National Bank of Canada

All participants, please stand by. Your conference is ready to begin. Good afternoon and welcome to National Bank of Canada's second quarter results conference call. I would now like to turn the meeting over to Marianne Raté, Vice President and Head of Investors 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. I will now turn the call over to Laurent.

Merci, Marianne, and thank you, everyone, for joining us. This morning, National Bank reported strong financial results for the second quarter of 2024 with earnings per share of $2.54 up 9% year over year, and a return on equity of 17%. This performance reflects the disciplined execution of our strategy across business segments and the diversified earnings power of the bank. Our capital level is strong, with a CET1 ratio of 13.2%. This allows us to invest in business growth and to return capital to shareholders through sustainable dividend increases. We've announced a 4 cent dividend increase this morning, bringing our quarterly dividend to $1.10, effective Q3 2024. Looking at the Canadian economy, it continues to show signs of deceleration. We are seeing further normalization in the credit environment, and the unemployment rate has been on the rise since monetary tightening began and now stands above 6%. Interest rates have been holding year to date, and housing and rental costs remain high. As core inflation has eased in recent months, we believe the Bank of Canada may now be in a position to offer some interest rate relief in the second half of the year. With continued uncertainty as to the path of the economy, our disciplined, diversified business mix and defensive posture provide us with resiliency and flexibility. This is illustrated by our strong results across our business segments in Q2. Personal and commercial banking delivered solid revenue growth of 6% year-over-year, supported by concurrent growth in average loans and deposits. Our personal banking loan book grew 3% over last year, and we are seeing better volumes within our internal mortgage origination channels. Our commercial banking loan portfolio grew 12% year-over-year, reflecting broad-based growth. Our wealth segment generated net income of $205 million a second quarter, up 15% over last year, on the back of double-digit revenue growth and positive operating leverage. Net income grew 7% over the year, over the same period and 3% sequentially, reflecting a strong deposit base. Compared to last year, fee-based revenues were up 13% and transaction revenues were up 12%, benefiting from strong markets and a growing franchise. Our financial markets business delivered net income of $322 million for the quarter, up 20% year over year. Global markets revenues were up 18% from last year, led by continued momentum in securities finance and a strong performance in our rates business. Corporate and investment banking revenues were up 9% year over year, with a solid performance across the franchise and strong debt underwriting. Our financial markets business continues to benefit from a well-diversified business mix and disciplined risk management. CreditG generated solid returns in Q2 with 5% Average asset growth sequentially, driving higher revenues and strong returns. Net interest income was up 6% quarter over quarter. Underlying portfolio performance is in line with expectations, and the team continues to focus on opportunities with attractive risk-reward profiles, primarily in the secured space. Finally, ABA Bank generated net income growth of 16% year over year. Margins improved sequentially as a result of strong growth in demand deposits. Our customer base expansion translated into year over year growth in loans and deposits of 18% and 20% respectively. These results reinforce the strength of ABA's financial ecosystem underpinned by its leading position in digital transactions deposit gathering, payments, and cash management. Looking ahead, we remain committed to our disciplined approach to capital, credit, and cost, and to generating long-term value to our shareholders. Before I turn it over to Marie Chantal, a few weeks ago, we announced that Bill Bunnell will be retiring from his CRO role at the end of the fiscal year, and that Jean-Sebastien Grisey will be appointed his successor effective November 1st. J.S. has been a key member of the risk management and compliance team since he joined the bank in 2015. He quickly rose through the ranks since that time thanks to both his technical expertise but also his vision and leadership qualities. Having worked closely with him and Bill through those years, he brings deep experience and understanding of our risk landscape to the role. I look forward to welcoming him to the senior leadership team this fall. As for Bill, it goes without saying that he has made an indelible mark on the bank as a steward of our risk culture over the last 12 years. I am very happy and fortunate to count on him for a little while longer of our CRO and then as a strategic advisor before a well-deserved retirement. Marie-Chantal, over to you.