Canada NewsWire
MONTREAL, Aug. 29, 2018
The financial information reported in this document is based on the unaudited interim condensed consolidated financial statements for the quarter and nine-month period ended July 31, 2018 and is prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), unless otherwise indicated. IFRS represent Canadian generally accepted accounting principles (GAAP). All amounts are presented in Canadian dollars.
MONTREAL, Aug. 29, 2018 /CNW Telbec/ - For the third quarter of 2018, National Bank is reporting net income of $569 million, up 10% from $518 million in the third quarter of 2017 as well as diluted earnings per share of $1.52 compared to $1.37 in the third quarter of 2017. Excluding the specified items described on page 4, third-quarter diluted earnings per share stood at $1.53, up 10% from $1.39 in the same quarter last year. These year-over-year increases were driven by net income growth across all the business segments.
For the first nine months of 2018, the Bank's net income totalled $1,666 million, up 11% from $1,499 million in the same period of 2017, and its diluted earnings per share stood at $4.42 versus $3.99 in the same nine-month period of 2017. These increases were also driven by net income growth across all the business segments. Nine-month diluted earnings per share excluding specified items stood at $4.46, a 10% increase from $4.05 in the first nine months of 2017.
Commenting on the third-quarter 2018 results, Louis Vachon, President and Chief Executive Officer of National Bank noted "another quarter of excellent performance in each business segment thanks to sustained revenue growth and effective cost management."
"I am also pleased to announce the appointment of Laurent Ferreira to the position of Executive Vice-President and Co-Head, Financial Markets, a responsibility he will share with the position's current incumbent, Denis Girouard, effective November 1, 2018. Laurent will become a member of the Office of the President and report to me. Since joining National Bank nearly 20 years ago, Laurent has stood out for his vision, leadership, and commitment to charitable and business initiatives," said Louis Vachon. Currently Executive Vice-President and Managing Director, Derivatives and Equities within Financial Markets, Mr. Ferreira holds a Bachelor's degree in economics from the Université du Québec à Montréal and a Master's degree in administration with a specialization in finance from HEC Montréal. He has been a member of the board of directors of Hydro-Québec since 2014 and is committed to several charitable causes.
Highlights | |||||||||||||||||||
(millions of Canadian dollars) |
Quarter ended July 31 |
Nine months ended July 31 | |||||||||||||||||
2018 |
2017 |
% Change |
2018 |
2017 |
% Change | ||||||||||||||
Net income |
569 |
518 |
10 |
1,666 |
1,499 |
11 | |||||||||||||
Diluted earnings per share (dollars) |
$ |
1.52 |
$ |
1.37 |
11 |
$ |
4.42 |
$ |
3.99 |
11 | |||||||||
Return on common shareholders' equity |
18.4 |
% |
18.2 |
% |
18.5 |
% |
18.2 |
% |
|||||||||||
Dividend payout ratio |
41 |
% |
47 |
% |
41 |
% |
47 |
% |
|||||||||||
Excluding specified items(1) |
|||||||||||||||||||
Net income excluding specified items |
573 |
524 |
9 |
1,680 |
1,518 |
11 | |||||||||||||
Diluted earnings per share excluding specified items (dollars) |
$ |
1.53 |
$ |
1.39 |
10 |
$ |
4.46 |
$ |
4.05 |
10 | |||||||||
Return on common shareholders' equity excluding specified items |
18.5 |
% |
18.4 |
% |
18.7 |
% |
18.4 |
% |
|||||||||||
Dividend payout ratio excluding specified items |
40 |
% |
42 |
% |
40 |
% |
42 |
% |
|||||||||||
As at July 31, 2018 |
As at October 31, |
||||||||||||||||||
CET1 capital ratio under Basel III |
11.6 |
% |
11.2 |
% |
|||||||||||||||
Leverage ratio under Basel III |
4.0 |
% |
4.0 |
% |
(1) |
See the Financial Reporting Method section on page 4 for additional information on non-GAAP financial measures. |
Personal and Commercial
Wealth Management
Financial Markets
U.S. Specialty Finance and International
Other
Capital Management
Dividends
(1) |
See the Financial Reporting Method section on page 4 for additional information on non-GAAP financial measures. |
HIGHLIGHTS | |||||||||||||||||||
(millions of Canadian dollars, except per share amounts) |
Quarter ended July 31 |
Nine months ended July 31 | |||||||||||||||||
2018 |
2017 |
% |
2018 |
2017 |
% | ||||||||||||||
Operating results |
|||||||||||||||||||
Total revenues |
1,792 |
1,675 |
7 |
5,352 |
4,905 |
9 | |||||||||||||
Net income |
569 |
518 |
10 |
1,666 |
1,499 |
11 | |||||||||||||
Net income attributable to the Bank's shareholders |
546 |
494 |
11 |
1,595 |
1,434 |
11 | |||||||||||||
Return on common shareholders' equity |
18.4 |
% |
18.2 |
% |
18.5 |
% |
18.2 |
% |
|||||||||||
Earnings per share |
|||||||||||||||||||
Basic |
$ |
1.54 |
$ |
1.39 |
11 |
$ |
4.48 |
$ |
4.04 |
11 | |||||||||
Diluted |
1.52 |
1.37 |
11 |
4.42 |
3.99 |
11 | |||||||||||||
Operating results on a taxable equivalent basis(1) and excluding specified items(2) |
|||||||||||||||||||
Total revenues on a taxable equivalent basis and excluding specified items |
1,856 |
1,743 |
6 |
5,544 |
5,104 |
9 | |||||||||||||
Net income excluding specified items |
573 |
524 |
9 |
1,680 |
1,518 |
11 | |||||||||||||
Return on common shareholders' equity excluding specified items |
18.5 |
% |
18.4 |
% |
18.7 |
% |
18.4 |
% |
|||||||||||
Efficiency ratio on a taxable equivalent basis and excluding specified items |
54.4 |
% |
55.4 |
% |
54.4 |
% |
56.2 |
% |
|||||||||||
Earnings per share excluding specified items(2) |
|||||||||||||||||||
Basic |
$ |
1.55 |
$ |
1.41 |
10 |
$ |
4.52 |
$ |
4.09 |
11 | |||||||||
Diluted |
1.53 |
1.39 |
10 |
4.46 |
4.05 |
10 | |||||||||||||
Common share information |
|||||||||||||||||||
Dividends declared |
$ |
0.62 |
$ |
0.58 |
$ |
1.82 |
$ |
1.70 |
|||||||||||
Book value |
33.91 |
30.84 |
|||||||||||||||||
Share price |
|||||||||||||||||||
High |
64.29 |
56.44 |
65.35 |
58.75 |
|||||||||||||||
Low |
61.26 |
51.77 |
58.69 |
46.83 |
|||||||||||||||
Close |
63.77 |
56.15 |
63.77 |
56.15 |
|||||||||||||||
Number of common shares (thousands) |
337,441 |
341,580 |
337,441 |
341,580 |
|||||||||||||||
Market capitalization |
21,519 |
19,180 |
21,519 |
19,180 |
|||||||||||||||
(millions of Canadian dollars) |
As at July 31, 2018 |
As at October 2017 |
% | ||||||||||||||||
Balance sheet and off-balance-sheet |
|||||||||||||||||||
Total assets |
257,637 |
245,827 |
5 | ||||||||||||||||
Loans and acceptances, net of allowances |
142,836 |
136,457 |
5 | ||||||||||||||||
Gross impaired loans(3) as a % of loans and acceptances, net of allowances |
0.4 |
% |
0.3 |
% |
|||||||||||||||
Deposits |
166,595 |
156,671 |
6 | ||||||||||||||||
Equity attributable to common shareholders |
11,441 |
10,700 |
7 | ||||||||||||||||
Assets under administration and under management |
496,096 |
477,358 |
4 | ||||||||||||||||
Earnings coverage |
13.11 |
13.61 |
|||||||||||||||||
Regulatory ratios under Basel III |
|||||||||||||||||||
Capital ratios(4) |
|||||||||||||||||||
Common Equity Tier 1 (CET1) |
11.6 |
% |
11.2 |
% |
|||||||||||||||
Tier 1(5) |
15.4 |
% |
14.9 |
% |
|||||||||||||||
Total(5) |
16.7 |
% |
15.1 |
% |
|||||||||||||||
Leverage ratio(4) |
4.0 |
% |
4.0 |
% |
|||||||||||||||
Liquidity coverage ratio (LCR) |
147 |
% |
132 |
% |
|||||||||||||||
Other information |
|||||||||||||||||||
Number of employees – worldwide |
23,029 |
21,635 |
6 | ||||||||||||||||
Number of branches in Canada |
428 |
429 |
− | ||||||||||||||||
Number of banking machines in Canada |
934 |
931 |
− |
(1) |
See the Consolidated Results section on page 6 of the Report to Shareholders for the quarter ended July 31, 2018. |
(2) |
See the Financial Reporting Method section on page 4 for additional information on non-GAAP financial measures. |
(3) |
Excluding purchased or originated credit-impaired loans. |
(4) |
The ratios are calculated using the "all-in" methodology. |
(5) |
The ratios as at October 31, 2017 include the redemption of the Series 28 preferred shares on November 15, 2017. |
FINANCIAL REPORTING METHOD
As stated in Note 2 to its audited annual consolidated financial statements for the year ended October 31, 2017, the Bank early adopted IFRS 9 on November 1, 2017. As permitted by IFRS 9, the Bank did not restate comparative consolidated financial statements. Note 4 to these consolidated financial statements presents the impacts of IFRS 9 adoption on the Bank's Consolidated Balance Sheet as at November 1, 2017. Since 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, 2017.
Non-GAAP Financial Measures
The Bank uses a number of financial measures when assessing its results and overall performance. Some of these financial measures are not calculated in accordance with GAAP, which are based on IFRS. Presenting non-GAAP financial measures helps readers to better understand how management analyzes results, shows the impacts of specified items on the results of the reported periods, and allows readers to assess results without the specified items if they consider such items not to be reflective of the underlying performance of the Bank's operations. Securities regulators require companies to caution readers that non-GAAP financial measures do not have a standardized meaning under GAAP and therefore may not be comparable to similar measures used by other companies.
Financial Information | ||||||||||||||||||||||
(millions of Canadian dollars, except per share amounts) |
Quarter ended July 31 |
Nine months ended July 31 | ||||||||||||||||||||
2018 |
2017 |
% Change |
2018 |
2017 |
% Change | |||||||||||||||||
Net income excluding specified items(1) |
||||||||||||||||||||||
Personal and Commercial |
248 |
235 |
6 |
691 |
669 |
3 | ||||||||||||||||
Wealth Management |
130 |
109 |
19 |
379 |
316 |
20 | ||||||||||||||||
Financial Markets |
178 |
165 |
8 |
572 |
515 |
11 | ||||||||||||||||
U.S. Specialty Finance and International |
54 |
51 |
6 |
167 |
129 |
29 | ||||||||||||||||
Other |
(37) |
(36) |
(129) |
(111) |
||||||||||||||||||
Net income excluding specified items |
573 |
524 |
9 |
1,680 |
1,518 |
11 | ||||||||||||||||
Acquisition-related items(2) |
(4) |
(6) |
(14) |
(19) |
||||||||||||||||||
Net income |
569 |
518 |
10 |
1,666 |
1,499 |
11 | ||||||||||||||||
Diluted earnings per share excluding specified items |
$ |
1.53 |
$ |
1.39 |
10 |
$ |
4.46 |
$ |
4.05 |
10 | ||||||||||||
Acquisition-related items(2) |
(0.01) |
(0.02) |
(0.04) |
(0.06) |
||||||||||||||||||
Diluted earnings per share |
$ |
1.52 |
$ |
1.37 |
11 |
$ |
4.42 |
$ |
3.99 |
11 | ||||||||||||
Return on common shareholders' equity |
||||||||||||||||||||||
Including specified items |
18.4 |
% |
18.2 |
% |
18.5 |
% |
18.2 |
% |
||||||||||||||
Excluding specified items |
18.5 |
% |
18.4 |
% |
18.7 |
% |
18.4 |
% |
(1) |
For the quarter and nine-month period ended July 31, 2017, certain amounts have been reclassified. |
(2) |
During the quarter ended July 31, 2018, the Bank recorded $4 million ($4 million net of income taxes) in charges related to the acquisitions (2017: $8 million, $6 million net of income taxes). For the nine-month period ended July 31, 2018, these charges were $16 million ($14 million net of income taxes) compared to $23 million ($19 million net of income taxes) in the same nine-month period of 2017. |
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Outlook for National Bank and the Major Economic Trends sections of the 2017 Annual Report, in other filings with Canadian securities regulators, and in other communications, for the purpose of describing the economic environment in which the Bank will operate during fiscal 2018 and the objectives it hopes to achieve for that period. These forward-looking statements are made in accordance with current securities legislation in Canada and the United States. They include, among others, statements with respect to the economy—particularly the Canadian and U.S. economies—market changes, observations regarding the Bank's objectives and its strategies for achieving them, Bank-projected financial returns and certain risks faced by the Bank. These forward-looking statements are typically identified by future or conditional verbs or words such as "outlook," "believe," "anticipate," "estimate," "project," "expect," "intend," "plan," and similar terms and expressions.
By their very nature, such forward-looking statements require assumptions to be made and involve inherent risks and uncertainties, both general and specific. Assumptions about the performance of the Canadian and U.S. economies in 2018 and how that will affect the Bank's business are among the main factors considered in setting the Bank's strategic priorities and objectives and in determining its financial targets, including provisions for credit losses. In determining its expectations for economic growth, both broadly and in the financial services sector in particular, the Bank primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
There is a strong possibility that express or implied projections contained in these forward-looking statements will not materialize or will not be accurate. The Bank recommends that readers not place undue reliance on these statements, as a number of factors, many of which are beyond the Bank's control, could cause actual future results, conditions, actions or events to differ significantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include credit risk, market risk, liquidity and funding risk, operational risk, regulatory compliance risk, reputation risk, strategic risk and environmental risk, all of which are described in more detail in the Risk Management section beginning on page 51 of the 2017 Annual Report, general economic environment and financial market conditions in Canada, the United States and certain other countries in which the Bank conducts business, including regulatory changes affecting the Bank's business, capital and liquidity; changes in the accounting policies the Bank uses to report its financial condition, including uncertainties associated with assumptions and critical accounting estimates; tax laws in the countries in which the Bank operates, primarily Canada and the United States (including the U.S. Foreign Account Tax Compliance Act (FATCA)); changes to capital and liquidity guidelines and to the manner in which they are to be presented and interpreted; changes to the credit ratings assigned to the Bank; and potential disruptions to the Bank's information technology systems, including evolving cyber attack risk.
The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management section of the 2017 Annual Report. Investors and others who rely on the Bank's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.
The forward-looking information contained in this document is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.
DISCLOSURE OF THE THIRD QUARTER 2018 RESULTS
Conference Call
Webcast
Financial Documents
SOURCE National Bank of Canada
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