National Bank of Canada

Good afternoon and welcome to National Bank of Canada's first quarter results conference call. I would now like to turn the meeting over to Marianne Raté, Vice President and Head of Investor Relations. Please go ahead, Marianne.

Merci and good afternoon, everyone. We will begin the call with remarks from Laurent Ferreira, President and CEO, Marie-Chantal Gingras, CFO, and Bill Bonnell, Chief Risk Officer. Also present for the Q&A session are Lucie Blanchet, Head of Personal Banking and Client Experience, Michael Denham, Head of Commercial and Private Banking, Nancy Paquette, Head of Wealth Management, Etienne Dubuc, Head of Financial Markets, also responsible for Credit G, and Stéphane Achat, Head of International, responsible for ABA Bank. Before we begin, I would like to refer you to slide two of our presentation for information on forward-looking statements and non-GAAP financial measures. The Bank uses non-GAAP measures, such as adjusted results, to assess its performance. Management will be referring to adjusted results unless otherwise noted. Also, in light of the proposed legislation with respect to Canadian dividends, the Bank did not either recognize an income tax deduction or use a taxable equivalent basis method to adjust revenues related to affected dividends received after January 1, 2024. I will now turn the call over to Laurent.

Merci, Marianne, and thank you, everyone, for joining us. The bank delivered a strong performance for the first quarter, reporting EPS of $2.59 with strong momentum and execution across business segments. The bank generated ROE in excess of 17% and maintained a CET1 ratio of 13.1%. Our results reflect effective capital deployment to generate profitable long-term growth, active cost management and simplification efforts to generate efficiencies, as well as our commitment to maintain a prudent credit profile, both in terms of mix and reserves. Our discipline across these fronts is serving us well in an uncertain macro landscape and normalizing credit environments. As anticipated, 2024 is shaping up to be a challenging year for consumers and businesses. Interest rates remain high and inflationary pressures are still at play. The housing supply imbalance is further pressuring Canadians while we continue to see signs of softening labor market. As we look ahead, economic growth could prove challenging, which could translate into lower inflation and interest rate relief. In this context, we enter the second quarter on solid footing with prudent reserves and strong capital ratios. This enables us to support business growth and return capital to shareholders through sustainable dividend increases. Our dividend payout ratio stands at 42.4% following the dividend increase announced last quarter. We will review our dividend in Q2 consistent with usual practice. The earnings power of our diversified business mix and defensive posture provide us with resiliency and flexibility, as demonstrated by the performance of our business segments. Personal and commercial banking continued to perform well in the first quarter, generating 5% year-over-year growth in pre-tax, pre-provision earnings. This was supported by concurrent growth in average loans and deposits while maintaining resilient margins. Our commercial book grew 4% sequentially. Growth in personal loans remained slower, reflecting a lower level of mortgage originations. We will continue to be disciplined across our portfolio, balancing volume growth with margin and credit quality. Wealth management delivered a strong first quarter, with record revenues of $660 million and net income of $196 million. Momentum in fee-based revenue held, with assets up 10% sequentially, in part driven by market appreciation. Net interest income grew 5% over the same period, benefiting from a strong deposit base. Financial markets continues to grow and diversify its activities, delivering record net income of $308 million for the quarter, up 3% year over year. Revenues were up 14% from last year for global markets with a solid performance across the franchise. This includes robust activity in securities finance and strong performance from our rates and commodities business. Corporate and investment banking maintained a strong top line in the quarter. Revenues of $304 million were up 4% year-over-year, driven by net interest income growth, partly offset by lower M&A activity. Our financial markets business remains focused on delivering net income growth for 2024. Credigy delivered a solid performance in Q1, generating 6% asset growth sequentially. With strong momentum in investment volumes, the business deployed $1.3 billion in the quarter. Revenues were down year-over-year and sequentially. as comparative periods benefited from favorable items, including significant prepayment revenues. Excluding these items, net interest income was up 6% sequentially. CreditG's underlying performance remains strong, and our portfolios are diversified and primarily secured. With sustained momentum in deal flow and a disciplined investment approach, CreditG is well-placed to continue delivering high-quality risk-adjusted returns. Finally, ABA Bank delivered a solid overall performance in Q1. Momentum in client acquisition persists with client count up 28% year-over-year, translating into double-digit growth on both sides of the balance sheet. Revenues were up 8% year-over-year and 4% sequentially. Deposit margins have been improving lately with a more favorable mix in deposit growth. The business is focused on balanced growth in the near term while continuing to benefit from a very attractive long-term outlook. In conclusion, and mindful of the uncertain environment, we remain committed to our prudent and disciplined approach to capital, credit, and cost management. Marie-Chantal, over to you.