National Bank of Canada

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

Merci. Welcome, everyone. We'll begin the call with remarks from Laurent Ferreira, President and CEO, Marie-Chantal Gingras, CFO, and Jean-Sébastien Cizé, Chief Risk Officer. Our business heads are also present for the Q&A session, including Lucie Blanchet, Personal Banking, Judith Menard, Commercial and Private Banking, Michael Denham, CWB Integrations, Nancy Paquette, Wealth Management, Etienne Dubuc, Capital Markets, and Bill Bonner, International. Before we begin, please refer to slide 2 of our presentation for forward-looking statements and non-gap measures. Management will refer to adjusted results unless otherwise noted. I will now pass the call to Laurent.

Merci, Marianne, and thank you, everyone, for joining us. This morning, we reported earnings per share of $2.82 for the fourth quarter of 2025 and $11.28 for the year. We delivered strong financial performance in 2025 while also completing the largest acquisition in our history. we met all of our medium-term financial objectives, generating return on equity of 15.3%, EPS growth of 9%, and a dividend payout ratio of 40.7%, supporting a 7% increase in our common share dividend in 2025. This was backed by resilient credit performance and strong capital levels amid a complex macro backdrop. The geopolitical and geoeconomic situation that has defined 2025 will continue to shape business confidence and investments in 2026. Trade tensions with the U.S. are affecting all provinces, causing job losses in certain sectors and a slowdown in the labor market. Meanwhile, inflation is proving sticky, with the path of monetary policy and interest rates uncertain. We are nonetheless encouraged by increased government focus on the economy. As reflected in the federal budget, which included tax cuts, investment in housing and infrastructure, and measures to stimulate business investment. This should support consumer consumption and resilience. We positively view the latest developments regarding nation-building projects to regain our economic sovereignty as an energy superpower. We are also encouraged by government action in support of our steel and softwood lumber industries. The private sector and provincial governments must also play a role in revitalizing our manufacturing sectors, strengthening supply chains, and building strategic development projects. With our increased national presence, the Bank intends to grow and deploy capital to help fuel Canada's economy. Our acquisition of Canadian Western Bank in early 2025 marked a historic milestone for the bank, positioning us for accelerated growth. The onboarding of new colleagues was our priority following closing. As a unified team, we have since migrated over 65,000 clients to our platform and rebranded all branches. With these integration steps now behind us, we look forward to what comes next. Cost and funding synergies are being realized at an accelerated pace, and we expect to meet our target more than a year ahead of plan. This morning, we also introduced a significant target of between $200 and $250 million in revenue synergies to be realized over the next three years. On capital, we plan on converting approximately two-thirds of the CWB loan books to the advanced method in late 2026, with additional portfolios to be converted at a later stage. We expect this to add a total of 50 to 75 basis points to our CE2-1 ratio, including the benefits already realized in 2025. Earlier this week, we entered into definitive agreements to acquire Laurentian Bank's retail and SME banking portfolios, following their decision to exit the sector. We will also acquire their syndicated loan portfolio. It's a natural fit given our strong presence in Quebec, enabling us to serve even more local customers and communities. This transaction also aligns with our growth and capital deployment We look forward to welcoming Laurentian's retail, SME, and syndicated loan clients. They will benefit from our leading digital capabilities, our broader branch network, products and services offering, and financial advisory and business banking teams.