TIDM32SS
RNS Number : 5505R
National Bank of Canada
01 March 2023
National Bank of Canada
March 1(st) , 2023
Regulatory Announcement (Part 2)
Q1 2023 Results
National Bank of Canada (the "Bank") announces publication of
its First Quarter 2023 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 and is
available on the Bank's website at
https://www.nbc.ca/about-us/investors/quarterly-results.html
To view the full PDF of this First Quarter 2023 Report to
Shareholders, please click on the following link:
http://www.rns-pdf.londonstockexchange.com/rns/5497R_1-2023-3-1.pdf
Report to Shareholders
First Quarter 2023
Interim Condensed Consolidated
Financial Statements
(unaudited)
Consolidated Balance Sheets 50
Consolidated Statements of Income 51
Consolidated Statements of Comprehensive
Income 52
Consolidated Statements of Changes
in Equity 54
Consolidated Statements of Cash Flows 55
Notes to the Interim Condensed Consolidated
Financial Statements 56
Consolidated Balance Sheets
(unaudited) (millions of Canadian dollars)
As at January As at October
31, 2023 31, 2022
--------------------------------------------------- ------------- -------------
Assets
Cash and deposits with financial institutions 42,286 31,870
--------------------------------------------------- ------------- -------------
Securities (Notes 2, 3 and 4)
At fair value through profit or loss 89,835 87,375
At fair value through other comprehensive
income 10,079 8,828
At amortized cost 14,025 13,516
--------------------------------------------------- ------------- -------------
113,939 109,719
-------------------------------------------------- ------------- -------------
Securities purchased under reverse repurchase
agreements
and securities borrowed 26,430 26,486
----------------------------------------------------- ------------- -------------
Loans (Note 5)
Residential mortgage 82,104 80,129
Personal 45,067 45,323
Credit card 2,296 2,389
Business and government 75,154 73,317
--------------------------------------------------- ------------- -------------
204,621 201,158
Customers' liability under acceptances 6,765 6,541
Allowances for credit losses (1,007) (955)
--------------------------------------------------- ------------- -------------
210,379 206,744
-------------------------------------------------- ------------- -------------
Other
Derivative financial instruments 14,060 18,547
Investments in associates and joint ventures 142 140
Premises and equipment 1,451 1,397
Goodwill 1,515 1,519
Intangible assets 1,341 1,360
Other assets (Note 6) 6,799 5,958
--------------------------------------------------- ------------- -------------
25,308 28,921
-------------------------------------------------- ------------- -------------
418,342 403,740
-------------------------------------------------- ------------- -------------
Liabilities and equity
Deposits (Notes 3 and 7) 282,505 266,394
--------------------------------------------------- ------------- -------------
Other
Acceptances 6,765 6,541
Obligations related to securities sold short 19,778 21,817
Obligations related to securities sold under
repurchase agreements
and securities loaned 37,635 33,473
Derivative financial instruments 17,170 19,632
Liabilities related to transferred receivables
(Note 3) 24,832 26,277
Other liabilities (Note 8) 6,145 6,361
--------------------------------------------------- ------------- -------------
112,325 114,101
-------------------------------------------------- ------------- -------------
Subordinated debt (Note 16) 1,497 1,499
--------------------------------------------------- ------------- -------------
Equity
Equity attributable to the Bank's shareholders
and holders of
other equity instruments (Notes 9 and 11)
Preferred shares and other equity instruments 3,150 3,150
Common shares 3,236 3,196
Contributed surplus 55 56
Retained earnings 15,470 15,140
Accumulated other comprehensive income 102 202
--------------------------------------------------- ------------- -------------
22,013 21,744
Non-controlling interests 2 2
--------------------------------------------------- ------------- -------------
22,015 21,746
-------------------------------------------------- ------------- -------------
418,342 403,740
-------------------------------------------------- ------------- -------------
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
Consolidated Statements of Income
(unaudited) (millions of Canadian dollars)
Quarter ended
January 31
--------------------------------------------------------------- ---------------
2023 2022(1)
--------------------------------------------------------------- ------ -------
Interest income
Loans 2,903 1,422
Securities at fair value through profit or loss 425 366
Securities at fair value through other comprehensive income 59 31
Securities at amortized cost 112 46
Deposits with financial institutions 372 23
---------------------------------------------------------------- ------ -------
3,871 1,888
--------------------------------------------------------------- ------ -------
Interest expense
Deposits 2,096 400
Liabilities related to transferred receivables 142 101
Subordinated debt 15 4
Other 519 51
---------------------------------------------------------------- ------ -------
2,772 556
--------------------------------------------------------------- ------ -------
Net interest income (2) 1,099 1,332
---------------------------------------------------------------- ------ -------
Non-interest income
Underwriting and advisory fees 107 78
Securities brokerage commissions 47 57
Mutual fund revenues 143 156
Investment management and trust service fees 242 256
Credit fees 137 125
Card revenues 46 47
Deposit and payment service charges 73 71
Trading revenues (losses) 531 122
Gains (losses) on non-trading securities, net 11 54
Insurance revenues, net 38 47
Foreign exchange revenues, other than trading 56 52
Share in the net income of associates and joint ventures 3 5
Other 49 64
---------------------------------------------------------------- ------ -------
1,483 1,134
--------------------------------------------------------------- ------ -------
Total revenues 2,582 2,466
---------------------------------------------------------------- ------ -------
Non-interest expenses
Compensation and employee benefits 875 817
Occupancy 83 76
Technology 252 231
Communications 14 14
Professional fees 63 63
Other 116 79
---------------------------------------------------------------- ------ -------
1,403 1,280
--------------------------------------------------------------- ------ -------
Income before provisions for credit losses and income taxes 1,179 1,186
Provisions for credit losses (Note 5) 86 (2)
---------------------------------------------------------------- ------ -------
Income before income taxes 1,093 1,188
Income taxes 212 258
---------------------------------------------------------------- ------ -------
Net income 881 930
---------------------------------------------------------------- ------ -------
Net income attributable to
Preferred shareholders and holders of other equity instruments 35 26
Common shareholders 846 904
---------------------------------------------------------------- ------ -------
Bank shareholders and holders of other equity instruments 881 930
Non-controlling interests - -
---------------------------------------------------------------- ------ -------
881 930
--------------------------------------------------------------- ------ -------
Earnings per share (dollars) (Note 14)
Basic 2.51 2.67
Diluted 2.49 2.64
Dividends per common share (dollars) (Note 9) 0.97 0.87
---------------------------------------------------------------- ------ -------
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
(1) For the quarter ended January 31, 2022, certain amounts have
been adjusted to reflect a change in accounting policy related to
cloud computing arrangements. For additional information, see Note
1.
(2) Net interest income includes dividend income. For additional
information, see Note 1 to the audited annual consolidated
financial statements for the year ended October 31, 2022.
Consolidated Statements of Comprehensive Income
(unaudited) (millions of Canadian dollars)
Quarter ended
January 31
------------------------------------------------------------------ ----------------
2023 2022(1)
---------------------------------------------------------------------- ------ -------
Net income 881 930
---------------------------------------------------------------------- ------ -------
Other comprehensive income, net of income taxes
Items that may be subsequently reclassified to net income
Net foreign currency translation adjustments
Net unrealized foreign currency translation gains (losses)
on investments
in foreign operations (140) 116
Impact of hedging net foreign currency translation gains
(losses) 40 (34)
(100) 82
-------------------------------------------------------------------- ------ -------
Net change in debt securities at fair value through other
comprehensive income
Net unrealized gains (losses) on debt securities at fair
value through other
comprehensive income 12 (64)
Net (gains) losses on debt securities at fair value through
other comprehensive
income reclassified to net income 4 21
Change in allowances for credit losses on debt securities
at fair value through
other comprehensive income reclassified to net income (1) -
------------------------------------------------------------------- ------ -------
15 (43)
------------------------------------------------------------------ ------ -------
Net change in cash flow hedges
Net gains (losses) on derivative financial instruments designated
as cash flow hedges (25) 6
Net (gains) losses on designated derivative financial instruments
reclassified
to net income 9 10
------------------------------------------------------------------- ------ -------
(16) 16
------------------------------------------------------------------ ------ -------
Share in the other comprehensive income of associates and
joint ventures 1 -
-------------------------------------------------------------------- ------ -------
Items that will not be subsequently reclassified to net
income
Remeasurements of pension plans and other post-employment
benefit plans (59) 96
Net gains (losses) on equity securities designated at fair
value through
other comprehensive income 10 6
Net fair value change attributable to the credit risk on
financial liabilities
designated at fair value through profit or loss (139) 21
------------------------------------------------------------------- ------ -------
(188) 123
------------------------------------------------------------------ ------ -------
Total other comprehensive income, net of income taxes (288) 178
---------------------------------------------------------------------- ------ -------
Comprehensive income 593 1,108
---------------------------------------------------------------------- ------ -------
Comprehensive income attributable to
Bank shareholders and holders of other equity instruments 593 1,108
Non-controlling interests - -
--------------------------------------------------------------------- ------ -------
593 1,108
--------------------------------------------------------------------- ------ -------
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
(1) For the quarter ended January 31, 2022, certain amounts have
been adjusted to reflect a change in accounting policy related to
cloud computing arrangements. For additional information, see Note
1.
Consolidated Statements of Comprehensive Income (cont.)
(unaudited) (millions of Canadian dollars)
Income Taxes - Other Comprehensive Income
The following table presents the income tax expense or recovery
for each component of other comprehensive income.
Quarter ended January 31
-------------------------------------------------------------------------------
2023 2022
--------------------------------------------------------------------- ---- ----
Items that may be subsequently reclassified to net income
Net foreign currency translation adjustments
Net unrealized foreign currency translation gains (losses)
on investments
in foreign operations 5 (5)
Impact of hedging net foreign currency translation gains
(losses) 8 (7)
-------------------------------------------------------------------- ---- ----
13 (12)
------------------------------------------------------------------ ---- ----
Net change in debt securities at fair value through other
comprehensive income
Net unrealized gains (losses) on debt securities at fair
value through other
comprehensive income 4 (23)
Net (gains) losses on debt securities at fair value through
other comprehensive income
reclassified to net income 2 8
Change in allowances for credit losses on debt securities
at fair value through
other comprehensive income reclassified to net income - -
------------------------------------------------------------------- ---- ----
6 (15)
------------------------------------------------------------------ ---- ----
Net change in cash flow hedges
Net gains (losses) on derivative financial instruments designated
as cash flow hedges (10) 2
Net (gains) losses on designated derivative financial instruments
reclassified
to net income 4 3
-------------------------------------------------------------------- ---- ----
(6) 5
------------------------------------------------------------------ ---- ----
Share in the other comprehensive income of associates and
joint ventures - -
--------------------------------------------------------------------- ---- ----
Items that will not be subsequently reclassified to net
income
Remeasurements of pension plans and other post-employment
benefit plans (13) 35
Net gains (losses) on equity securities designated at fair
value through
other comprehensive income 3 2
Net fair value change attributable to the credit risk on
financial liabilities
designated at fair value through profit or loss (53) 8
-------------------------------------------------------------------- ---- ----
(63) 45
---- ----
(50) 23
--------------------------------------------------------------------- ---- ----
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
Consolidated Statements of Changes in Equity
(unaudited) (millions of Canadian dollars)
Quarter ended January
31
----------------------------------------------------------- --------------------------
2023 2022(1)
------------------------------------------------------------ ---------- -----------
Preferred shares and other equity instruments at
beginning and at end (Note 9) 3,150 2,650
------------------------------------------------------------ ---------- -----------
Common shares at beginning (Note 9) 3,196 3,160
Issuances of common shares pursuant to the Stock
Option Plan 34 42
Repurchases of common shares for cancellation - (5)
Impact of shares purchased or sold for trading 6 11
Common shares at end 3,236 3,208
------------------------------------------------------------ ---------- -----------
Contributed surplus at beginning 56 47
Stock option expense (Note 11) 5 4
Stock options exercised (4) (5)
Other (2) -
------------------------------------------------------------ ---------- -----------
Contributed surplus at end 55 46
------------------------------------------------------------ ---------- -----------
Retained earnings at beginning 15,140 12,854
Net income attributable to the Bank's shareholders
and holders of other equity instruments 881 930
Dividends on preferred shares and distributions on
other equity instruments (Note 9) (40) (28)
Dividends on common shares (Note 9) (327) (294)
Premium paid on common shares repurchased for cancellation
(Note 9) - (43)
Remeasurements of pension plans and other post-employment
benefit plans (59) 96
Net gains (losses) on equity securities designated
at fair value through other comprehensive income 10 6
Net fair value change attributable to the credit
risk on financial liabilities
designated at fair value through profit or loss (139) 21
Impact of a financial liability resulting from put
options written to non-controlling interests (1) (1)
Other 5 2
------------------------------------------------------------ ---------- -----------
Retained earnings at end 15,470 13,543
------------------------------------------------------------ ---------- -----------
Accumulated other comprehensive income at beginning 202 (32)
Net foreign currency translation adjustments (100) 82
Net change in unrealized gains (losses) on debt securities
at fair value through other comprehensive income 15 (43)
Net change in gains (losses) on cash flow hedges (16) 16
Share in the other comprehensive income of associates
and joint ventures 1 -
------------------------------------------------------------ ---------- -----------
Accumulated other comprehensive income at end 102 23
------------------------------------------------------------ ---------- -----------
-
Equity attributable to the Bank's shareholders and
holders of other equity instruments 22,013 19,470
------------------------------------------------------------ ---------- -----------
Non-controlling interests at beginning 2 3
Net income attributable to non-controlling interests - -
Non-controlling interests at end 2 3
------------------------------------------------------------ ---------- -----------
Equity 22,015 19,473
------------------------------------------------------------ ---------- -----------
Accumulated Other Comprehensive Income
As at January As at January
31, 2023 31, 2022
---------------------------------------------------------------- ------------- -------------
Accumulated other comprehensive income
Net foreign currency translation adjustments 104 (47)
Net unrealized gains (losses) on debt securities at
fair value through other comprehensive income (19) 28
Net gains (losses) on instruments designated as cash
flow hedges 15 39
Share in the other comprehensive income of associates
and joint ventures 2 3
----------------------------------------------------------------- ------------- -------------
102 23
---------------------------------------------------------------- ------------- -------------
The accompanying notes are an integral part of these
unaudited interim condensed consolidated financial statements.
(1) For the quarter ended January 31, 2022, certain amounts have
been adjusted to reflect a change in accounting policy related to
cloud computing arrangements. For additional information, see Note
1.
Consolidated Statements of Cash Flows
(unaudited) (millions of Canadian dollars)
Quarter ended January
31
--------------------------------------------------------------- -----------------------
2023 2022(1)
----------------------------------------------------------------- ----------- ----------
Cash flows from operating activities
Net income 881 930
Adjustments for
Provisions for credit losses 86 (2)
Amortization of premises and equipment, including right-of-use
assets 52 51
Amortization of intangible assets 79 70
Deferred taxes (30) 77
Losses (gains) on sales of non-trading securities,
net (11) (54)
Share in the net income of associates and joint ventures (3) (5)
Stock option expense 5 4
Change in operating assets and liabilities
Securities at fair value through profit or loss (2,460) 7,122
Securities purchased under reverse repurchase agreements
and securities borrowed 56 (7,662)
Loans and acceptances, net of securitization (4,935) (5,493)
Deposits 16,111 6,157
Obligations related to securities sold short (2,039) 263
Obligations related to securities sold under repurchase
agreements and securities loaned 4,162 8,011
Derivative financial instruments, net 2,025 (2,406)
Interest and dividends receivable and interest payable (48) (6)
Current tax assets and liabilities (148) (437)
Other items (1,111) (1,498)
---------------------------------------------------------------- ----------- ----------
12,672 5,122
--------------------------------------------------------------- ----------- ----------
Cash flows from financing activities
Issuances of common shares (including the impact of
shares purchased for trading) 36 48
Repurchases of common shares for cancellation - (48)
Repayments of lease liabilities (25) (25)
Dividends paid on shares and distributions on other
equity instruments (364) (29)
(353) (54)
--------------------------------------------------------------- ----------- ----------
Cash flows from investing activities
Net change in investments in associates and joint ventures - 60
Purchases of non-trading securities (2,785) (1,920)
Maturities of non-trading securities 691 428
Sales of non-trading securities 390 2,007
Net change in premises and equipment, excluding right-of-use
assets (89) (75)
Net change in intangible assets (60) (80)
----------------------------------------------------------------- ----------- ----------
(1,853) 420
--------------------------------------------------------------- ----------- ----------
Impact of currency rate movements on cash and cash
equivalents (50) 696
------------------------------------------------------------------ ----------- ----------
Increase (decrease) in cash and cash equivalents 10,416 6,184
Cash and cash equivalents at beginning 31,870 33,879
----------------------------------------------------------------- ----------- ----------
Cash and cash equivalents at end (2) 42,286 40,063
----------------------------------------------------------------- ----------- ----------
Supplementary information about cash flows from operating
activities
Interest paid 2,445 594
Interest and dividends received 3,496 1,921
Income taxes paid 218 559
----------------------------------------------------------------- ----------- ----------
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
(1) For the quarter ended January 31, 2022, certain amounts have
been adjusted to reflect a change in accounting policy related to
cloud computing arrangements. For additional information, see Note
1.
(2) This item is the equivalent of Consolidated Balance Sheet
item Cash and deposits with financial institutions. It includes an
amount of $9.0 billion as at January 31, 2023 ($7.7 billion as at
October 31, 2022) for which there are restrictions and of which
$6.0 billion ($5.3 billion as at October 31, 2022) represent the
balances that the Bank must maintain with central banks, other
regulatory agencies, and certain counterparties.
Notes to the Interim Condensed Consolidated Financial
Statements
(unaudited) (millions of Canadian dollars)
Note Note Share Capital and Other Equity
1 Basis of Presentation 56 9 Instruments 73
Note Note
2 Fair Value of Financial Instruments 57 10 Capital Disclosure 75
Note Financial Instruments Designated Note
3 at Fair Value Through 11 Share-Based Payments 76
Note Employee Benefits - Pension
Profit or Loss 62 12 Plans and Other
Note
4 Securities 63 Post-Employment Benefit Plans 76
Note Loans and Allowances for Credit Note
5 Losses 64 13 Income Taxes 77
Note Note
6 Other Assets 72 14 Earnings Per Share 77
Note Note
7 Deposits 72 15 Segment Disclosures 78
Note Note Event After the Consolidated
8 Other Liabilities 73 16 Balance Sheet Date 79
Note 1 - Basis of Presentation
On February 28, 2023, the Board of Directors authorized the
publication of the Bank's unaudited interim condensed consolidated
financial statements (the consolidated financial statements) for
the quarter ended January 31, 2023.
The Bank's consolidated financial statements are prepared in
accordance with International Financial Reporting Standards (IFRS),
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 the Office of the Superintendent of Financial Institutions
(Canada) (OSFI), the consolidated financial statements are to be
prepared in accordance with IFRS. IFRS represent Canadian generally
accepted accounting principles (GAAP). None of the OSFI accounting
requirements are exceptions to IFRS.
These consolidated financial statements were prepared in
accordance with IAS 34 - Interim Financial Reporting and using the
same accounting policies as those described in Note 1 to the
audited annual consolidated financial statements for the year ended
October 31, 2022. Since these interim consolidated financial
statements do not include all of the annual financial statement
disclosures required under IFRS, they should be read in conjunction
with the audited annual consolidated financial statements and
accompanying notes for the year ended October 31, 2022. Future
accounting policy changes that have not yet come into effect are
described in Note 2 to the audited annual consolidated financial
statements for the year ended October 31, 2022.
Certain comparative amounts have been adjusted to reflect an
accounting policy change related to cloud computing arrangements,
as described in Note 1 to the audited annual consolidated financial
statements for the year ended October 31, 2022.
Judgment, Estimates and Assumptions
In preparing consolidated financial statements in accordance
with IFRS, 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
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, 2022 for a summary of the
most significant estimation processes used to prepare the
consolidated financial statements in accordance with IFRS and for
the valuation techniques used to determine the carrying values and
fair values of assets and liabilities.
The geopolitical landscape, rising inflation, interest rate
hikes, and the Russia-Ukraine war are persisting and continue to
create uncertainty. As a result, establishing reliable estimates
and applying judgment continue to be substantially complex. The
uncertainty regarding certain key inputs used in measuring ECLs is
described in Note 5 to these unaudited interim condensed
consolidated financial statements.
Unless otherwise indicated, all amounts are expressed in
Canadian dollars, which is the Bank's functional and presentation
currency.
Note 2 - Fair Value of Financial Instruments
Fair Value and Carrying Value of Financial Instruments by
Category
Financial assets and financial liabilities are recognized on the
Consolidated Balance Sheet at fair value or at amortized cost in
accordance with the categories set out in the accounting framework
for financial instruments.
As at January
31, 2023
---------------- ----------- ----------- ------------- ------------- ----------- ------------------------------
Carrying value Carrying Fair
and fair value value value
------------- ------------------------------------------------------ ----------- ----------- -------- -------
Debt Equity
Financial Financial securities securities
instruments instruments classified designated
classified designated as at at Financial Financial
as at at fair fair value fair value instruments instruments
fair value value through through at at
through through other other amortized amortized Total Total
profit profit comprehensive comprehensive cost, cost, carrying fair
or loss or loss income income net net value value
------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
Financial assets
Cash and
deposits
with financial
institutions - - - - 42,286 42,286 42,286 42,286
Securities 88,943 892 9,506 573 14,025 13,634 113,939 113,548
Securities
purchased
under reverse
repurchase
agreements
and securities
borrowed - 39 - - 26,391 26,391 26,430 26,430
Loans and
acceptances,
net of
allowances 11,258 - - - 199,121 196,000 210,379 207,258
Other
Derivative
financial
instruments 14,060 - - - - - 14,060 14,060
Other assets 83 - - - 3,756 3,756 3,839 3,839
--------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
Financial
liabilities
Deposits (1) - 17,632 264,873 264,051 282,505 281,683
Other
Acceptances - - 6,765 6,765 6,765 6,765
Obligations
related
to securities
sold
short 19,778 - - - 19,778 19,778
Obligations
related
to securities
sold
under
repurchase
agreements
and
securities
loaned - - 37,635 37,635 37,635 37,635
Derivative
financial
instruments 17,170 - - - 17,170 17,170
Liabilities
related
to transferred
receivables - 9,608 15,224 14,633 24,832 24,241
Other
liabilities - - 2,788 2,784 2,788 2,784
Subordinated
debt - - 1,497 1,510 1,497 1,510
--------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
(1) Includes embedded derivative financial instruments.
Note 2 - Fair Value of Financial Instruments (cont.)
As at October 31,
2022
---------------- ----------- ----------- ------------- ------------- ----------- ------------------------------
Carrying value and Carrying Fair
fair value value value
------------- ------------------------------------------------------ ----------- ----------- -------- -------
Debt Equity
Financial Financial securities securities
instruments instruments classified designated
classified designated as at at Financial Financial
as at at fair fair value fair value instruments instruments
fair value value through through at at
through through other other amortized amortized Total Total
profit profit comprehensive comprehensive cost, cost, carrying fair
or loss or loss income income net net value value
------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
Financial assets
Cash and
deposits
with financial
institutions - - - - 31,870 31,870 31,870 31,870
Securities 86,338 1,037 8,272 556 13,516 13,007 109,719 109,210
Securities
purchased
under reverse
repurchase
agreements
and securities
borrowed - - - - 26,486 26,486 26,486 26,486
Loans and
acceptances,
net of
allowances 10,516 - - - 196,228 190,955 206,744 201,471
Other
Derivative
financial
instruments 18,547 - - - - - 18,547 18,547
Other assets 87 - - - 3,221 3,221 3,308 3,308
--------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
Financial
liabilities
Deposits (1) - 15,355 251,039 249,937 266,394 265,292
Other
Acceptances - - 6,541 6,541 6,541 6,541
Obligations
related
to securities
sold
short 21,817 - - - 21,817 21,817
Obligations
related
to securities
sold
under
repurchase
agreements
and
securities
loaned - - 33,473 33,473 33,473 33,473
Derivative
financial
instruments 19,632 - - - 19,632 19,632
Liabilities
related
to transferred
receivables - 11,352 14,925 14,137 26,277 25,489
Other
liabilities - - 2,632 2,627 2,632 2,627
Subordinated
debt - - 1,499 1,478 1,499 1,478
--------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
(1) Includes embedded derivative financial instruments .
Establishing Fair Value
The fair value of a financial instrument is the price that would
be received to sell a financial asset or paid to transfer a
financial liability in an orderly transaction in the principal
market at the measurement date under current market conditions
(i.e., an exit price).
Unadjusted quoted prices in active markets provide the best
evidence of fair value. When there is no quoted price in an active
market, the Bank applies other valuation techniques that maximize
the use of relevant observable inputs and that minimize the use of
unobservable inputs. Such valuation techniques include the
following: using information available from recent market
transactions, referring to the current fair value of a comparable
financial instrument, applying discounted cash flow analysis,
applying option pricing models, or relying on any other valuation
technique that is commonly used by market participants and has
proven to yield reliable estimates. Judgment is required when
applying many of the valuation techniques. The Bank's valuations
were based on its assessment of the conditions prevailing as at
January 31, 2023 and may change in the future. Furthermore, there
may be measurement uncertainty resulting from the choice of
valuation model used.
Fair value is established in accordance with a rigorous control
framework. The Bank has policies and procedures that govern the
process for determining fair value. The Bank's valuation governance
structure has remained largely unchanged from that described in
Note 3 to the audited annual consolidated financial statements for
the year ended October 31, 2022. The valuation techniques used to
determine the fair value of financial assets and financial
liabilities are also described in this note, and no significant
changes have been made to the valuation techniques.
Financial Instruments Recorded at Fair Value on the Consolidated
Balance Sheet
Hierarchy of Fair Value Measurements
IFRS establishes a fair value measurement hierarchy that
classifies the inputs used in financial instrument fair value
measurement techniques according to three levels. This fair value
hierarchy requires observable market inputs in an active market to
be used whenever such inputs exist. According to the hierarchy, the
highest level of inputs are unadjusted quoted prices in active
markets for identical instruments and the lowest level of inputs
are unobservable inputs. If inputs from different levels of the
hierarchy are used, the financial instrument is classified in the
same level as the lowest level input that is significant to the
fair value measurement. For additional information, see Note 3 to
the audited annual consolidated financial statements for the year
ended October 31, 2022.
Transfers of financial instruments between Levels 1 and 2 and
transfers to (or from) Level 3 are deemed to have taken place at
the beginning of the quarter in which the transfer occurred.
Significant transfers can occur between the fair value hierarchy
levels due to new information on inputs used to determine fair
value and the observable nature of those inputs.
During the quarter ended January 31, 2023, $6 million in
securities classified as at fair value through profit or loss were
transferred from Level 2 to Level 1 as a result of changing market
conditions ($15 million in securities classified as at fair value
through profit or loss during the quarter ended January 31, 2022).
Also, during the quarter ended January 31, 2023, $4 million in
securities classified as at fair value through profit or loss and
$2 million in obligations related to securities sold short were
transferred from Level 1 to Level 2 as a result of changing market
conditions ($2 million in securities classified as at fair value
through profit or loss and $1 million in obligations related to
securities sold short during the quarter ended January 31, 2022). D
uring the quarters ended January 31, 2023 and 2022, financial
instruments were transferred to (or from) Level 3 due to changes in
the availability of observable market inputs as a result of
changing market conditions.
The following tables show financial instruments recorded at fair
value on the Consolidated Balance Sheet according to the fair value
hierarchy.
As at January 31, 2023
----------------------------------------------- ------ ----------------------------------
Total
financial
assets/liabilities
Level Level Level at fair
1 2 3 value
----------------------------------------------- ------ ------ ----- -------------------
Financial assets
Securities
At fair value through profit or loss
Securities issued or guaranteed by
Canadian government 4,474 9,326 - 13,800
Canadian provincial and municipal governments - 9,599 - 9,599
U.S. Treasury, other U.S. agencies and
other foreign governments 7,420 3,515 - 10,935
Other debt securities - 3,690 67 3,757
Equity securities 50,817 512 415 51,744
------------------------------------------------ ------ ------ ----- -------------------
62,711 26,642 482 89,835
----------------------------------------------- ------ ------ ----- -------------------
At fair value through other comprehensive
income
Securities issued or guaranteed by
Canadian government 13 3,817 - 3,830
Canadian provincial and municipal governments - 2,278 - 2,278
U.S. Treasury, other U.S. agencies and
other foreign governments 1,650 212 - 1,862
Other debt securities - 1,536 - 1,536
Equity securities - 247 326 573
------------------------------------------------ ------ ------ ----- -------------------
1,663 8,090 326 10,079
----------------------------------------------- ------ ------ ----- -------------------
Securities purchased under reverse repurchase
agreements and
securities borrowed - 39 - 39
Loans - 11,016 242 11,258
Other
Derivative financial instruments 63 13,981 16 14,060
Other assets - Other items - - 83 83
------------------------------------------------- ------ ------ ----- -------------------
64,437 59,768 1,149 125,354
--------------------------------------------------- ------ ------ ----- -------------------
Financial liabilities
Deposits (1) - 17,798 1 17,799
Other
Obligations related to securities sold
short 14,563 5,215 - 19,778
Derivative financial instruments 245 16,905 20 17,170
Liabilities related to transferred receivables - 9,608 - 9,608
14,808 49,526 21 64,355
--------------------------------------------------- ------ ------ ----- -------------------
(1) The amounts include the fair value of embedded derivative
financial instruments in deposits.
Note 2 - Fair Value of Financial Instruments (cont.)
As at October 31, 2022
----------------------------------------------- ------- -------------------------------------
Total financial
assets/liabilities
at fair
Level 1 Level 2 Level 3 value
----------------------------------------------- ------- ------- ------- -------------------
Financial assets
Securities
At fair value through profit or loss
Securities issued or guaranteed by
Canadian government 4,736 8,186 - 12,922
Canadian provincial and municipal governments - 9,260 - 9,260
U.S. Treasury, other U.S. agencies and
other foreign governments 10,639 4,445 - 15,084
Other debt securities - 3,324 60 3,384
Equity securities 45,805 504 416 46,725
------------------------------------------------ ------- ------- ------- -------------------
61,180 25,719 476 87,375
----------------------------------------------- ------- ------- ------- -------------------
At fair value through other comprehensive
income
Securities issued or guaranteed by
Canadian government 21 3,191 - 3,212
Canadian provincial and municipal governments - 1,970 - 1,970
U.S. Treasury, other U.S. agencies and
other foreign governments 1,687 191 - 1,878
Other debt securities - 1,212 - 1,212
Equity securities - 236 320 556
------------------------------------------------ ------- ------- ------- -------------------
1,708 6,800 320 8,828
----------------------------------------------- ------- ------- ------- -------------------
Loans - 10,272 244 10,516
Other
Derivative financial instruments 342 18,204 1 18,547
Other assets - Other items - - 87 87
------------------------------------------------- ------- ------- ------- -------------------
63,230 60,995 1,128 125,353
------------------------------------------------ ------- ------- ------- -------------------
Financial liabilities
Deposits (1) - 15,424 8 15,432
Other
Obligations related to securities sold
short 15,213 6,604 - 21,817
Derivative financial instruments 625 18,989 18 19,632
Liabilities related to transferred receivables - 11,352 - 11,352
15,838 52,369 26 68,233
------------------------------------------------ ------- ------- ------- -------------------
(1) The amounts include the fair value of embedded derivative
financial instruments in deposits.
Financial Instruments Classified in Level 3
The Bank classifies financial instruments in Level 3 when the
valuation technique is based on at least one significant input that
is not observable in the markets. The Bank maximizes the use of
observable inputs to determine the fair value of financial
instruments.
For a description of the valuation techniques and significant
unobservable inputs used in determining the fair value of financial
instruments classified in Level 3, see Note 3 to the audited annual
consolidated financial statements for the year ended October 31,
2022. For the quarter ended January 31, 2023, no significant change
was made to the valuation techniques and significant unobservable
inputs used in determining fair value.
Sensitivity Analysis of Financial Instruments Classified in
Level 3
The Bank performs sensitivity analyses for the fair value
measurements of Level 3 financial instruments, substituting
unobservable inputs with one or more reasonably possible
alternative assumptions. For additional information on how a change
in an unobservable input might affect the fair value measurements
of Level 3 financial instruments, see Note 3 to the audited annual
consolidated financial statements for the year ended October 31,
2022. For the quarter ended January 31, 2023, there were no
significant changes in the sensitivity analyses of Level 3
financial instruments .
Change in the Fair Value of Financial Instruments Classified in
Level 3
The Bank may hedge the fair value of financial instruments
classified in the various levels through offsetting hedge
positions. Gains and losses on financial instruments classified in
Level 3 presented in the following tables do not reflect the
inverse gains and losses on financial instruments used for economic
hedging purposes that may have been classified in Level 1 or Level
2 by the Bank. In addition, the Bank may hedge the fair value of
financial instruments classified in Level 3 using other financial
instruments classified in Level 3. The effect of these hedges is
not included in the net amount presented in the following tables. T
he gains and losses presented hereafter may comprise changes in
fair value based on observable and unobservable inputs.
Quarter ended
January 31, 2023
--------------------------------------- ---------- -------------- ------- ----------------------
Securities
Securities at fair
at fair value
value through Loans Derivative
through other and financial
profit comprehensive other instruments Deposits
or loss income assets (1) (2)
-------------------------------------- ---------- -------------- ------- ------------ --------
Fair value as at October 31, 2022 476 320 331 (17) (8)
Total realized and unrealized gains
(losses) included in Net income
(3) (7) - 4 6 -
Total realized and unrealized gains
(losses) included in
Other comprehensive income - 6 - - -
Purchases 15 - - - -
Sales (2) - - - -
Issuances - - 7 - -
Settlements and other - - (17) 4 -
Financial instruments transferred
into Level 3 - - - -
Financial instruments transferred
out of Level 3 - - - 3 7
--------------------------------------- ---------- -------------- ------- ------------ --------
Fair value as at January 31, 2023 482 326 325 (4) (1)
--------------------------------------- ---------- -------------- ------- ------------ --------
Change in unrealized gains and losses
included in Net income with respect
to financial assets and financial
liabilities held as at January 31,
2023(4) (7) - 4 6 -
--------------------------------------- ---------- -------------- ------- ------------ --------
Quarter ended
January 31, 2022
--------------------------------------- ---------- -------------- ------- -------------------------
Securities
Securities at fair
at fair value
value through Loans
through other and Derivative
profit comprehensive other financial
or loss income assets instruments(1) Deposits
-------------------------------------- ---------- -------------- ------- --------------- --------
Fair value as at October 31, 2021 471 306 297 2 -
Total realized and unrealized gains
(losses) included in Net income
(5) (14) - (4) (1) -
Total realized and unrealized gains
(losses) included in
Other comprehensive income - 11 - - -
Purchases 29 7 71 - -
Sales (15) - - - -
Issuances - - 5 - -
Settlements and other - - 5 - -
Financial instruments transferred
into Level 3 - - - - -
Financial instruments transferred
out of Level 3 (12) - - - -
--------------------------------------- ---------- -------------- ------- --------------- --------
Fair value as at January 31, 2022 459 324 374 1 -
--------------------------------------- ---------- -------------- ------- --------------- --------
Change in unrealized gains and losses
included in Net income with respect
to financial assets and financial
liabilities held as at January 31,
2022(6) (17) - (4) (1) -
--------------------------------------- ---------- -------------- ------- --------------- --------
(1) The derivative financial instruments include assets and
liabilities presented on a net basis.
(2) The amounts include the fair value of embedded derivative
financial instruments in deposits.
(3) Total gains (losses) included in Non-interest income was a gain of $3 million.
(4) Total unrealized gains (losses) included in Non-interest
income was an unrealized gain of $3 million.
(5) Total gains (losses) included in Non-interest income was a loss of $19 million.
(6) Total unrealized gains (losses) included in Non-interest
income was an unrealized loss of $22 million.
Note 3 - Financial Instruments Designated at Fair Value Through
Profit or Loss
The Bank chose to designate certain financial instruments at
fair value through profit or loss according to the criteria
presented in Note 1 to the audited annual consolidated financial
statements for the year ended October 31, 2022. Consistent with its
risk management strategy and in accordance with the fair value
option, which permits the designation if it eliminates or
significantly reduces a measurement or recognition inconsistency
that would otherwise arise from measuring financial assets and
financial liabilities or recognizing the gains and losses thereon
on different bases, the Bank designated certain securities, certain
securities purchased under reverse repurchase agreements, and
certain liabilities related to transferred receivables at fair
value through profit or loss. The fair value of liabilities related
to transferred receivables does not include credit risk, as the
holders of these liabilities are not exposed to the Bank's credit
risk. The Bank also designated certain deposits that include
embedded derivative financial instruments at fair value through
profit or loss.
To determine a change in fair value arising from a change in the
credit risk of deposits designated at fair value through profit or
loss, the Bank calculates, at the beginning of the period, the
present value of the instrument's contractual cash flows using the
following rates: first, an observed discount rate for similar
securities that reflects the Bank's credit spread and, then, a rate
that excludes the Bank's credit spread. The difference obtained
between the two values is then compared to the difference obtained
using the same rates at the end of the period.
Information about the financial assets and financial liabilities
designated at fair value through profit or loss is provided in the
following tables.
Unrealized Unrealized
gains (losses) gains (losses)
Carrying for since
value as the quarter the initial
at ended recognition
January January of the
31, 2023 31, 2023 instrument
------------------------------------------------- --------- --------------- ------------------
Financial assets designated at fair value
through profit or loss
Securities 892 9 2
Securities purchased under reverse repurchase
agreements 39 - -
----------------------------------------------- --------- --------------- ------------------
931 9 2
------------------------------------------------- --------- --------------- ------------------
Financial liabilities designated at fair
value through profit or loss
Deposits(1)(2) 17,632 (1,188) 1,899
Liabilities related to transferred receivables 9,608 (146) 424
------------------------------------------------ --------- --------------- ------------------
(.) 27,240 (1,334) 2,323
------------------------------------------------- --------- --------------- ------------------
Unrealized
gains (losses) Unrealized
Carrying for gains (losses)
value as the quarter since
at ended the initial
January January recognition
31, 2022 31, 2022 of the instrument
------------------------------------------------- --------- --------------- ------------------
Financial assets designated at fair value
through profit or loss
Securities 1,211 (10) 17
Financial liabilities designated at fair
value through profit or loss
Deposits(1)(2) 14,540 107 (57)
Liabilities related to transferred receivables 10,909 59 81
------------------------------------------------ --------- --------------- ------------------
25,449 166 24
------------------------------------------------- --------- --------------- ------------------
(1) For the quarter ended January 31, 2023, the change in the
fair value of deposits designated at fair value through profit or
loss attributable to credit risk, and recorded in Other
comprehensive income, resulted in a loss of $192 million ($29
million gain for the quarter ended January 31, 2022).
(2) The amount at maturity that the Bank will be contractually
required to pay to the holders of these deposits varies and will
differ from the reporting date fair value.
Note 4 - Securities
Credit Quality
As at January 31, 2023 and as at October 31, 2022, securities at
fair value through other comprehensive income and securities at
amortized cost were mainly classified in Stage 1, with their credit
quality falling mostly in the "Excellent" category according to the
Bank's internal risk-rating categories. For additional information
on the reconciliation of allowances for credit losses, see Note 5
to these consolidated financial statements.
Unrealized Gross Gains (Losses) on Securities at Fair Value
Through Other Comprehensive Income
As at January 31, 2023
----------------------------------------------- ---------------------------------------------
Gross Gross Carrying
Amortized unrealized unrealized value
cost gains losses (1)
---------------------------------------------- --------- ----------- ----------- --------
Securities issued or guaranteed by
Canadian government 3,979 1 (150) 3,830
Canadian provincial and municipal governments 2,380 13 (115) 2,278
U.S. Treasury, other U.S. agencies and
other foreign governments 1,952 1 (91) 1,862
Other debt securities 1,633 2 (99) 1,536
Equity securities 569 22 (18) 573
----------------------------------------------- --------- ----------- ----------- --------
10,513 39 (473) 10,079
----------------------------------------------- --------- ----------- ----------- --------
As at October 31, 2022
----------------------------------------------- --------------------------------------------------------
Amortized Gross unrealized Gross unrealized Carrying
cost gains losses value(1)
---------------------------------------------- --------- ---------------- ---------------- ---------
Securities issued or guaranteed by
Canadian government 3,386 1 (175) 3,212
Canadian provincial and municipal governments 2,129 1 (160) 1,970
U.S. Treasury, other U.S. agencies and
other foreign governments 2,022 - (144) 1,878
Other debt securities 1,355 - (143) 1,212
Equity securities 570 21 (35) 556
----------------------------------------------- ---------------- ---------------- ---------
9,462 23 (657) 8,828
----------------------------------------------- --------- ---------------- ---------------- ---------
(1) The allowances for credit losses on securities at fair value
through other comprehensive income (excluding the equity
securities), representing $1 million as at January 31, 2023 ($2
million as at October 31, 2022), are reported in Other
comprehensive income. For additional information, see Note 5 to
these consolidated financial statements.
Equity Securities Designated at Fair Value Through Other
Comprehensive Income
The Bank designated certain equity securities, the main business
objective of which is to generate dividend income, at fair value
through other comprehensive income without subsequent
reclassification of gains and losses to net income. During the
quarter ended January 31, 2023, a dividend income amount of $7
million was recognized for these investments ($5 million for the
quarter ended January 31, 2022), including negligible amounts for
investments that were sold during the quarters ended January 31,
2023 and 2022.
Quarter ended January 31, Quarter ended January 31,
2023 2022
------------------- ------------------------------- -------------------------------------------
Equity
Equity securities
securities of Equity securities Equity securities
of private public of private of
companies companies Total companies public companies Total
------------------- ----------- ----------- ----- ----------------- ----------------- -----
Fair value at
beginning 320 236 556 306 311 617
Change in fair value 6 7 13 11 (3) 8
Designated at fair
value through
other comprehensive
income - 25 25 7 10 17
Sales(1) - (21) (21) - (36) (36)
-------------------- ----------- ----------- ----- ----------------- ----------------- -----
Fair value at end 326 247 573 324 282 606
--------------------- ----------- ----------- ----- ----------------- ----------------- -----
(1) The Bank disposed of private and public company equity securities for economic reasons.
Note 4 - Securities (cont.)
Securities at Amortized Cost
As at January As at October
31, 2023 31, 2022
------------------------------------------------------ ------------- -------------
Securities issued or guaranteed by
Canadian government 5,913 5,737
Canadian provincial and municipal governments 1,908 1,826
U.S. Treasury, other U.S. agencies and other foreign
governments 149 150
Other debt securities 6,063 5,810
------------------------------------------------------ ------------- -------------
Gross carrying value 14,033 13,523
Allowances for credit losses 8 7
------------------------------------------------------ ------------- -------------
Carrying value 14,025 13,516
------------------------------------------------------ ------------- -------------
Gains (Losses) on Disposals of Securities at Amortized Cost
During the quarter ended January 31, 2023, the Bank did not
dispose of any securities measured at amortized cost. During the
quarter ended January 31, 2022 , the Bank sold certain debt
securities measured at amortized cost. The carrying value of these
securities upon disposal was $66 million, and the Bank recognized
gains of $1 million in Non-interest income - Gains (losses) on
non-trading securities, net in the Consolidated Statement of
Income.
Note 5 - Loans and Allowances for Credit Losses
Determining and Measuring Expected Credit Losses (ECL)
Determining Expected Credit Losses
Expected credit losses are determined using a three-stage
impairment approach that is based on the change in the credit
quality of financial assets since initial recognition.
Non-Impaired Loans
Stage 1
Financial assets that have experienced no significant increase
in credit risk between initial recognition and the reporting date,
and for which 12-month expected credit losses are recorded at the
reporting date, are classified in Stage 1.
Stage 2
Financial assets that have experienced a significant increase in
credit risk between initial recognition and the reporting date, and
for which lifetime expected credit losses are recorded at the
reporting date, are classified in Stage 2.
Impaired Loans
Stage 3
Financial assets for which there is objective evidence of
impairment, for which one or more events have had a detrimental
impact on the estimated future cash flows of these financial assets
at the reporting date, and for which lifetime expected credit
losses are recorded, are classified in Stage 3.
POCI
Financial assets that are credit-impaired when purchased or
originated (POCI) are classified in the POCI category.
For additional information, see Notes 1 and 7 to the audited
annual consolidated financial statements for the year ended October
31, 2022.
Credit Quality of Loans
The following tables present the gross carrying amounts of loans
as at January 31, 2023 and as at October 31, 2022, according to
credit quality and ECL impairment stage of each loan category at
amortized cost, and according to credit quality for loans at fair
value through profit or loss. For additional information on credit
quality according to the Advanced Internal Ratings-Based (AIRB)
categories, see the Internal Default Risk Ratings table on page 78
in the Credit Risk section of the 2022 Annual Report.
As at January 31, 2023
---------------------------- ---------- -------- -------- --------------------------
Non-impaired loans Impaired loans
---------------------------- -------------------- ----------------- -------- -------
Loans
at fair
value
through
profit
Stage Stage Stage or loss
1 2 3 POCI (1) Total
---------------------------- ---------- -------- -------- ------- -------- -------
Residential mortgage
Excellent 30,177 1 - - - 30,178
Good 16,435 103 - - - 16,538
Satisfactory 10,275 3,868 - - - 14,143
Special mention 373 693 - - - 1,066
Substandard 57 180 - - - 237
Default - - 55 - - 55
----------------------------- ---------- -------- -------- ------- -------- -------
AIRB approach 57,317 4,845 55 - - 62,217
Standardized approach 8,227 204 199 351 10,906 19,887
----------------------------- ---------- -------- -------- ------- -------- -------
Gross carrying amount 65,544 5,049 254 351 10,906 82,104
Allowances for credit
losses(2) 62 84 60 (71) - 135
----------------------------- ---------- -------- -------- ------- -------- -------
Carrying amount 65,482 4,965 194 422 10,906 81,969
----------------------------- ---------- -------- -------- ------- -------- -------
Personal
Excellent 22,307 15 - - - 22,322
Good 8,348 549 - - - 8,897
Satisfactory 5,328 1,584 - - - 6,912
Special mention 1,857 795 - - - 2,652
Substandard 32 231 - - - 263
Default - - 139 - - 139
----------------------------- ---------- -------- -------- ------- -------- -------
AIRB approach 37,872 3,174 139 - - 41,185
Standardized approach 3,700 78 41 63 - 3,882
----------------------------- ---------- -------- -------- ------- -------- -------
Gross carrying amount 41,572 3,252 180 63 - 45,067
Allowances for credit
losses(2) 72 117 79 (11) - 257
----------------------------- ---------- -------- -------- ------- -------- -------
Carrying amount 41,500 3,135 101 74 - 44,810
----------------------------- ---------- -------- -------- ------- -------- -------
Credit card
Excellent 517 - - - - 517
Good 329 - - - - 329
Satisfactory 694 55 - - - 749
Special mention 286 186 - - - 472
Substandard 37 74 - - - 111
Default - - - - - -
---------------------------- ---------- -------- -------- ------- -------- -------
AIRB approach 1,863 315 - - - 2,178
Standardized approach 118 - - - - 118
----------------------------- ---------- -------- -------- ------- -------- -------
Gross carrying amount 1,981 315 - - - 2,296
Allowances for credit
losses(2) 37 99 - - - 136
----------------------------- ---------- -------- -------- ------- -------- -------
Carrying amount 1,944 216 - - - 2,160
----------------------------- ---------- -------- -------- ------- -------- -------
Business and government
(3)
Excellent 7,337 - - - 99 7,436
Good 27,595 83 - - 53 27,731
Satisfactory 28,501 7,257 - - 145 35,903
Special mention 134 1,577 - - - 1,711
Substandard 37 260 - - - 297
Default - - 339 - - 339
----------------------------- ---------- -------- -------- ------- -------- -------
AIRB approach 63,604 9,177 339 - 297 73,417
Standardized approach 8,395 32 20 - 55 8,502
----------------------------- ---------- -------- -------- ------- -------- -------
Gross carrying amount 71,999 9,209 359 - 352 81,919
Allowances for credit
losses(2) 134 167 178 - - 479
----------------------------- ---------- -------- -------- ------- -------- -------
Carrying amount 71,865 9,042 181 - 352 81,440
----------------------------- ---------- -------- -------- ------- -------- -------
Total loans and acceptances
Gross carrying amount 181,096 17,825 793 414 11,258 211,386
Allowances for credit
losses(2) 305 467 317 (82) - 1,007
----------------------------- ---------- -------- -------- ------- -------- -------
Carrying amount 180,791 17,358 476 496 11,258 210,379
----------------------------- ---------- -------- -------- ------- -------- -------
(1) Not subject to expected credit losses.
(2) The allowances for credit losses do not include the amounts
related to undrawn commitments reported in the Other liabilities
item of the Consolidated Balance Sheet.
(3) Includes customers' liability under acceptances.
Note 5 - Loans and Allowances for Credit Losses (cont.)
As at October 31, 2022
---------------------------- --------- --------- --------- ---------------------------
Non-impaired loans Impaired loans
---------------------------- -------------------- ---------------- ----------- -------
Loans at
fair value
through
profit
Stage 1 Stage 2 Stage 3 POCI or loss(1) Total
---------------------------- --------- --------- --------- ----- ----------- -------
Residential mortgage
Excellent 30,465 - - - - 30,465
Good 16,351 12 - - - 16,363
Satisfactory 10,765 3,269 - - - 14,034
Special mention 609 394 - - - 1,003
Substandard 76 140 - - - 216
Default - - 49 - - 49
----------------------------- --------- --------- --------- ----- ----------- -------
AIRB approach 58,266 3,815 49 - - 62,130
Standardized approach 7,266 179 211 384 9,959 17,999
----------------------------- --------- --------- --------- ----- ----------- -------
Gross carrying amount 65,532 3,994 260 384 9,959 80,129
Allowances for credit
losses(2) 53 80 61 (76) - 118
----------------------------- --------- --------- --------- ----- ----------- -------
Carrying amount 65,479 3,914 199 460 9,959 80,011
----------------------------- --------- --------- --------- ----- ----------- -------
Personal
Excellent 22,190 22 - - - 22,212
Good 8,792 479 - - - 9,271
Satisfactory 6,928 1,394 - - - 8,322
Special mention 358 775 - - - 1,133
Substandard 26 203 - - - 229
Default - - 130 - - 130
----------------------------- --------- --------- --------- ----- ----------- -------
AIRB approach 38,294 2,873 130 - - 41,297
Standardized approach 3,837 78 36 75 - 4,026
----------------------------- --------- --------- --------- ----- ----------- -------
Gross carrying amount 42,131 2,951 166 75 - 45,323
Allowances for credit
losses(2) 67 113 75 (16) - 239
----------------------------- --------- --------- --------- ----- ----------- -------
Carrying amount 42,064 2,838 91 91 - 45,084
----------------------------- --------- --------- --------- ----- ----------- -------
Credit card
Excellent 600 - - - - 600
Good 359 - - - - 359
Satisfactory 689 51 - - - 740
Special mention 287 178 - - - 465
Substandard 37 71 - - - 108
Default - - - - - -
---------------------------- --------- --------- --------- ----- ----------- -------
AIRB approach 1,972 300 - - - 2,272
Standardized approach 117 - - - - 117
----------------------------- --------- --------- --------- ----- ----------- -------
Gross carrying amount 2,089 300 - - - 2,389
Allowances for credit
losses(2) 31 95 - - - 126
----------------------------- --------- --------- --------- ----- ----------- -------
Carrying amount 2,058 205 - - - 2,263
----------------------------- --------- --------- --------- ----- ----------- -------
Business and government
(3)
Excellent 6,140 2 - - 147 6,289
Good 27,607 112 - - 53 27,772
Satisfactory 26,567 8,803 - - 145 35,515
Special mention 75 1,172 - - - 1,247
Substandard 41 272 - - - 313
Default - - 367 - - 367
----------------------------- --------- --------- --------- ----- ----------- -------
AIRB approach 60,430 10,361 367 - 345 71,503
Standardized approach 8,096 28 19 - 212 8,355
----------------------------- --------- --------- --------- ----- ----------- -------
Gross carrying amount 68,526 10,389 386 - 557 79,858
Allowances for credit
losses(2) 115 160 197 - - 472
----------------------------- --------- --------- --------- ----- ----------- -------
Carrying amount 68,411 10,229 189 - 557 79,386
----------------------------- --------- --------- --------- ----- ----------- -------
Total loans and acceptances
Gross carrying amount 178,278 17,634 812 459 10,516 207,699
Allowances for credit
losses(2) 266 448 333 (92) - 955
----------------------------- --------- --------- --------- ----- ----------- -------
Carrying amount 178,012 17,186 479 551 10,516 206,744
----------------------------- --------- --------- --------- ----- ----------- -------
(1) Not subject to expected credit losses.
(2) The allowances for credit losses do not include the amounts
related to undrawn commitments reported in the Other liabilities
item of the Consolidated Balance Sheet.
(3) Includes customers' liability under acceptances.
The following table presents the credit risk exposures of
off-balance-sheet commitments as at January 31, 2023 and as at
October 31, 2022 according to credit quality and ECL impairment
stage.
As at October
As at January 31, 2023 31, 2022
---------------------- ------ -------------------------- ------ ----- ---------------
Stage Stage Stage Stage Stage Stage
1 2 3 Total 1 2 3 Total
---------------------- ------ ------- ------- -------- ------ ----- ------ -------
Off-balance-sheet
commitments (1)
Retail
Excellent 15,633 8 - 15,641 15,292 13 - 15,305
Good 3,381 191 - 3,572 3,316 165 - 3,481
Satisfactory 1,219 201 - 1,420 1,170 180 - 1,350
Special mention 209 75 - 284 193 68 - 261
Substandard 17 16 - 33 15 15 - 30
Default - - 1 1 - - 1 1
Non-retail
Excellent 14,411 - - 14,411 13,136 - - 13,136
Good 18,954 11 - 18,965 18,723 24 - 18,747
Satisfactory 9,551 3,689 - 13,240 7,894 3,488 - 11,382
Special mention 12 320 - 332 12 246 - 258
Substandard 4 18 - 22 4 24 - 28
Default - - 11 11 - - 18 18
---------------------- ------ ------- ------- -------- ------ ----- ------ -------
AIRB approach 63,391 4,529 12 67,932 59,755 4,223 19 63,997
Standardized approach 15,466 - - 15,466 15,432 - - 15,432
----------------------- ------ ------- ------- -------- ------ ----- ------ -------
Total exposure 78,857 4,529 12 83,398 75,187 4,223 19 79,429
Allowances for
credit losses 100 60 1 161 99 63 - 162
----------------------- ------ ------- ------- -------- ------ ----- ------ -------
Total exposure,
net
of allowances 78,757 4,469 11 83,237 75,088 4,160 19 79,267
---------------------- ------ ------- ------- -------- ------ ----- ------ -------
(1) Represent letters of guarantee and documentary letters of
credit, undrawn commitments, and backstop liquidity and credit
enhancement facilities.
Loans Past Due But Not Impaired (1)
As at October
As at January 31, 2023 31, 2022
---------- ----------------------------------------- ----------- -------- ------------------
Business Business
and and
Residential Credit government Residential Credit government
mortgage Personal card (2) mortgage Personal card (2)
---------- ----------- -------- ------ ---------- ----------- -------- ------ ----------
Past due
but not
impaired
31 to 60
days 102 104 21 25 106 105 23 23
61 to 90
days 51 36 12 16 38 30 11 9
Over 90
days(3) - - 25 - - - 22 -
----------- ----------- -------- ------ ---------- ----------- -------- ------ ----------
153 140 58 41 144 135 56 32
----------- ----------- -------- ------ ---------- ----------- -------- ------ ----------
(1) Loans less than 31 days past due are not presented as they
are not considered past due from an administrative standpoint.
(2) Includes customers' liability under acceptances.
(3) All loans more than 90 days past due, except for credit card
receivables, are considered impaired (Stage 3).
Impaired Loans
As at January
31, 2023 As at October 31, 2022
---------------------------- ----- --------------- --------------------------
Allowances Allowances
for for
credit credit
Gross losses Net Gross losses Net
--------------------------- ----- ---------- --- ------ ----------- -----
Loans - Stage 3
Residential mortgage 254 60 194 260 61 199
Personal 180 79 101 166 75 91
Credit card(1) - - - - - -
Business and government(2) 359 178 181 386 197 189
--------------------------- ----- ---------- --- ------ ----------- -----
793 317 476 812 333 479
Loans - POCI 414 (82) 496 459 (92) 551
---------------------------- ----- ---------- --- ------ ----------- -----
1,207 235 972 1,271 241 1,030
--------------------------- ----- ---------- --- ------ ----------- -----
(1) Credit card receivables are considered impaired, at the
latest, when payment is 180 days past due, and they are written off
at that time.
(2) Includes customers' liability under acceptances.
Note 5 - Loans and Allowances for Credit Losses (cont.)
Allowances for Credit Losses
The following tables present a reconciliation of the allowances
for credit losses by Consolidated Balance Sheet item and by type of
off-balance-sheet commitment.
Quarter ended
January 31, 2023
-------------------------------- ---------- ---------- ---------- --------- ----------------------
Allowances Allowances
for for
credit credit
losses Provisions losses as
as at for at
October credit Write-offs Recoveries January
31, 2022 losses (1) Disposals and other 31, 2023
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Balance sheet
Cash and deposits with financial 5 - - - -
institutions (2)(3) 5
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Securities (3)
At fair value through other 2 (1) - - -
comprehensive income(4) 1
At amortized cost(2) 7 1 - - - 8
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Securities purchased under
reverse repurchase
agreements and securities - - - - -
borrowed (2)(3) -
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Loans (5)
Residential mortgage 118 19 (1) - (1) 135
Personal 239 31 (16) - 3 257
Credit card 126 25 (18) - 3 136
Business and government 418 19 (5) - - 432
Customers' liability under
acceptances 54 (7) - - - 47
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
955 87 (40) - 5 1,007
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Other assets (2)(3) - - - - - -
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Off-balance-sheet commitments
(6)
Letters of guarantee and
documentary letters of credit 13 - - - - 13
Undrawn commitments 143 (1) - - - 142
Backstop liquidity and credit 6 - - - -
enhancement facilities 6
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
162 (1) - - - 161
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
1,131 86 (40) - 5 1,182
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Quarter ended January
31, 2022
------------------------- ---------- ---------- ------------- --------- --------------------------
Allowances
for Allowances
credit for
losses Provisions credit losses
as at for as at
October credit Recoveries January
31, 2021 losses Write-offs(1) Disposals and other 31, 2022
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Balance sheet
Cash and deposits with
financial
institutions (2)(3) 5 2 - - - 7
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
Securities (3)
At fair value through
other
comprehensive income(4) 1 - - - - 1
At amortized cost(2) 3 2 - - - 5
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Securities purchased under
reverse repurchase
agreements and securities - - - - -
borrowed (2)(3) -
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Loans (5)
Residential mortgage 71 10 (1) - - 80
Personal 202 15 (11) - 6 212
Credit card 122 13 (15) - 4 124
Business and government 515 - (67) - 3 451
Customers' liability
under
acceptances 88 (27) - - - 61
------------------------- ---------- ---------- ------------- --------- ---------- --------------
998 11 (94) - 13 928
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Other assets (2)(3) - - - - - -
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
Off-balance-sheet
commitments
(6)
Letters of guarantee and
documentary letters of
credit 13 (3) - - - 10
Undrawn commitments 143 (13) - - - 130
Backstop liquidity and
credit
enhancement facilities 6 (1) - - - 5
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
162 (17) - - - 145
------------------------- ---------- ---------- ------------- --------- ---------- --------------
1,169 (2) (94) - 13 1,086
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
(1) The contractual amount outstanding on financial assets that
were written off during the quarter ended January 31, 2023 and that
are still subject to enforcement activity was $25 million ($22
million for the quarter ended January 31, 2022).
(2) These financial assets are presented net of the allowances
for credit losses on the Consolidated Balance Sheet.
(3) As at January 31, 2023 and 2022, these financial assets were
mainly classified in Stage 1 and their credit quality fell mostly
within the Excellent category.
(4) The allowances for credit losses are reported in the
Accumulated other comprehensive income item of the Consolidated
Balance Sheet.
(5) The allowances for credit losses are reported in the
Allowances for credit losses item of the Consolidated Balance
Sheet.
(6) The allowances for credit losses are reported in the Other
liabilities item of the Consolidated Balance Sheet.
The following tables present a reconciliation of allowances for
credit losses for each loan category at amortized cost according to
ECL impairment stage.
Quarter ended January Quarter ended
31, 2023 January 31, 2022
------------------ ----- ----------------------------- ------ ------- -----------------------
Allowances Allowances Allowances Allowances
for for for for
credit losses credit losses credit losses credit losses
on on on on
non-impaired impaired non-impaired impaired
loans loans loans loans
------------------ -------------- ------------- ----- --------------- ---------------- -----
Stage Stage Stage POCI Stage Stage Stage
1 2 3 (1) Total 1 2 3 POCI(1) Total
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Residential mortgage
Balance at beginning 53 80 61 (76) 118 50 52 29 (60) 71
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 5 - - - 5 5 - - - 5
Transfers(2) :
to Stage 1 8 (7) (1) - - 3 (3) - - -
to Stage 2 (3) 9 (6) - - (1) 1 - - -
to Stage 3 - (8) 8 - - - - - - -
Net remeasurement
of
loss allowances(3) - 12 3 3 18 (18) 14 6 4 6
Derecognitions(4) (1) (1) (2) - (4) - (1) - - (1)
Changes to models - - - - - - - - - -
Provisions for
credit
losses 9 5 2 3 19 (11) 11 6 4 10
Write-offs - - (1) - (1) - - (1) - (1)
Disposals - - - - - - - - - -
Recoveries - - - - - - - - - -
Foreign exchange
movements
and other - (1) (2) 2 (1) 1 - - (1) -
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 62 84 60 (71) 135 40 63 34 (57) 80
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 62 84 60 (71) 135 40 63 34 (57) 80
Undrawn
commitments(5) - - - - - - - - - -
------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Personal
Balance at beginning 70 117 75 (16) 246 73 103 63 (29) 210
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 10 - - - 10 12 - - - 12
Transfers(2) :
to Stage 1 19 (17) (2) - - 18 (16) (2) - -
to Stage 2 (4) 4 - - - (3) 3 - - -
to Stage 3 - (12) 12 - - - (6) 6 - -
Net remeasurement
of
loss allowances(3) (18) 33 7 5 27 (26) 23 3 4 4
Derecognitions(4) (2) (4) (1) - (7) (3) (4) (1) - (8)
Changes to models 1 - - - 1 (2) 8 - - 6
Provisions for
credit
losses 6 4 16 5 31 (4) 8 6 4 14
Write-offs - - (16) - (16) - - (11) - (11)
Disposals - - - - - - - - - -
Recoveries - - 5 - 5 - - 5 - 5
Foreign exchange
movements
and other (1) - (1) - (2) 1 - - - 1
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 75 121 79 (11) 264 70 111 63 (25) 219
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 72 117 79 (11) 257 67 107 63 (25) 212
Undrawn
commitments(5) 3 4 - - 7 3 4 - - 7
------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
(1) No POCI loans were acquired during the quarter ended January
31, 2023 (the total amount of undiscounted initially expected
credit losses on the POCI loans acquired during the quarter ended
January 31, 2022 was $5 million). The expected credit losses
reflected in the purchase price have been discounted.
(2) Represent stage transfers deemed to have taken place at the
beginning of the quarter in which the transfer occurred.
(3) Includes the net remeasurement of loss allowances (after
transfers) attributable mainly to changes in volumes and in the
credit quality of existing loans as well as to changes in risk
parameters.
(4) Represent reversals to loss allowances arising from full
loan repayments (excluding write-offs and disposals).
(5) The allowances for credit losses on undrawn commitments are
reported in the Other liabilities item of the Consolidated Balance
Sheet.
Note 5 - Loans and Allowances for Credit Losses (cont.)
Quarter ended January Quarter ended
31, 2023 January 31, 2022
------------------ ------ ----------------------------- ------ ------- -----------------------
Allowances Allowances Allowances Allowances
for for for for
credit losses credit losses credit losses credit losses
on on on on
non-impaired impaired non-impaired impaired
loans loans loans loans
------------------ --------------- ------------- ----- --------------- ---------------- -----
Stage Stage Stage POCI Stage Stage Stage
1 2 3 (1) Total 1 2 3 POCI(1) Total
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Credit card
Balance at beginning 53 112 - - 165 57 101 - - 158
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 2 - - - 2 3 - - - 3
Transfers(2) :
to Stage 1 25 (25) - - - 22 (22) - - -
to Stage 2 (4) 4 - - - (5) 5 - - -
to Stage 3 - (7) 7 - - - (5) 5 - -
Net remeasurement
of
loss allowances(3) (16) 33 8 - 25 (21) 24 6 - 9
Derecognitions(4) (1) - - - (1) (1) - - - (1)
Changes to models - - - - - - - - - -
Provisions for
credit
losses 6 5 15 - 26 (2) 2 11 - 11
Write-offs - - (18) - (18) - - (15) - (15)
Disposals - - - - - - - - - -
Recoveries - - 3 - 3 - - 4 - 4
Foreign exchange
movements
and other - - - - - - - - - -
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 59 117 - - 176 55 103 - - 158
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 37 99 - - 136 34 90 - - 124
Undrawn
commitments(5) 22 18 - - 40 21 13 - - 34
------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Business and
government
(6)
Balance at beginning 177 195 197 - 569 177 238 287 - 702
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 24 - - - 24 22 - - - 22
Transfers(2) :
to Stage 1 17 (17) - - - 28 (28) - - -
to Stage 2 (6) 8 (2) - - (8) 9 (1) - -
to Stage 3 - (1) 1 - - - (1) 1 - -
Net remeasurement
of
loss allowances(3) (10) 21 (10) - 1 (35) (2) 1 - (36)
Derecognitions(4) (5) (8) (2) - (15) (9) (14) - - (23)
Changes to models - - - - - - - - - -
Provisions for
credit
losses 20 3 (13) - 10 (2) (36) 1 - (37)
Write-offs - - (5) - (5) - - (67) - (67)
Disposals - - - - - - - - - -
Recoveries - - 1 - 1 - - 1 - 1
Foreign exchange
movements
and other - - (1) - (1) - - 2 - 2
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 197 198 179 - 574 175 202 224 - 601
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 134 167 178 - 479 113 175 224 - 512
Undrawn
commitments(5) 63 31 1 - 95 62 27 - - 89
------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Total allowances for
credit losses at
end
(7) 393 520 318 (82) 1,149 340 479 321 (82) 1,058
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 305 467 317 (82) 1,007 254 435 321 (82) 928
Undrawn
commitments(5) 88 53 1 - 142 86 44 - - 130
------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
(1) No POCI loans were acquired during the quarter ended January
31, 2023 (the total amount of undiscounted initially expected
credit losses on the POCI loans acquired during the quarter ended
January 31, 2022 was $5 million). The expected credit losses
reflected in the purchase price have been discounted.
(2) Represent stage transfers deemed to have taken place at the
beginning of the quarter in which the transfer occurred.
(3) Includes the net remeasurement of loss allowances (after
transfers) attributable mainly to changes in volumes and in the
credit quality of existing loans as well as to changes in risk
parameters.
(4) Represent reversals to loss allowances arising from full
loan repayments (excluding write-offs and disposals).
(5) The allowances for credit losses on undrawn commitments are
reported in the Other liabilities item of the Consolidated Balance
Sheet.
(6) Includes customers' liability under acceptances.
(7) Excludes allowances for credit losses on other financial assets at amortized cost and on off-balance-sheet commitments other than undrawn commitments.
Main Macroeconomic Factors
The following tables show the main macroeconomic factors used to
estimate the allowances for credit losses on loans. For each
scenario, namely, the base scenario, upside scenario, and downside
scenario, the average values of the macroeconomic factors over the
next 12 months (used for Stage 1 credit loss calculations) and over
the remaining forecast period (used for Stage 2 credit loss
calculations) are presented.
As at January 31,
2023
------------------ -------- ------ --- --------- ------ --- --------------------------
Base scenario Upside scenario Downside scenario
----------------- ------------------------- -------------------------- --------------------------
Next Remaining Remaining Remaining
12 forecast Next forecast Next forecast
months period 12 months period 12 months period
----------------- -------- ----------- --------- ----------- --------- -----------
Macroeconomic
factors
(1)
GDP growth(2) 0.3 % 1.8 % 0.8 % 1.9 % (5.1) % 2.6 %
Unemployment rate 5.8 % 6.2 % 5.5 % 5.6 % 7.3 % 6.8 %
Housing price
index
growth(2) (9.6) % 1.3 % (0.8) % 0.4 % (13.9) % 0.3 %
BBB spread(3) 2.3 % 2.1 % 2.1 % 1.9 % 3.3 % 2.5 %
S&P/TSX
growth(2)(4) 4.2 % 2.0 % 5.6 % 2.6 % (25.6) % 5.5 %
WTI oil price(5)
(US$ per barrel) 77 75 92 87 46 57
------------------ -------- ------ --- --------- ------ --- --------- ------ ---
As at October 31,
2022
------------------ -------- ------ --- --------- ------ --- --------------------------
Base scenario Upside scenario Downside scenario
----------------- ------------------------- -------------------------- --------------------------
Next Remaining Remaining Remaining
12 forecast Next forecast Next forecast
months period 12 months period 12 months period
----------------- -------- ----------- --------- ----------- --------- -----------
Macroeconomic
factors
(1)
GDP growth(2) 0.6% 1.7% 1.1% 1.6% (5.2)% 2.9%
Unemployment rate 6.0% 6.1% 5.4% 5.4% 7.4% 6.4%
Housing price
index
growth(2) (11.2)% 0.7% -% 0.2% (13.9)% 0.3%
BBB spread(3) 2.4% 2.1% 2.0% 1.9% 3.4% 2.6%
S&P/TSX
growth(2)(4) (4.3)% 2.4% 5.1% 2.6% (25.6)% 5.5%
WTI oil price(5)
(US$ per barrel) 78 77 102 97 44 51
------------------ -------- ------ --- --------- ------ --- --------- ------ ---
(1) All macroeconomic factors are based on the Canadian economy unless otherwise indicated.
(2) Growth rate is annualized.
(3) Yield on corporate BBB bonds less yield on Canadian federal
government bonds with 10-year maturity.
(4) Main stock index in Canada.
(5) The West Texas Intermediate (WTI) index is commonly used as
a benchmark for the price of oil.
The main macroeconomic factors used for the personal credit
portfolio are unemployment rate and growth in the housing price
index, based on the economy of Canada or Quebec. The main
macroeconomic factors used for the business and government credit
portfolio are unemployment rate, spread on corporate BBB bonds,
S&P/TSX growth, and WTI oil price. An increase in unemployment
rate or BBB spread will generally lead to higher allowances for
credit losses, whereas an increase in the other macroeconomic
factors (GDP, S&P/TSX, housing price index, and WTI oil price)
will generally lead to lower allowances for credit losses.
During the quarter ended January 31, 2023, macroeconomic risks
increased slightly.
A decline in energy costs in Europe and the relaxation of public
health measures in China are good news for the global economy.
Nevertheless, our base scenario remains prudent, since most
countries still face persistent inflationary challenges, while
uncertainty on the geopolitical front remains high. Supply chains
are normalizing, and the prices for certain goods are decreasing,
but the impacts of the tightening monetary policy are being felt.
In North America, the normalization of monetary policy continues
and is affecting the residential sector. However, the Canadian
economy is still well positioned. Although commodity prices have
declined from their recent peaks, they remain historically high and
should benefit the natural resources industry. Meanwhile, consumers
have amassed substantial excess savings against a backdrop of full
employment. Still, consumption is likely to suffer from interest
payment shock. The unemployment rate is 6.1% after 12 months, a
1-percentage-point increase. Housing prices decrease by 9.6% year
over year. The S&P/TSX sits at 20,325 points after one year,
and the price of oil hovers around US$80.
In the upside scenario, an easing of geopolitical tensions
boosts confidence. Inflation comes under control as supply chains
normalize, and the tight monetary policy does not inflict too much
damage on the economy. Governments maintain a sizable fiscal
stimulus in Canada and the United States, offsetting the tight
monetary policy. Consumer spending is surprisingly high because of
the excess savings amassed since the start of the pandemic. After
one year, the unemployment rate is more favourable than in the base
scenario (three-tenths lower). Housing prices decline by 0.8%, the
S&P/TSX is at 20,600 points after one year and the price of oil
is around US$91.
In the downside scenario, central bankers have underestimated
the impact of their simultaneous tightening measures, and the
global economy sinks into a recession, as a decrease in demand is
reflected in reduced investment by businesses, which also carry out
layoffs. Given budgetary constraints, governments cannot support
households and businesses as they did during the pandemic. After 12
months, the economic contraction pushes the unemployment rate to
8.1%. Housing prices decrease considerably, and after one year, the
S&P/TSX is at 14,500 points and the price of oil falls to
US$40.
Note 5 - Loans and Allowances for Credit Losses (cont.)
Given the uncertainty surrounding key inputs used to measure
credit losses, the Bank has applied expert credit judgment to
adjust the modelled expected credit loss results.
Sensitivity Analysis of Allowances for Credit Losses on
Non-Impaired Loans
Scenarios
The following table shows a comparison of the Bank's allowances
for credit losses on non-impaired loans (Stages 1 and 2) as at
January 31, 2023 based on the probability weightings of three
scenarios with allowances for credit losses resulting from
simulations of each scenario weighted at 100%.
Allowances
for credit
losses on non-impaired
loans
------------------------------- -----------------------
Balance as at January 31, 2023 913
-------------------------------- -----------------------
Simulations
100% upside scenario 648
100% base scenario 763
100% downside scenario 1,181
-------------------------------- -----------------------
Note 6 - Other Assets
As at January As at October
31, 2023 31, 2022
---------------------------------------------- ------------- -------------
Receivables, prepaid expenses and other items 3,036 2,591
Interest and dividends receivable 1,432 1,057
Due from clients, dealers and brokers 707 842
Defined benefit asset 452 498
Deferred tax assets 406 389
Current tax assets 650 471
Reinsurance assets 7 6
Insurance assets 109 104
----------------------------------------------- ------------- -------------
6,799 5,958
---------------------------------------------- ------------- -------------
Note 7 - Deposits
As at January 31, As at October
2023 31, 2022
---------------------------- --------- ------------ ------------------- -------------
On demand After notice Fixed term
(1) (2) (3) Total Total
---------------------------- --------- ------------ ---------- ------- -------------
Personal 4,994 36,005 42,648 83,647 78,811
Business and government 59,829 31,035 104,174 195,038 184,230
Deposit-taking institutions 1,355 224 2,241 3,820 3,353
----------------------------- --------- ------------ ---------- ------- -------------
66,178 67,264 149,063 282,505 266,394
---------------------------- --------- ------------ ---------- ------- -------------
(1) Demand deposits are deposits for which the Bank does not
have the right to require a notice of withdrawal and consist
essentially of deposits in chequing accounts.
(2) Notice deposits are deposits for which the Bank may legally
require a notice of withdrawal and consist mainly of deposits in
savings accounts.
(3) Fixed-term deposits are deposits that can be withdrawn by
the holder on a specified date and include term deposits,
guaranteed investment certificates, savings accounts and plans,
covered bonds, and other similar instruments.
The Deposits - Business and government item includes, among
other items, covered bonds for which the balance was $11.4 billion
as at January 31, 2023 ($10.4 billion as at October 31, 2022).
During the quarter ended January 31, 2023, the Bank issued 280
million Swiss francs in covered bonds (1.0 billion euros in covered
bonds came to maturity, and the Bank issued 1.0 billion euros in
covered bonds during the quarter ended January 31, 2022). For
additional information on covered bonds, see Note 27 to the audited
annual consolidated financial statements for the year ended October
31, 2022.
In addition, as at January 31, 2023, the Deposits - Business and
government item also includes deposits of $ 15.8 billion ($ 12.8
billion as at October 31, 2022) that are subject to the bank
bail-in conversion regulations issued by the Government of Canada.
These regulations provide certain powers to the Canada Deposit
Insurance Corporation (CDIC), notably the power to convert certain
eligible Bank shares and liabilities into common shares should the
Bank become non-viable.
Note 8 - Other Liabilities
As at January As at October
31, 2023 31, 2022
------------------------------------------------- ------------- -------------
Accounts payable and accrued expenses 1,974 2,582
Subsidiaries' debts to third parties 168 156
Interest and dividends payable 1,392 1,063
Lease liabilities 543 552
Due to clients, dealers and brokers 670 730
Defined benefit liability 116 111
Allowances for credit losses - Off-balance-sheet
commitments (Note 5) 161 162
Deferred tax liabilities 15 14
Current tax liabilities 98 67
Insurance liabilities 7 10
Other items(1)(2)(3) 1,001 914
-------------------------------------------------- ------------- -------------
6,145 6,361
------------------------------------------------- ------------- -------------
(1) As at January 31, 2023, Other items included $10 million in
litigation provisions ($11 million as at October 31, 2022).
(2) As at January 31, 2023, Other items included $32 million in
provisions for onerous contracts ($33 million as at October 31,
2022 ).
(3) As at January 31, 2023, Other items included the financial
liability resulting from put options written to non-controlling
interests of Flinks Technology Inc. (Flinks) for an amount of $34
million ($33 million as at October 31, 2022).
Note 9 - Share Capital and Other Equity Instruments
Shares and Other Equity Instruments Outstanding
As at January 31, As at October 31,
2023 2022
------------------------------------- --------------------- ---------------------
Number
of shares Shares Number Shares
or LRCN or LRCN of shares or LRCN
(1) $ or LRCN $
------------------------------------- ----------- -------- ----------- --------
First Preferred Shares
Series 30 14,000,000 350 14,000,000 350
Series 32 12,000,000 300 12,000,000 300
Series 38 16,000,000 400 16,000,000 400
Series 40 12,000,000 300 12,000,000 300
Series 42 12,000,000 300 12,000,000 300
-------------------------------------- ----------- -------- ----------- --------
66,000,000 1,650 66,000,000 1,650
------------------------------------- ----------- -------- ----------- --------
Other equity instruments
LRCN - Series 1 500,000 500 500,000 500
LRCN - Series 2 500,000 500 500,000 500
LRCN - Series 3 500,000 500 500,000 500
-------------------------------------- ----------- -------- ----------- --------
1,500,000 1,500 1,500,000 1,500
------------------------------------- ----------- -------- ----------- --------
Preferred shares and other equity
instruments 67,500,000 3,150 67,500,000 3,150
--------------------------------------- ----------- -------- ----------- --------
Common shares at beginning of fiscal
year 336,582,124 3,196 337,912,283 3,160
Issued pursuant to the Stock Option
Plan 667,543 34 1,193,663 61
Repurchases of common shares for
cancellation - - (2,500,000) (24)
Impact of shares purchased or sold
for trading(2) 68,093 6 (18,295) (1)
Other - - (5,527) -
--------------------------------------- ----------- -------- ----------- --------
Common shares at end of period 337,317,760 3,236 336,582,124 3,196
--------------------------------------- ----------- -------- ----------- --------
(1) Limited Recourse Capital Notes (LRCN).
(2) As at January 31, 2023, a total of 62,843 shares were sold
short for trading, representing $6 million ( 5,250 shares were held
for trading, representing a negligible amount as at October 31,
2022).
Note 9 - Share Capital and Other Equity Instruments (cont.)
Dividends Declared and Distributions on Other Equity
Instruments
Quarter ended January
31
---------------------------------- ------------ ---------- ------------------------
2023 2022
------------------------------------ ------------------------ ------------------------
Dividends Dividends
or interest Dividends or interest Dividends
$ per share $ per share
---------------------------------- ------------ ---------- ------------ ----------
First Preferred Shares
Series 30 3 0.2516 3 0.2516
Series 32 3 0.2399 3 0.2399
Series 38 7 0.4392 5 0.2781
Series 40 3 0.2875 3 0.2875
Series 42 4 0.3094 4 0.3094
----------------------------------- ------------ ---------- ------------ ----------
20 18
---------------------------------- ------------ ---------- ------------ ----------
Other equity instruments
LRCN - Series 1(1) 5 5
LRCN - Series 2(2) 5 5
LRCN - Series 3(3) 10 -
----------------------------------- ------------ ---------- ------------ ----------
20 10
---------------------------------- ------------ ---------- ------------ ----------
Preferred shares and other equity
instruments 40 28
------------------------------------ ------------ ---------- ------------ ----------
Common shares 327 0.9700 294 0.8700
------------------------------------ ------------ ---------- ------------ ----------
367 322
---------------------------------- ------------ ---------- ------------ ----------
(1) The LRCN - Series 1 bear interest at a fixed rate of 4.30% per annum.
(2) The LRCN - Series 2 bear interest at a fixed rate of 4.05% per annum.
(3) The LRCN - Series 3 bear interest at a fixed rate of 7.50% per annum.
Repurchase of Common Shares
On December 12, 2022, the Bank began a normal course issuer bid
to repurchase for cancellation up to 7,000,000 common shares
(representing approximately 2.1% of its outstanding common shares)
over the 12-month period ending no later than December 11, 2023. On
December 10, 2021, the Bank had begun a normal course issuer bid to
repurchase for cancellation up to 7,000,000 common shares
(representing approximately 2% of its then outstanding common
shares) over the 12-month period ended December 9, 2022. Any
repurchase through the Toronto Stock Exchange will be done at
market prices. The common shares may also be repurchased through
other means authorized by the Toronto Stock Exchange and applicable
regulations, including private agreements or share repurchase
programs under issuer bid exemption orders issued by the securities
regulators. A private purchase made under an exemption order issued
by a securities regulator will be done at a discount to the
prevailing market price. The amounts that are paid above the
average book value of the common shares are charged to Retained
earnings. During the quarter ended January 31, 2023, the Bank did
not repurchase any common shares. During the quarter ended January
31, 2022, the Bank had repurchased 500,000 common shares for $48
million, which had reduced Common share capital by $5 million and
Retained earnings by $43 million.
Note 10 - Capital Disclosure
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 10.5%, a Tier 1 capital ratio of at least
12.0%, and a Total capital ratio of at least 14.0%. All of these
ratios include a capital conservation buffer of 2.5% established by
the Basel Committee on Banking Supervision and OSFI as well as a
1.0% surcharge applicable solely to Domestic Systemically Important
Banks (D-SIBs) and a 2.5% domestic stability buffer. On December 8,
2022, OSFI expanded the domestic stability buffer range, setting it
at 0% to 4.0% instead of the previous range of 0% to 2.5%, and it
announced that the buffer would rise from 2.5% to 3.0% effective
February 1, 2023. The domestic stability buffer must consist
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 must provide a remediation plan to
OSFI. Banks also have to meet the capital floor that sets the
regulatory capital level according to the Basel II Standardized
Approach. If the capital requirement under Basel III is less than
70% of the capital requirement as calculated under Basel II, the
difference is added to risk-weighted assets. Lastly, OSFI requires
Canadian banks to meet a Basel III leverage ratio of at least
3.0%.
OSFI also requires D-SIBs to maintain a risk-based total
loss-absorbing capacity (TLAC) ratio of at least 24.0% (including
the domestic stability buffer) of risk-weighted assets and a TLAC
leverage ratio of at least 6.75%. The purpose of TLAC is to ensure
that a D-SIB has sufficient loss-absorbing capacity to support its
internal recapitalization in the unlikely event it becomes
non-viable.
During the quarter ended January 31, 2023, the Bank was in
compliance with all of OSFI's regulatory capital, leverage, and
TLAC requirements.
Regulatory Capital (1) , Leverage Ratio (1) and TLAC (2)
As at January As at October
31, 2023 31, 2022
---------------------- ------------- -------------
Capital
CET1 15,330 14,818
Tier 1 18,478 17,961
Total(3) 19,484 19,727
---------------------- ------------- -------------
Risk-weighted assets 121,813 116,840
Total exposure 411,149 401,780
---------------------- ------------- -------------
Capital ratios
CET1 12.6 % 12.7%
Tier 1 15.2 % 15.4%
Total(3) 16.0 % 16.9%
------------- -------------
Leverage ratio 4.5 % 4.5%
Available TLAC 34,902 32,351
TLAC ratio 28.7 % 27.7%
TLAC leverage ratio 8.5 % 8.1%
---------------------- ------------- -------------
(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. The calculation of
the figures as at October 31, 2022 had included the transitional
measure applicable to expected credit loss provisioning implemented
by OSFI in response to the COVID-19 pandemic. This provision ceased
to apply on November 1, 2022.
(2) Available TLAC, the TLAC ratio, and the TLAC leverage ratio
are calculated in accordance with OSFI's Total Loss Absorbing
Capacity Guideline.
(3) Includes the $750 million redemption of medium-term notes on February 1, 2023.
Note 11 - Share-Based Payments
Stock Option Plan
During the quarter ended January 31, 2023, the Bank awarded
1,416,060 stock options (1,771,588 stock options during the quarter
ended January 31, 2022) with an average fair value of $14.76 per
option ($13.24 in 2022).
As at January 31, 2023, there were 12,604,649 stock options
outstanding (11,861,749 stock options as at October 31, 2022).
The average fair value of the options awarded was estimated on
the award date using the Black-Scholes model as well as the
following assumptions.
Quarter ended January 31
--------------------------
2023 2022
Risk-free interest rate 3.25% 1.79%
Expected life of options 7 years 7 years
Expected volatility 23.13% 22.68%
Expected dividend yield 4.23% 3.88%
During the quarter ended January 31, 2023, a $5 million
compensation expense was recorded for this plan ($4 million for the
quarter ended January 31, 2022).
Note 12 - Employee Benefits - Pension Plans and Other
Post-Employment Benefit Plans
The Bank offers pension plans that have a defined benefit
component and a defined contribution component. The Bank also
offers other post-employment benefit plans to eligible employees.
The cost associated with these plans, including the remeasurements
recognized in Other comprehensive income, is presented in the
following table.
Cost for Pension Plans and Other Post-Employment Benefit
Plans
Quarter ended January
31
Other post-employment
Pension plans benefit plans
---------------
2023 2022 2023 2022
------- ------ ----------- ----------
Current service cost 23 31 - -
Interest expense (income), net (6) (5) 2 1
Administrative costs 1 1
------- ------ ----------- ----------
Expense of the defined benefit component 18 27 2 1
Expense of the defined contribution component 1
------- ------ ----------- ----------
Expense recognized in Net income 19 27 2 1
------- ------ ----------- ----------
Remeasurements (1)
Actuarial (gains) losses on defined
benefit obligation 330 (185) 6 (4)
Return on plan assets(2) (264) 58
------- ------ ----------- ----------
Remeasurements recognized in Other comprehensive
income 66 (127) 6 (4)
------- ------ ----------- ----------
85 (100) 8 (3)
------- ------ ----------- ----------
(1) Changes related to the discount rate and to the return on
plan assets are reviewed and updated on a quarterly basis. All
other assumptions are updated annually.
(2) Excludes interest income.
Note 13 - Income Taxes
Proposed Legislation
On November 4, 2022, the Government of Canada introduced Bill
C-32 - An Act to implement certain provisions of the fall economic
statement tabled in Parliament on November 3, 2022 and certain
provisions of the budget tabled in Parliament on April 7, 2022 to
implement tax measures applicable to certain entities of banking
and life insurer groups, as presented in its April 7, 2022 budget.
These tax measures include the Canada Recovery Dividend (CRD),
which is a one-time, 15% tax on the fiscal 2021 and 2020 average
taxable income above $1 billion, as well as a 1.5% increase in the
statutory tax rate. On December 15, 2022, Bill C-32 received royal
assent. Given that these tax measures were in effect at the
financial reporting date, a $32 million tax expense for the CRD and
an $8 million tax recovery for the tax rate increase, including the
impact related to current and deferred taxes for fiscal 2022, were
recognized in the consolidated financial statements as at January
31, 2023.
Note 14 - 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.
Quarter ended January
31
-----------------------
2023 2022(1)
----------- ----------
Basic earnings per share
Net income attributable to the Bank's shareholders and
holders of other equity instruments 881 930
Dividends on preferred shares and distributions on other
equity instruments 35 26
Net income attributable to common shareholders 846 904
Weighted average basic number of common shares outstanding
(thousands) 336,993 338,056
-------------------------------------------------------------- ----------
Basic earnings per share (dollars) 2.51 2.67
-------------------------------------------------------------- ----------
Diluted earnings per share
Net income attributable to common shareholders 846 904
-------------------------------------------------------------- ----------
Weighted average basic number of common shares outstanding
(thousands) 336,993 338,056
Adjustment to average number of common shares (thousands)
Stock options(2) 3,450 4,262
----------
Weighted average diluted number of common shares outstanding
(thousands) 340,443 342,318
-------------------------------------------------------------- ----------
Diluted earnings per share (dollars) 2.49 2.64
----------
(1) For the quarter ended January 31, 2022, certain amounts have
been adjusted to reflect a change in accounting policy related to
cloud computing arrangements. For additional information, see Note
1.
(2) For the quarter ended January 31, 2023, the calculation of
diluted earnings per share excluded an average number of 1,754,368
options outstanding with a weighted average exercise price of
$96.35, given that the exercise price of these options was greater
than the average price of the Bank's common shares. For the quarter
ended January 31, 2022, given that the exercise price of the
options was lower than the average price of the Bank's common
shares, no options were excluded from the diluted earnings per
share calculation.
Note 15 - Segment Disclosures
The Bank carries out its activities in four business segments,
which are defined below. For presentation purposes, other
activities are grouped in the Other heading. Each reportable
segment is distinguished by services offered, type of clientele,
and marketing strategy. The presentation of segment disclosures is
consistent with the presentation adopted by the Bank for the fiscal
year beginning November 1, 2022. This presentation reflects a
revision to the method used for the sectoral allocation of
technology investment expenses , which are now immediately
allocated to the various business segments, whereas certain
expenses , notably costs incurred during the research phase of
projects , had previously been recorded in the Other heading of
segment results. This revision is consistent with the accounting
policy change applied in fiscal 2022 related to cloud computing
arrangements. For the quarter ended January 31, 2022, certain
amounts have been adjusted to reflect this accounting policy change
(for additional information, see Note 1).
Personal and Commercial
The Personal and Commercial segment encompasses the banking,
financing, and investing services offered to individuals, advisors,
and businesses as well as insurance operations.
Wealth Management
The Wealth Management segment comprises investment solutions,
trust services, banking services, lending services, and other
wealth management solutions offered through internal and
third-party distribution networks.
Financial Markets
The Financial Markets segment encompasses corporate banking and
investment banking and financial solutions for large and mid-size
corporations, public sector organizations, and institutional
investors.
U.S. Specialty Finance and International (USSF&I)
The USSF&I segment encompasses the specialty finance
expertise provided by the Credigy subsidiary; the activities of the
ABA Bank subsidiary, which offers financial products and services
to individuals and businesses in Cambodia; and the activities of
targeted investments in certain emerging markets.
Other
This heading encompasses treasury activities; liquidity
management; Bank funding; asset/liability management activities;
the activities of the Flinks subsidiary, a fintech company
specialized in financial data aggregation and distribution; certain
specified items; and the unallocated portion of corporate
units.
Quarter ended January 31(1)
-----------------
Personal
and Wealth Financial
Commercial Management Markets USSF&I Other Total
----------------
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
------------------
Net interest
income(2) 825 669 208 119 (91) 398 299 270 (142) (124) 1,099 1,332
Non-interest
income(2) 299 289 429 473 780 264 20 15 (45) 93 1,483 1,134
Total revenues 1,124 958 637 592 689 662 319 285 (187) (31) 2,582 2,466
Non-interest
expenses 606 555 364 360 287 263 98 80 48 22 1,403 1,280
Income before
provisions
for credit
losses and income
taxes 518 403 273 232 402 399 221 205 (235) (53) 1,179 1,186
Provisions for
credit
losses 61 (5) - - (9) (16) 35 18 (1) 1 86 (2)
Income before
income
taxes (recovery) 457 408 273 232 411 415 186 187 (234) (54) 1,093 1,188
Income taxes
(recovery)(2)(3) 126 108 75 62 113 110 39 39 (141) (61) 212 258
Net income 331 300 198 170 298 305 147 148 (93) 7 881 930
Non-controlling
interests - - - - - - - - - - - -
Net income
attributable
to the Bank's
shareholders
and holders of
other
equity
instruments 331 300 198 170 298 305 147 148 (93) 7 881 930
Average assets(4) 146,131 136,093 8,523 8,331 173,262 157,761 21,606 17,974 75,424 68,513 424,946 388,672
Total assets 146,852 137,803 8,427 8,414 163,581 134,314 22,072 18,225 77,410 67,925 418,342 366,681
(1) For the quarter ended January 31, 2022, certain amounts have
been reclassified, notably due to a revised method for the sectoral
allocation of technology investment expenses. In addition, certain
amounts have been adjusted to reflect a change in accounting policy
related to cloud computing arrangements (for additional
information, see Note 1).
(2) The Net interest income, Non-interest income and Income
taxes (recovery) items of the business segments are presented on a
taxable equivalent basis. Taxable equivalent basis is a calculation
method that consists of grossing up certain tax-exempt income by
the amount of income tax that would have been otherwise payable.
For the business segments as a whole, Net interest income was
grossed up by $ 78 million ($ 60 million in 2022), Non-interest
income was grossed up by $ 52 million ($4 million in 2022), and an
equivalent amount was recognized in Income taxes (recovery). The
effect of these adjustments have been reversed under the Other
heading.
(3) During the quarter ended January 31, 2023, the Bank recorded
a $32 million tax expense with respect to the Canada Recovery
Dividend, i.e., a one-time, 15% tax on the fiscal 2021 and 2020
average taxable income above $1 billion, as well as an $8 million
tax recovery related to a 1.5% increase in the statutory tax rate,
which includes the impact related to current and deferred taxes for
fiscal 2022. These items are recorded in the Other heading. For
additional information on these tax measures, see Note 13.
(4) Represents the average of the daily balances for the period,
which is also the basis on which segment assets are reported to the
operating segments.
Note 16 - Event After the Consolidated Balance Sheet Date
Redemption of Subordinated Debt
On February 1, 2023, the Bank redeemed $750 million of
medium-term notes maturing on February 1, 2028 at a price equal to
their nominal value plus accrued interest.
Information for Shareholders and Investors
Investor Relations
Financial analysts and investors who want to obtain financial
information on the Bank may contact the Investor Relations
Department.
600 De La Gauchetière Street West, 7(th) Floor
Montreal, Quebec H3B 4L2
Toll-free: 1-866-517-5455
Email: investorrelations@nbc.ca
Website: nbc.ca/investorrelations
Communications and Corporate Social Responsibility
600 De La Gauchetière Street West, 18(th) Floor
Montreal, Quebec H3B 4L2
Telephone: 514-394-8644
Email: pa@nbc.ca
Quarterly Report Publication Dates for Fiscal 2023
(subject to approval by the Board of Directors of the Bank)
First quarter March 1
Second quarter May 31
Third quarter August 30
Fourth quarter December 1
Disclosure of
First Quarter 2023 Results
Conference Call
* A conference call for analysts and institutional
investors will be held on Wednesday, March 1, 2023 at
1:00 p.m. ET.
* Access by telephone in listen-only mode:
1-800-806-5484 or
416-340-2217 . The access code is
9678666 # .
* A recording of the conference call can be heard until
July 1, 2023 by dialing 1-800-408-3053 or
905-694-9451. The access code is 4766736#.
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.
Transfer Agent and Registrar
For information about stock transfers, address changes,
dividends, lost certificates, tax forms, and estate transfers,
shareholders of record may contact the transfer agent,
Computershare Trust Company of Canada, at the address or telephone
number below.
Computershare Trust Company of Canada
Share Ownership Management
100 University Avenue, 8(th) Floor
Toronto, Ontario M5J 2Y1
Telephone: 1-888-838-1407
Fax: 1-888-453-0330
Email: service@computershare.com
Website: computershare.com
Shareholders whose shares are held by a market intermediary are
asked to contact the market intermediary concerned.
Direct Deposit Service for Dividends
Shareholders may elect to have their dividend payments deposited
directly via electronic funds transfer to their bank account at any
financial institution that is a member of the Canadian Payments
Association. To do so, they must send a written request to the
transfer agent, Computershare Trust Company of Canada.
Dividend Reinvestment and Share Purchase Plan
National Bank has a Dividend Reinvestment and Share Purchase
Plan for holders of its common and preferred shares under which
they can acquire common shares of the Bank without paying
commissions or administration fees. P articipants acquire common
shares through the reinvestment of cash dividends paid on the
shares they hold or through optional cash payments of at least $1
per payment, up to a maximum of $5,000 per quarter.
For additional information, shareholders may contact National
Bank's registrar and transfer agent, Computershare Trust Company of
Canada, at 1--888--838--1407. To participate in the plan, National
Bank's beneficial or non-registered common shareholders must
contact their financial institution or broker.
Dividends
Dividends paid are "eligible dividends" in accordance with the
Income Tax Act (Canada).
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END
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