In addition, representatives of the Bank may make
forward-looking statements orally to analysts, investors, the media
and others. All such statements are made in accordance with
applicable securities legislation in Canada and the
United States. Forward-looking statements in this document
may include, but are not limited to, statements with respect to the
economy—particularly the Canadian and U.S. economies—market
changes, the Bank's objectives, outlook and priorities for fiscal
year 2021 and beyond, its strategies or future actions for
achieving them, expectations for the Bank's financial condition,
the regulatory environment in which it operates, the potential
impacts of—and the Bank's response to—the COVID-19 pandemic,
and certain risks it faces. These forward-looking statements are
typically identified by future or conditional verbs or words such
as "outlook", "believe", "foresee", "forecast", "anticipate",
"estimate", "project", "expect", "intend", "plan", and similar
expressions of future or conditional verbs such as "will", "may",
"should", "could" or "would". Such forward-looking statements are
made for the purpose of assisting the holders of the Bank's
securities in understanding the Bank's financial position and
results of operations as at and for the periods ended on the dates
presented, as well as the Bank's vision, strategic objectives and
its financial performance targets, and may not be appropriate for
other purposes.
By their very nature, these forward-looking statements require
assumptions to be made and involve inherent risks and
uncertainties, both general and specific. Assumptions about the
performance of the Canadian and U.S. economies in 2021, including
in the context of the COVID-19 pandemic, and how that will affect
the Bank's business are among the main factors considered in
setting the Bank's strategic priorities and objectives, including
provisions for credit losses. In determining its expectations for
economic conditions, both broadly and in the financial services
sector in particular, the Bank primarily considers historical
economic data provided by the governments of Canada, the United
States and certain other countries in which the Bank
conducts business, as well as their agencies.
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 may not be
confirmed and that its vision, strategic objectives and financial
performance targets will not be achieved. The Bank recommends that
readers not place undue reliance on forward-looking statements, as
a number of factors, many of which are beyond the Bank's control,
including the impacts of the COVID-19 pandemic, could cause actual
results to differ significantly from the expectations, estimates or
intentions expressed in these forward-looking statements. These
factors include credit risk, market risk, liquidity and funding
risk, operational risk, regulatory compliance risk, reputation
risk, strategic risk and environmental and social risk, all of
which are described in more detail in the Risk Management section
beginning on page 68 of the Bank's 2020 Annual Report, and
more specifically, general economic environment and financial
market conditions in Canada,
the United States and certain
other countries in which the Bank conducts business; regulatory
changes affecting the Bank's business; geopolitical and
sociopolitical uncertainty; important changes in consumer
behaviour; the housing and household indebtedness situation and
real estate market in Canada;
changes in the Bank's customers' and counterparties' performance
and creditworthiness; changes in the accounting policies the Bank
uses to report its financial condition, including uncertainties
associated with assumptions and critical accounting estimates; tax
laws in the countries in which the Bank operates, primarily
Canada and the United States; changes to capital and
liquidity guidelines and to the manner in which they are to be
presented and interpreted; changes to the credit ratings assigned
to the Bank; potential disruption to key suppliers of goods
and services to the Bank; potential disruptions to the Bank's
information technology systems, including evolving cyberattack risk
as well as identity theft and theft of personal information; and
possible impacts of catastrophic events affecting local and global
economies, including natural disasters and public health
emergencies such as the COVID-19 pandemic. Statements about the
expected impacts of the COVID-19 pandemic on the Bank's business,
results of operations, reputation, financial position and
liquidity, and on the global economy may be inaccurate and differ,
possibly materially, from what is currently expected as they depend
on future developments that are highly uncertain and cannot be
predicted. The foregoing list of risk factors is not
exhaustive. Additional information about these factors can be found
in the COVID-19 Pandemic and Risk Management sections of the Bank's
2020 Annual Report and in the Report to Shareholders for the
First Quarter of 2021, especially in the COVID-19 Pandemic section.
Investors and others who rely on the Bank's forward-looking
statements should carefully consider the above factors as well as
the uncertainties they represent and the risks 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.
Disclosure of the First Quarter 2021 results
Conference Call
- A conference call for analysts and institutional investors will
be held on Wednesday, February 24,
2021 at 1:00 p.m. EST.
- Access by telephone in listen-only mode: 1-800-898-3989 or
416-406-0743. The access code is 1995846#.
- A recording of the conference call can be heard until
March 24, 2021 by dialing
1-800-408-3053 or 905-694-9451. The access code is 1381684#.
Webcast
- The conference call will be webcast live at
nbc.ca/investorrelations.
- A recording of the webcast will also be available on National
Bank's website after the call.
Financial Documents
- The Report to Shareholders (which includes the quarterly
consolidated financial statements) is available at all times on
National Bank's website at nbc.ca/investorrelations.
- The Report to Shareholders, the Supplementary
Financial Information, the Supplementary Regulatory Capital
and Pillar 3 Disclosure, and a slide presentation will be
available on the Investor Relations page of National Bank's website
on the morning of the day of the conference call.
SOURCE National Bank of Canada