National Bank reports its 2022 fourth-quarter and annual results and raises its quarterly dividend by 5 cents to 97 cents per share

The financial information reported in this document is based on the unaudited interim condensed consolidated financial statements for the fourth quarter of fiscal 2022 and on the audited annual consolidated financial statements for the year ended October 31, 2022 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, Nov. 30, 2022 /CNW/ - For the fourth quarter of 2022, National Bank is reporting net income of $738 million, down 4% from $769 million in the fourth quarter of 2021. Fourth-quarter diluted earnings per share stood at $2.08 compared to $2.17 in the fourth quarter of 2021. Solid performance in all of the business segments was offset by higher provisions for credit losses recorded to reflect a less favourable macroeconomic outlook in the fourth quarter of 2022, whereas, in the fourth quarter of 2021, reversals of allowances for credit losses had been recorded to reflect a more favourable macroeconomic outlook. Income before provisions for credit losses and income taxes totalled $988 million in the fourth quarter of 2022 compared to $943 million in the fourth quarter of 2021, a 5% increase arising from total revenue growth in all of the business segments.

National Bank Logo (CNW Group/National Bank of Canada)
National Bank Logo (CNW Group/National Bank of Canada)

For the year ended October 31, 2022, the Bank's net income totalled $3,383 million, up 8% from $3,140 million in fiscal 2021, and its diluted earnings per share stood at $9.61 in fiscal 2022 versus $8.85 in fiscal 2021. Excellent performance in all of the business segments, driven by revenue growth, contributed to these increases in net income and diluted earnings per share, even with the higher provisions for credit losses that were recorded to reflect, in part, a less favourable macroeconomic outlook in the second half of fiscal 2022. For fiscal 2022, income before provisions for credit losses and income taxes totalled $4,422 million, a 10% year-over-year increase driven by revenue growth in all of the business segments.

Commenting on the Bank's performance for fiscal year 2022, Laurent Ferreira, President and Chief Executive Officer, said: "We generated superior organic growth across all our business segments and the operating leverage was positive for the year. We maintain prudent allowances for credit losses and robust capital ratios. We continue to prioritize deploying capital to support organic growth, investing in efficiency improvements and returning capital to shareholders."

"In the fourth quarter of fiscal 2022, the pre-tax, pre-provision earnings for each business segment were up, with strong double-digit growth for the Personal and Commercial and the Wealth Management segments," added Mr. Ferreira.

Highlights

(millions of Canadian dollars)



Quarter ended October 31



Year ended October 31






2022




2021(1)



% Change



2022




2021(1)



% Change

























Net income



738




769



(4)



3,383




3,140



8


Diluted earnings per share (dollars)


$

2.08



$

2.17



(4)


$

9.61



$

8.85



9


Income before provisions for credit losses and income taxes



988




943



5



4,422




4,024



10


Return on common shareholders' equity(2)



15.3

%



18.7

%





18.8

%



20.7

%




Dividend payout ratio(2)



36.8

%



31.7

%





36.8

%



31.7

%








































As at

October 31,

 2022



As at

October 31, 2021





CET1 capital ratio under Basel III(3)













12.7

%



12.4

%




Leverage ratio under Basel III(3)













4.5

%



4.4

%




(1)

Certain amounts have been adjusted to reflect an accounting policy change applicable to cloud computing arrangements. For additional information, see Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022.

(2)

For additional information on composition of these measures, see the Glossary section on pages 122 to 125 of the Bank's 2022 Annual Report, which is available on the Bank's website at nbc.ca or the SEDAR website at sedar.com.

(3)

For additional information on capital management measures, see the Financial Reporting Method section on pages 16 to 21 of the Bank's 2022 Annual Report, which is available on the Bank's website at nbc.ca or the SEDAR website at sedar.com.


Financial Reporting Method

The Bank's consolidated financial statements are prepared in accordance with IFRS, as issued by the IASB. The financial statements also comply with section 308(4) of the Bank Act (Canada), which states that, except as otherwise specified by the Office of the Superintendent of Financial Institutions (Canada) (OSFI), the consolidated financial statements are to be prepared in accordance with IFRS, which represent Canadian GAAP. None of the OSFI accounting requirements are exceptions to IFRS.

The presentation of segment disclosures is consistent with the presentation adopted by the Bank for the fiscal year beginning November 1, 2021. This presentation reflects the fact that the loan portfolio comprising borrowers in the "Oil and gas" and "Pipelines" sectors as well as related activities, which had previously been reported in the Personal and Commercial segment, is now reported in the Financial Markets segment. The Bank made this change to better align the monitoring of its activities with its management structure.

In addition, a change in accounting policy, as described in the "Accounting Policy Changes" section of Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022 was applied retrospectively during the year ended October 31, 2022, after the International Financial Reporting Interpretations Committee (IFRIC) issued a final agenda decision on accounting for the costs of configuring or customizing a supplier's software in a cloud computing arrangement. The figures for the quarter and year ended October 31, 2021 have been adjusted to reflect this change in accounting policy.

Non-GAAP and Other Financial Measures
The Bank uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures are not calculated in accordance with GAAP. Regulation 52-112 Respecting Non-GAAP and Other Financial Measures Disclosure (Regulation 52-112) prescribes disclosure requirements that apply to the following measures used by the Bank:

  • non-GAAP financial measures;

  • non-GAAP ratios;

  • supplementary financial measures;

  • capital management measures.

Non-GAAP Financial Measures

The Bank uses non-GAAP financial measures that do not have standardized meanings under GAAP and that therefore may not be comparable to similar measures used by other companies. 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 better assess results without the specified items if they consider such items not to be reflective of the underlying performance of the Bank's operations. In addition, like many other financial institutions, the Bank uses the taxable equivalent basis to calculate net interest income, non-interest income, and income taxes. This calculation method consists of grossing up certain tax-exempt income (particularly dividends) by the income tax that would have been otherwise payable. An equivalent amount is added to income taxes. This adjustment is necessary in order to perform a uniform comparison of the return on different assets regardless of their tax treatment.

For additional information on non-GAAP financial measures, non-GAAP ratios, supplementary financial measures, and capital management measures, see the Financial Reporting Method section and the Glossary section, on pages 16 to 21 and 122 to 125, respectively, of the 2022 Annual Report, which is available on the Bank's website at nbc.ca or the SEDAR website at sedar.com.

Reconciliation of Non-GAAP Financial Measures

Presentation of Results – Adjusted

(millions of Canadian dollars)









Quarter ended October 31













2022


2021(1)




Personal
and
Commercial


Wealth
Management


Financial
Markets


USSF&I


Other













Total


Total


Net interest income

785


187


49


277


(91)


1,207


1,190


Taxable equivalent



64



1


65


39


Net interest income – Adjusted

785


187


113


277


(90)


1,272


1,229


















Non-interest income

286


426


420


(10)


5


1,127


1,021


Taxable equivalent



30




30


2


Non-interest income – Adjusted

286


426


450


(10)


5


1,157


1,023


















Total revenues – Adjusted

1,071


613


563


267


(85)


2,429


2,252


Non-interest expenses

551


343


252


90


110


1,346


1,268


Impairment losses on intangible assets(2)







(9)


Non-interest expenses – Adjusted

551


343


252


90


110


1,346


1,259


















Income before provisions for credit losses and income taxes – Adjusted

520


270


311


177


(195)


1,083


993


Provisions for credit losses

42


2


32


10


1


87


(41)


Income before income taxes – Adjusted

478


268


279


167


(196)


996


1,034


Income taxes

127


70


(20)


35


(49)


163


215


Taxable equivalent



94



1


95


41


Income taxes related to impairment losses on intangible assets(2)







2


Income taxes – Adjusted

127


70


74


35


(48)


258


258


Net income – Adjusted

351


198


205


132


(148)


738


776


Specified items after income taxes







(7)


Net income   

351


198


205


132


(148)


738


769


Non-controlling interests
























Net income attributable to the Bank's shareholders

  and holders of other equity instruments

351


198


205


132


(148)


738


769


Net income attributable to the Bank's shareholders

  and holders of other equity instruments – Adjusted

351


198


205


132


(148)


738


776


Dividends on preferred shares and distributions on

  limited recourse capital notes











30


26


Net income attributable to common shareholders  – Adjusted











708


750


(1)

Certain amounts have been adjusted to reflect an accounting policy change applicable to cloud computing arrangements. For additional information, see Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022.

(2)

During the quarter ended October 31, 2021, the Bank recorded $9 million ($7 million net of income taxes) in intangible asset impairment losses related to technology developments, which were considered a specified item. 

 

(millions of Canadian dollars)







Year ended October 31













2022


2021(1)




Personal
and
Commercial


Wealth
Management


Financial
Markets


USSF&I


Other













Total


Total


Net interest income

2,865


594


1,029


1,090


(307)


5,271


4,783


Taxable equivalent



229



5


234


181


Net interest income  Adjusted

2,865


594


1,258


1,090


(302)


5,505


4,964


















Non-interest income

1,169


1,781


1,162


20


249


4,381


4,144


Taxable equivalent



48




48


8


Non-interest income – Adjusted

1,169


1,781


1,210


20


249


4,429


4,152


















Total revenues – Adjusted

4,034


2,375


2,468


1,110


(53)


9,934


9,116


Non-interest expenses

2,149


1,391


1,022


344


324


5,230


4,903


Impairment losses on intangible assets(2)







(9)


Non-interest expenses  Adjusted

2,149