National Bank of Canada

This conference is recorded. All participants, please stand by. Your conference is ready to begin. Good morning and welcome to National Bank of Canada's Third Quarter Results Conference Call. I would now like to turn the meeting over to Mariam Arate, Vice President and Head of Investor Relations. Please go ahead, Mariam.

Thank you and welcome 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 Duduc, Head of Financial Markets, and Stéphane Achard, Head of Internationals. 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 third quarter with earnings per share of $2.68 and a return on equity of 17%. These results reflect our diversified earnings mix and solid credit profile. Moreover, they underline the performance of our team and disciplined execution across the bank in balancing revenue growth, costs, and investments, as well as credit performance in a complex environment. Looking at the Canadian economy, monetary policy remains restricted as evidenced by further normalization in the credit environment and a rising unemployment rate across the country. Recent rate cuts are a step in the right direction in providing relief for consumers and supporting business investment. Looking at our performance here today, we are pleased with our progress in executing our growth strategy supported by our strong capital levels with a CET1 ratio of 13.5%. First, we are generating strong organic growth and have been growing our balance sheet across our businesses. We are also returning capital to our shareholders through sustainable dividend increases. We ended Q3 with a payout ratio of 41.2%, reflecting last quarter's dividend increase and robust earnings growth. We will review our dividend next quarter consistent with usual practice. Finally, this past June, we announced that we entered into an agreement to acquire Canadian Western Bank to accelerate our pan-Canadian growth. We will be bringing together two strong teams and highly complementary banks. The combination will strengthen our Western presence and national reach and will also provide more choices to individuals, entrepreneurs, and businesses across the country. The regulatory approval process is underway and our integration roadmap is progressing in partnership with CWB leadership. Turning now to the Q3 performance of our segments. Personal and commercial banking delivered solid revenue growth of 7% year-over-year. As anticipated, personal mortgage growth picked up, increasing 2.4% year-over-year, driven by strong originations in our internal channels. Our commercial loan portfolio grew 14% year over year, underlying continued momentum in insured residential real estate and broad-based growth across our industries. Wealth management delivered a strong performance in the third quarter. Net interest income was up 14% year over year, with strong deposit inflows in our full-service brokerage and private banking channels. Benefiting from strong markets, feed-based revenues were up 12% while transaction revenues were up 21% year-over-year. With a strong top line and operating leverage of nearly 3%, net income grew 19% from last year. AUM also grew 20% year-over-year as the franchise continues to experience strong organic growth. Financial markets generated net income of $318 million in Q3, reflecting a well-diversified business mix, and the benefits of our strategic investments. Favorable market conditions also contributed positively across most sectors. Revenues for global markets exceeded $450 million again this quarter, supported by momentum in our securities finance and interest rates businesses. Corporate and investment banking revenues were up 16% year-over-year, with a solid performance across the platform. CreditG delivered another solid performance in Q3, with average assets up 13% year-over-year and strong investment volumes year-to-date. Net interest income was up 12% over last year and 2% sequentially. CreditG's portfolio continues to generate strong underlying performance while maintaining a defensive position. And the team also remains disciplined as it pursues opportunities with attractive risk-reward profiles. Finally, ABA Bank generated net income growth of 24% year-over-year. ABA's loans and deposits were up 17% and 21%, respectively, and its client base up 29% year-over-year. ABA's performance once again reflects its unique strengths, including its digital payments and cash management capabilities. Looking ahead, our capital deployment strategy and delivering superior returns remain key priorities for the bank. With our strong execution, diversified earnings stream and prudent approach to capital, credit and costs, we remain well positioned in the current environment and for the growth opportunities ahead. I will now turn it over to Marie Chantal.