National Bank reports its results for the Second Quarter of 2014 and raises its quarterly dividend by 4% to 48 cents per share

National Bank reports its results for the Second Quarter of 2014 and raises 
its quarterly dividend by 4% to 48 cents per share 
The financial information reported herein is based on the unaudited interim 
condensed consolidated financial statements for the second quarter and first 
six months ended April 30, 2014 and prepared in accordance with International 
Financial Reporting Standards (IFRS), as issued by the International 
Accounting Standards Board (IASB) and set out in the CPA Canada Handbook. 
Additional information about National Bank of Canada, including the Report to 
shareholders - Second Quarter 2014 and the Annual Information Form, can be 
obtained from the Bank's website at nbc.ca or on SEDAR website at sedar.com. 
All amounts are presented in Canadian dollars. 
MONTREAL, May 27, 2014 /CNW Telbec/ - For the second quarter of fiscal 2014, 
National Bank is reporting $362 million in net income versus $417 million in 
the second quarter of 2013 and diluted earnings per share of $1.01 compared to 
$1.20 in the second quarter of 2013, particularly due to a $102 million rise 
in the fair value of restructured notes that had been recorded in the second 
quarter of 2013. 
Excluding the specified items described on page 4, second-quarter net income 
totalled $375 million, up 7% from $352 million in the second quarter of 2013, 
and second-quarter diluted earnings per share stood at $1.05, up 5% from $1.00 
in the same quarter of 2013. 
For the first six months of fiscal 2014, the Bank's net income totalled $767 
million versus $790 million in the same period of 2013. First-half diluted 
earnings per share stood at $2.16 compared to $2.25 in the same period of 
2013. Excluding the specified items described on page 4, first-half net income 
totalled $759 million, up 9% from $696 million in the same period of 2013, and 
first-half diluted earnings per share stood at $2.14, up 9% from $1.97 in the 
same period of 2013. 
"National Bank delivered another good quarter with strong performance from the 
Wealth Management and P&C Banking segments," said Louis Vachon, President and 
Chief Executive Officer. "With the quality of our results and our continuous 
efforts with the One client, one bank initiative, we are pleased to increase 
the quarterly dividend by 4%." 
Highlights: 


        --  $362 million in net income for the second quarter of 2014
            versus $417 million in the same quarter last year, particularly
            due to a $102 million rise in the fair value of restructured
            notes in 2013;
        --  Diluted earnings per share of $1.01 for the second quarter of
            2014 compared to $1.20 in the same quarter of 2013;
        --  Return on equity of 17.4%;
        --  The Common Equity Tier 1 (CET1) capital ratio under Basel III
            was 8.7% as at April 30, 2014, remaining stable versus 8.7% as
            at October 31, 2013.

Highlights Excluding Specified Items((1)):
        --  $375 million in net income for the second quarter of 2014, up
            7% from $352 million in the same quarter of 2013;
        --  Diluted earnings per share of $1.05 for the second quarter of
            2014, up 5% from $1.00 in the same quarter of 2013;
        --  Return on equity of 18.1%.

Financial Indicators
                                  Results                     Results    
                                excluding       Results     excluding    
                                                  First
                    Results     specified          half     specified    
                    Q2 2014         items (1)      2014         items (1)
                                                                         
    Growth in
    diluted
    earnings per
    share              (16) %           5   %       (4) %           9   %
    Return on
    common
    shareholders'
    equity             17.4 %        18.1   %      18.6 %        18.4   %
    Dividend
    payout ratio         42 %          43   %        42 %          43   %
    CET1 capital
    ratio under
    Basel III           8.7 %                       8.7 %                
    (1) See the Financial Reporting Method section on page 4.
    Personal and Commercial
        --  Net income totalled $162 million in the second quarter of 2014,
            up 6% from $153 million in the second quarter of 2013.
        --  At $649 million, second-quarter total revenues rose $19 million
            or 3% year over year.
        --  Rising 7% from a year ago, personal lending experienced
            sustained growth, with the strongest increases coming from
            consumer loans and mortgage lending, in addition to 5% growth
            in commercial lending from a year ago.
        --  The net interest margin was 2.24% in the second quarter of 2014
            versus 2.25% the preceding quarter and 2.31% in the second
            quarter of 2013.
        --  Before provisions for credit losses and income taxes, the
            segment's contribution rose $12 million or 5%.
        --  At 57.9%, the efficiency ratio improved from 58.6% in the
            second quarter of 2013.

Wealth Management
        --  Net income totalled $68 million in the second quarter of 2014,
            a 39% increase from $49 million in the same quarter of 2013.
        --  Excluding specified items(1), net income totalled $77 million,
            up $22 million or 40%.
        --  Second-quarter total revenues amounted to $330 million versus
            $288 million in the same quarter of 2013, a $42 million or 15%
            increase that was driven particularly by growth across all
            revenue streams and by the TD Waterhouse acquisition.
        --  Second-quarter non-interest expenses stood at $237 million, up
            7% year over year.
        --  Excluding specified items(1), the efficiency ratio was 68.4%,
            an improvement from 73.8% in the second quarter of 2013.

Financial Markets
        --  Net income totalled $128 million in the second quarter of 2014,
            down 9% from $141 million in the same quarter of 2013.
        --  At $337 million, second-quarter revenues decreased $26 million
            or 7% year over year, mainly because trading activity revenues
            were down, in particular the revenues generated by fixed-income
            trading activities and commodities and foreign exchange trading
            activities.
        --  At $162 million, the second-quarter non-interest expenses
            decreased $7 million year over year, particularly because
            variable compensation was lower given the revenue decline.
        --  The efficiency ratio was 48.1% in the second quarter of 2014
            versus 46.6% in the second quarter of last year.

Other
        --  Net income totalled $4 million for the second quarter of 2014
            versus $74 million in the same quarter of 2013, a decrease that
            stems mainly from the following amounts, net of income taxes,
            that had been recorded in the second quarter of 2013: a
            $102 million rise in the fair value of the restructured notes
            partly offset by $29 million in intangible asset impairment
            losses.

Capital Management
        --  As at April 30, 2014, the Common Equity Tier 1 (CET1) capital
            ratio under Basel III was 8.7%, remaining stable versus 8.7% as
            at October 31, 2013, as internally generated capital was offset
            by the Wealth Management acquisition and the coming into force
            of the credit valuation adjustment.
    (1) See the Financial Reporting Method section on page 4.
        HIGHLIGHTS                                                                               
    (millions of
    Canadian                                                                         
    dollars)                                                                                 
                                                                                             
                             Quarter ended April 30                 Six months ended April 30
                                                  %                                         %
                      2014        2013 (1)   Change        2014            2013 (1)    Change
                                                                                             
    Operating
    results                                                                                  
    Total revenues $ 1,276     $ 1,383          (8)   $   2,640     $     2,615             1
    Net income         362         417         (13)         767             790           (3)
    Net income
    attributable
    to the Bank's
    shareholders       345         402         (14)         734             758           (3)
    Return on
    common
    shareholders'
    equity            17.4 %      23.4   %                 18.6 %          22.1   %          
    Earnings per
    share(2)
    (dollars)                                                                                
      Basic        $  1.02     $  1.21         (16)   $    2.19     $      2.27           (4)
      Diluted         1.01        1.20         (16)        2.16            2.25           (4)
                                                                                             
    EXCLUDING
    SPECIFIED
    ITEMS(3)                                                                                 
    Operating
    results                                                                                  
    Total revenues $ 1,283     $ 1,248            3   $   2,609     $     2,470             6
    Net income         375         352            7         759             696             9
    Net income
    attributable
    to the Bank's
    shareholders       358         337            6         726             664             9
    Return on
    common
    shareholders'
    equity            18.1 %      19.6   %                 18.4 %          19.3   %          
    Earnings per
    share(2)
    (dollars)                                                                                
      Basic        $  1.06     $  1.01            5   $    2.16     $      1.99             9
      Diluted         1.05        1.00            5        2.14            1.97             9
                                                                                             
    Per common
    share(2)
    (dollars)                                                                                
    Dividends
    declared       $  0.46     $  0.41                $    0.92     $      0.82              
    Book value                                            24.43           21.57              
    Stock trading
    range                                                                                    
      High           45.73       39.76                    46.86           40.02              
      Low            41.60       36.18                    41.60           36.18              
      Close          45.49       38.08                    45.49           38.08              
                                                                                             
                                                          As at           As at
                                                      April 30,     October 31,             %
                                                           2014            2013 (1)    Change
                                                                                             
    Financial
    position                                                                                 
    Total assets                                      $ 194,289     $   188,219             3
    Loans and
    acceptances                                         101,555          97,338             4
    Deposits                                            110,794         102,111             9
    Equity
    attributable
    to common
    shareholders                                          8,005           7,487             7
    Capital ratios
    under Basel
    III(4)                                                                                   
      Common
      Equity Tier
      1 (CET1)                                              8.7 %           8.7   %          
      Tier 1                                               11.6 %          11.4   %          
      Total                                                14.6 %          15.0   %          
    Impaired
    loans, net of
    total
    allowances                                            (175)           (183)              
      As a % of
      average
      loans and
      acceptances                                         (0.2) %         (0.2)   %          
    Assets under
    administration
    and under
    management                                          327,125         258,010            27
    Total personal
    savings                                             168,329         157,515             7
    Interest
    coverage                                              13.03           11.18              
    Asset coverage                                         4.79            3.76              
                                                                                             
    Other
    information                                                                              
    Number of
    employees                                            19,831          19,691             1
    Number of
    branches in
    Canada                                                  451             453       −
    Number of
    banking
    machines                                                935             937       −
    (1) Certain amounts have been adjusted to reflect changes in accounting
        standards. See Note 2 to the unaudited interim condensed
        consolidated financial statements in the Report to Shareholders for
        the second quarter and six-month period ended April 30, 2014.
    (2) Reflecting the stock dividend paid on February 13, 2014. See Note
        13 to the unaudited interim condensed consolidated financial
        statements in the Report to Shareholders for the second quarter and
        six-month period ended April 30, 2014.
    (3) See the Financial Reporting Method section on page 4.
    (4) The ratios have been calculated using the "all-in" methodology, and
        the October 31, 2013 ratios have not been adjusted to reflect
        changes in accounting standards.
        FINANCIAL REPORTING METHOD
    (millions of Canadian dollars, except per share amounts)
     
    When assessing its results, the Bank uses certain measures that do not
    comply with International Financial Reporting Standards (IFRS), as
    issued by the International Accounting Standards Board (IASB) and set
    out in the CPA Canada Handbook. Securities regulators require companies
    to caution readers that net income and other measures adjusted using
    non-IFRS criteria are not standard under IFRS and cannot be easily
    compared with similar measures used by other companies.
       Financial Information                                                                      
                                                                                               
                                        Quarter ended April 30             Six months ended April 30
                                                             %                                     %
                               2014          2013 (1)   Change        2014         2013 (1)   Change
                                                                                                    
    Excluding specified
    items                                                                                           
      Personal and
      Commercial                162           153            6         330          316            4
      Wealth Management          77            55           40         153          108           42
      Financial Markets         128           141          (9)         272          254            7
      Other                       8             3                        4           18             
                                                                                                    
    Net income excluding
    specified items             375           352            7         759          696            9
      Items related to
      holding
      restructured notes
      (2)                       (3)           100                       27          109             
      Acquisition-related
      items(3)                 (10)           (6)                     (19)         (12)             
      Impairment losses
      on intangible
      assets(4)             −          (29)                  −         (29)             
      Item related to
      employee benefits
      (5)                   −       −                  −           26             
    Net income                  362           417         (13)         767          790          (3)
                                                                                                    
    Diluted earnings per
    share excluding
    specified items(6)    $    1.05     $    1.00            5   $    2.14     $   1.97            9
      Items related to
      holding
      restructured notes
      (2)                    (0.01)          0.31                     0.08         0.34             
      Acquisition-related
      items(3)               (0.03)        (0.02)                   (0.06)       (0.05)             
      Impairment losses
      on intangible
      assets(4)             −        (0.09)                  −       (0.09)             
      Item related to
      employee benefits
      (5)                   −       −                  −         0.08             
    Diluted earnings per
    share(6)              $    1.01     $    1.20         (16)   $    2.16     $   2.25          (4)
                                                                                                    
    Return on common
    shareholders' equity                                                                            
      Including specified
      items                    17.4 %        23.4   %                 18.6 %       22.1   %         
      Excluding specified
      items                    18.1 %        19.6   %                 18.4 %       19.3   %         
    (1) Certain amounts have been adjusted to reflect changes in accounting
        standards. See Note 2 to the unaudited interim condensed
        consolidated financial statements in the Report to Shareholders for
        the second quarter and six-month period ended April 30, 2014.
    (2) During the quarter ended April 30, 2014, the Bank recorded
        $4 million in financing costs ($3 million net of income taxes)
        related to holding restructured notes (2013: $2 million, $2 million
        net of income taxes). In addition, during the quarter ended April
        30, 2013, the Bank had recorded $139 million in revenues
        ($102 million net of income taxes) to reflect a rise in the fair
        value of those notes. During the six months ended April 30, 2014,
        the Bank recorded $9 million in financing costs ($6 million net of
        income taxes) related to holding restructured notes (2013:
        $2 million, $2 million net of income taxes) and $45 million in
        revenues ($33 million net of income taxes) to reflect a rise in the
        fair value of those notes (2013: $151 million, $111 million net of
        income taxes).
    (3) During the quarter ended April 30, 2014, the Bank recorded
        $13 million in charges ($10 million net of income taxes) related to
        the Wealth Management acquisitions (2013: $9 million, $6 million
        net of income taxes) and consisting mostly of retention bonuses and
        TD Waterhouse integration charges; they also include the Bank's
        share in the integration costs incurred by Fiera and its share in
        the integration costs and intangible asset amortization related to
        the Bank's interest in TMX. For the six months ended April 30,
        2014, the charges amounted to $24 million ($19 million net of
        income taxes) compared to $17 million ($12 million net of income
        taxes) for the same period of 2013.
    (4) During the quarter ended April 30, 2013, the Bank had recorded
        $39 million ($29 million net of income taxes) in intangible asset
        impairment losses on internal technology developments.
    (5) During the quarter ended January 31, 2013, the Bank had recorded a
        $35 million decrease in past service costs ($26 million net of
        income taxes) to reflect changes to the provisions of its pension
        plans and other post-retirement plans subsequent to changes in
        accounting standards.
    (6) Reflecting the stock dividend paid on February 13, 2014. See Note
        13 to the unaudited interim condensed consolidated financial
        statements in the Report to Shareholders for the second quarter and
        six-month period ended April 30, 2014.
    CAUTION REGARDING FORWARD-LOOKING STATEMENTS

From time to time, the Bank makes written and oral forward-looking statements, 
such as those contained in the "Major Economic Trends" and the "Outlook for 
National Bank" sections of the 2013 Annual Report, in other filings with 
Canadian securities regulators, and in other communications, for the purpose 
of describing the economic environment in which the Bank will operate during 
fiscal 2014 and the objectives it has set for itself for that period. These 
forward-looking statements are made in accordance with current securities 
legislation. They include, among others, statements with respect to the 
economy—particularly the Canadian and U.S. economies—market changes, 
observations regarding the Bank's objectives and its strategies for achieving 
them, Bank-projected financial returns and certain risks faced by the Bank. 
These forward-looking statements are typically identified by future or 
conditional verbs or words such as "outlook," "believe," "anticipate," 
"estimate," "project," "expect," "intend," "plan," and similar terms and 
expressions.

By their very nature, such forward-looking statements require assumptions to 
be made and involve inherent risks and uncertainties, both general and 
specific. Assumptions about the performance of the Canadian and U.S. economies 
in 2014 and how that will affect the Bank's business are among the main 
factors considered in setting the Bank's strategic priorities and objectives 
and in determining its financial targets, including provisions for credit 
losses. In determining its expectations for economic growth, both broadly and 
in the financial services sector in particular, the Bank primarily considers 
historical economic data provided by the Canadian and U.S. governments and 
their agencies.

There is a strong possibility that express or implied projections contained in 
these forward-looking statements will not materialize or will not be accurate. 
The Bank recommends that readers not place undue reliance on these statements, 
as a number of factors, many of which are beyond the Bank's control, could 
cause actual future results, conditions, actions or events to differ 
significantly from the targets, expectations, estimates or intentions 
expressed in the forward-looking statements. These factors include strategic 
risk, credit risk, market risk, liquidity risk, operational risk, regulatory 
risk, reputation risk, and environmental risk, which are described in more 
detail in the "Risk Management" section beginning on page 60 of the 2013 
Annual Report, and in particular the general economic environment and 
financial market conditions in Canada, the United States and certain other 
countries in which the Bank conducts business, including the regulatory 
changes affecting the Bank's business, capital and liquidity; the situation 
with respect to the restructured notes of the master asset vehicle (MAV) 
conduits, in particular the realizable value of underlying assets; changes in 
the accounting policies the Bank uses to report its financial condition, 
including uncertainties associated with assumptions and critical accounting 
estimates; tax laws in the countries in which the Bank operates, primarily 
Canada and the United States (including the new reporting regime set out in 
sections 1471 to 1474 of the U.S. Internal Revenue Code of 1986 (FATCA)); and 
changes to capital adequacy and liquidity guidelines and to the manner in 
which they are to be presented and interpreted.

The foregoing list of risk factors is not exhaustive. Additional information 
about these factors can be found in the "Risk Management" and "Other Risk 
Factors" sections of the 2013 Annual Report. Investors and others who rely on 
the Bank's forward-looking statements should carefully consider the above 
factors as well as the uncertainties they represent and the risk they entail. 
The Bank also cautions readers not to place undue reliance on these 
forward-looking statements.

The forward-looking information contained in this document is presented for 
the purpose of interpreting the information contained herein and may not be 
appropriate for other purposes.  

DISCLOSURE OF SECOND QUARTER 2014 RESULTS

Conference Call
        --  A conference call for analysts and institutional investors will
            be held on Wednesday, May 28, 2014 at 11 a.m. EDT.
        --  Access by telephone in listen-only mode: 1-866-862-3930 or
            416-695-7806. The access code is 3390539#.
        --  A recording of the conference call can be heard until
            June 6, 2014 by dialing 1-800-408-3053 or 905-694-9451. The
            access code is 5955220#.

Webcast
        --  The conference call will be webcast live at
            nbc.ca/investorrelations.
        --  A recording of the webcast will also be available on National
            Bank's website after the call.

Financial Documents
        --  The quarterly consolidated financial statements are available
            at all times on National Bank's website at
            nbc.ca/investorrelations.
        --  The Report to Shareholders, Supplementary Financial Information
            and a slide presentation will be available on the Investor
            Relations page of National Bank's website shortly before the
            start of the conference call.



SOURCE  National Bank of Canada 
Ghislain Parent Chief Financial Officer and Executive Vice-President Finance 
and Treasury 514-394-6807 
Jean Dagenais Senior Vice-President Finance, Taxation and Investor Relations 
514-394-6233 
Claude Breton Vice-President Public Affairs and Investor Relations 514-394-8644 
Hélène Baril Senior Director Investor Relations 514-394-0296  
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CO: National Bank of Canada
ST: Quebec
NI: FIN CONF DIV ERN  
-0- May/27/2014 21:14 GMT
 
 
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