- Earnings Per Share (EPS): $2.58 for Q4 2024; $10.39 for the full year.
- EPS Growth: 10% for 2024.
- Return on Equity (ROE): 17% for 2024.
- CET1 Ratio: 13.7% at year-end 2024.
- Dividend Increase: Close to 9% in 2024; $0.04 increase announced for Q1 2025.
- Revenue Growth: 10% increase in Q4 2024.
- Pre-Tax Pre-Provision (PTPP) Earnings Growth: 11% in Q4 2024.
- Operating Leverage: Positive at 1.5% in Q4 2024.
- Wealth Management Revenue Growth: 14% in Q4 2024.
- Wealth Management PTPP Growth: 16% in Q4 2024.
- Commercial Loan Growth: 14% in Q4 2024; 13% for the year.
- Net Income from Financial Markets: $306 million in Q4 2024.
- Financial Markets Net Earnings Growth: 18% for 2024.
- Credigy Net Income Growth: 10% for 2024.
- ABA Bank Loan Growth: 11% year-over-year in Q4 2024.
- ABA Bank Client Base Growth: 29% year-over-year in Q4 2024.
- ABA Bank Deposit Growth: 19% year-over-year in Q4 2024.
- Expenses Increase: 8% year-over-year in Q4 2024.
- Non-Trading Net Interest Income (NII) Growth: 6% sequentially in Q4 2024.
- Loan Growth: 8% year-over-year; 1.5% quarter-over-quarter in Q4 2024.
- Deposit Growth: 9% year-over-year; 3% quarter-over-quarter in Q4 2024.
- Provisions for Credit Losses (PCL): $162 million or 27 bps in Q4 2024.
- Gross Impaired Loan Ratio: 68 bps, up 9 bps quarter-over-quarter in Q4 2024.
Release Date: December 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- National Bank of Canada (NTIOF, Financial) reported a strong earnings per share (EPS) growth of 10% for 2024, achieving $2.58 for the last quarter and $10.39 for the full year.
- The bank increased its common share dividend by nearly 9% in 2024 and announced a further $0.04 increase for Q1 2025.
- Commercial loan growth was robust, with a 14% increase in Q4 and 13% for the year, driven by strength in insured residential real estate.
- Wealth Management delivered a 12% net earnings growth in 2024, supported by strong deposit and asset growth.
- The bank maintained a strong CET1 ratio of 13.7%, reflecting robust capital generation and disciplined risk management.
Negative Points
- The Canadian economy is expected to experience slower growth in the first half of 2025 due to restrictive interest rates, impacting labor markets and consumer spending.
- The Financial Markets segment faces challenges in 2025 due to the impact of Pillar 2 on European activities and a challenging credit environment.
- ABA Bank's provisions for credit losses remain elevated due to a local economy operating below potential and lower tourism spend.
- The acquisition of Canadian Western Bank (CWB) is expected to temporarily lower the bank's ROE in the commercial segment.
- The implementation of the global minimum tax is expected to increase the bank's effective tax rate by approximately 1% to 2%, impacting profitability.
Q & A Highlights
Q: Can you provide an update on the approval process for the Canadian Western Bank (CWB) acquisition?
A: Laurent Ferreira, President and CEO, stated that the documentation has been submitted to OSFI, which is currently conducting its review. The bank is optimistic about closing the acquisition in early 2025, pending the completion of OSFI's review and the Minister of Finance's decision.
Q: What is the outlook for the Financial Markets segment in 2025?
A: Jean-Sebastien Grise, Chief Risk Officer, explained that while the segment had a strong performance in 2024, the bank expects positive net income growth in 2025 despite headwinds such as the global minimum tax and potential normalization of government borrowing. The bank remains optimistic about leveraging its strengths in equities and rates markets.
Q: How do you view the growth potential of ABA Bank within National Bank of Canada?
A: Laurent Ferreira, President and CEO, expressed confidence in ABA Bank's growth, highlighting its strong digital payments and cash management capabilities. While comfortable with its current size, there is potential for future expansion in Southeast Asia with a strategic partner.
Q: Can you elaborate on the provisions for credit losses at ABA Bank and whether they are expected to increase?
A: Jean-Sebastien Grise, Chief Risk Officer, noted that the current level of provisions is at the higher end of expectations, driven by macroeconomic factors. The bank anticipates that provisions will stabilize, reflecting a peak in current trends.
Q: What are the expectations for commercial loan growth in 2025, and how does it compare to personal loan growth?
A: Lucie Blanchet, Executive Vice President - Personal Banking and Client Experience, indicated that commercial loan growth is expected to outperform personal loan growth in 2025, continuing the trend from 2024. The bank anticipates stable growth in personal loans, particularly in mortgages and auto loans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
