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| Name | Symbol | Market | Type |
|---|---|---|---|
| Nat Bk Canada25 | LSE:32SS | London | Medium Term Loan |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 100.625 | 0 | 00:00:00 |
From Feb 2023 to Feb 2025
TIDM32SS
RNS Number : 2066B
National Bank of Canada
31 May 2023
National Bank of Canada
May 31(st) , 2023
Regulatory Announcement (Part 2)
Q2 2023 Results
National Bank of Canada (the "Bank") announces publication of its Second Quarter 2023 Report to Shareholders. The Second Quarter Results have been uploaded to the National Storage Mechanism and will shortly be available at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and is available on the Bank's website at https://www.nbc.ca/en/about-us/investors/investor-relations/quarterly-results.html
To view the full PDF of this Second Quarter 2023 Report to Shareholders, please click on the following link:
http://www.rns-pdf.londonstockexchange.com/rns/2054B_1-2023-5-31.pdf
Report to Shareholders Second Quarter 2023
Interim Condensed Consolidated
Financial Statements
(unaudited)
Hot Features
Premium
Consolidated Balance Sheets 54
Consolidated Statements of Income 55
Consolidated Statements of Comprehensive
Income 56
Consolidated Statements of Changes
in Equity 58
Consolidated Statements of Cash Flows 59
Notes to the Interim Condensed Consolidated
Financial Statements 60
Consolidated Balance Sheets
(unaudited) (millions of Canadian dollars)
As at April As at October
30, 2023 31, 2022
----------------------------------------------------- ----------- -------------
Assets
Cash and deposits with financial institutions 42,501 31,870
----------------------------------------------------- ----------- -------------
Securities (Notes 2, 3 and 4)
At fair value through profit or loss 93,111 87,375
At fair value through other comprehensive
income 9,712 8,828
At amortized cost 14,099 13,516
----------------------------------------------------- ----------- -------------
116,922 109,719
---------------------------------------------------- ----------- -------------
Securities purchased under reverse repurchase
agreements
and securities borrowed 16,827 26,486
------------------------------------------------------- ----------- -------------
Loans (Note 5)
Residential mortgage 83,441 80,129
Personal 45,255 45,323
Credit card 2,433 2,389
Business and government 79,138 73,317
----------------------------------------------------- ----------- -------------
210,267 201,158
Customers' liability under acceptances 6,567 6,541
Allowances for credit losses (1,070) (955)
----------------------------------------------------- ----------- -------------
215,764 206,744
---------------------------------------------------- ----------- -------------
Other
Derivative financial instruments 14,058 18,547
Investments in associates and joint ventures
(Note 17) 146 140
Premises and equipment 1,508 1,397
Goodwill 1,518 1,519
Intangible assets 1,333 1,360
Other assets (Note 6) 7,107 5,958
----------------------------------------------------- ----------- -------------
25,670 28,921
---------------------------------------------------- ----------- -------------
417,684 403,740
---------------------------------------------------- ----------- -------------
Liabilities and equity
Deposits (Notes 3 and 7) 281,514 266,394
----------------------------------------------------- ----------- -------------
Other
Acceptances 6,567 6,541
Obligations related to securities sold short 18,721 21,817
Obligations related to securities sold under
repurchase agreements
and securities loaned 38,057 33,473
Derivative financial instruments 16,865 19,632
Liabilities related to transferred receivables
(Note 3) 25,982 26,277
Other liabilities (Note 8) 6,609 6,361
----------------------------------------------------- ----------- -------------
112,801 114,101
---------------------------------------------------- ----------- -------------
Subordinated debt (Note 9) 748 1,499
----------------------------------------------------- ----------- -------------
Equity
Equity attributable to the Bank's shareholders
and holders of
other equity instruments (Notes 10 and 12)
Preferred shares and other equity instruments 3,150 3,150
Common shares 3,261 3,196
Contributed surplus 59 56
Retained earnings 15,943 15,140
Accumulated other comprehensive income 207 202
----------------------------------------------------- ----------- -------------
22,620 21,744
Non-controlling interests 1 2
----------------------------------------------------- ----------- -------------
22,621 21,746
---------------------------------------------------- ----------- -------------
417,684 403,740
---------------------------------------------------- ----------- -------------
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
Consolidated Statements of Income
(unaudited) (millions of Canadian dollars)
Quarter ended Six months ended
April 30 April 30
----------------------------------------------------- --------------- ------------------
2023 2022(1) 2023 2022(1)
----------------------------------------------------- ------ ------- ------- ---------
Interest income
Loans 3,026 1,469 5,929 2,891
Securities at fair value through profit or
loss 358 319 783 685
Securities at fair value through other comprehensive
income 68 31 127 62
Securities at amortized cost 119 52 231 98
Deposits with financial institutions 408 40 780 63
------------------------------------------------------ ------ ------- ------- ---------
3,979 1,911 7,850 3,799
----------------------------------------------------- ------ ------- ------- ---------
Interest expense
Deposits 2,365 435 4,461 835
Liabilities related to transferred receivables 157 105 299 206
Subordinated debt 10 4 25 8
Other 565 54 1,084 105
------------------------------------------------------ ------ ------- ------- ---------
3,097 598 5,869 1,154
----------------------------------------------------- ------ ------- ------- ---------
Net interest income (2) 882 1,313 1,981 2,645
------------------------------------------------------ ------ ------- ------- ---------
Non-interest income
Underwriting and advisory fees 93 84 200 162
Securities brokerage commissions 47 59 94 116
Mutual fund revenues 141 147 284 303
Investment management and trust service fees 247 253 489 509
Credit fees 133 119 270 244
Card revenues 51 44 97 91
Deposit and payment service charges 73 73 146 144
Trading revenues (losses) 650 121 1,181 243
Gains (losses) on non-trading securities, net 30 53 41 107
Insurance revenues, net 45 37 83 84
Foreign exchange revenues, other than trading 38 56 94 108
Share in the net income of associates and joint
ventures 4 15 7 20
Other 45 65 94 129
------------------------------------------------------ ------ ------- ------- ---------
1,597 1,126 3,080 2,260
----------------------------------------------------- ------ ------- ------- ---------
Total revenues 2,479 2,439 5,061 4,905
------------------------------------------------------ ------ ------- ------- ---------
Non-interest expenses
Compensation and employee benefits 833 808 1,708 1,625
Occupancy 83 76 166 152
Technology 255 232 507 463
Communications 15 16 29 30
Professional fees 62 57 125 120
Other 126 110 242 189
------------------------------------------------------ ------ ------- ------- ---------
1,374 1,299 2,777 2,579
----------------------------------------------------- ------ ------- ------- ---------
Income before provisions for credit losses
and income taxes 1,105 1,140 2,284 2,326
Provisions for credit losses (Note 5) 85 3 171 1
------------------------------------------------------ ------ ------- ------- ---------
Income before income taxes 1,020 1,137 2,113 2,325
Income taxes 173 248 385 506
------------------------------------------------------ ------ ------- ------- ---------
Net income 847 889 1,728 1,819
------------------------------------------------------ ------ ------- ------- ---------
Net income attributable to
Preferred shareholders and holders of other
equity instruments 35 25 70 51
Common shareholders 813 865 1,659 1,769
------------------------------------------------------ ------ ------- ------- ---------
Bank shareholders and holders of other equity
instruments 848 890 1,729 1,820
Non-controlling interests (1) (1) (1) (1)
------------------------------------------------------ ------ ------- ------- ---------
847 889 1,728 1,819
----------------------------------------------------- ------ ------- ------- ---------
Earnings per share (dollars) (Note 15)
Basic 2.41 2.56 4.92 5.24
Diluted 2.38 2.53 4.87 5.17
Dividends per common share (dollars) (Note
10) 0.97 0.87 1.94 1.74
------------------------------------------------------ ------ ------- ------- ---------
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
(1) For the quarter and six-month period ended April 30, 2022, certain amounts have been adjusted to reflect a change in accounting policy related to cloud computing arrangements. For additional information, see Note 1.
(2) Net interest income includes dividend income. For additional information, see Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022.
Consolidated Statements of Comprehensive Income
(unaudited) (millions of Canadian dollars)
Quarter ended Six months ended
April 30 April 30
--------------------------------------------------- ---------------- ------------------
2023 2022(1) 2023 2022(1)
------------------------------------------------------- ----- -------- ------- ---------
Net income 847 889 1,728 1,819
------------------------------------------------------- ----- -------- ------- ---------
Other comprehensive income, net of income
taxes
Items that may be subsequently reclassified
to net income
Net foreign currency translation adjustments
Net unrealized foreign currency translation
gains (losses) on investments
in foreign operations 109 48 (31) 164
Impact of hedging net foreign currency translation
gains (losses) (34) (17) 6 (51)
75 31 (25) 113
----------------------------------------------------- ----- -------- ------- ---------
Net change in debt securities at fair value
through other comprehensive income
Net unrealized gains (losses) on debt securities
at fair value through other
comprehensive income (40) (56) (28) (120)
Net (gains) losses on debt securities at fair
value through other comprehensive
income reclassified to net income 48 23 52 44
Change in allowances for credit losses on
debt securities at fair value through
other comprehensive income reclassified to
net income 1 - - -
--------------------------------------------------- ----- -------- ------- ---------
9 (33) 24 (76)
--------------------------------------------------- ----- -------- ------- ---------
Net change in cash flow hedges
Net gains (losses) on derivative financial
instruments designated as cash flow hedges 5 28 (20) 34
Net (gains) losses on designated derivative
financial instruments reclassified
to net income 16 6 25 16
---------------------------------------------------- ----- -------- ------- ---------
21 34 5 50
--------------------------------------------------- ----- -------- ------- ---------
Share in the other comprehensive income of
associates and joint ventures - (1) 1 (1)
----------------------------------------------------- ----- -------- ------- ---------
Items that will not be subsequently reclassified
to net income
Remeasurements of pension plans and other
post-employment benefit plans 3 76 (56) 172
Net gains (losses) on equity securities designated
at fair value through
other comprehensive income (4) (23) 6 (17)
Net fair value change attributable to the
credit risk on financial liabilities
designated at fair value through profit or
loss (19) 304 (158) 325
---------------------------------------------------- ----- -------- ------- ---------
(20) 357 (208) 480
--------------------------------------------------- ----- -------- ------- ---------
Total other comprehensive income, net of income
taxes 85 388 (203) 566
------------------------------------------------------- ----- -------- ------- ---------
Comprehensive income 932 1,277 1,525 2,385
------------------------------------------------------- ----- -------- ------- ---------
Comprehensive income attributable to
Bank shareholders and holders of other equity
instruments 933 1,278 1,526 2,386
Non-controlling interests (1) (1) (1) (1)
------------------------------------------------------ ----- -------- ------- ---------
932 1,277 1,525 2,385
------------------------------------------------------ ----- -------- ------- ---------
The accompanying notes are an integral part of these
unaudited interim condensed consolidated financial
statements.
(1) For the quarter and six-month period ended April 30, 2022 , certain amounts have been adjusted to reflect a change in accounting policy related to cloud computing arrangements. For additional information, see Note 1.
Consolidated Statements of Comprehensive Income (cont.)
(unaudited) (millions of Canadian dollars)
Income Taxes - Other Comprehensive Income
The following table presents the income tax expense or recovery for each component of other comprehensive income.
Six months ended
Quarter ended April 30 April 30
-------------------------------------------------------------------- ------------------
2023 2022 2023 2022
---------------------------------------------------------- ---- ---- -------- --------
Items that may be subsequently reclassified
to net income
Net foreign currency translation adjustments
Net unrealized foreign currency translation
gains (losses) on investments
in foreign operations (3) - 2 (5)
Impact of hedging net foreign currency translation
gains (losses) (8) 2 - (5)
--------------------------------------------------------- ---- ---- -------- --------
(11) 2 2 (10)
------------------------------------------------------- ---- ---- -------- --------
Net change in debt securities at fair value
through other comprehensive income
Net unrealized gains (losses) on debt securities
at fair value through other
comprehensive income (15) (20) (11) (43)
Net (gains) losses on debt securities at fair
value through other comprehensive income
reclassified to net income 18 8 20 16
Change in allowances for credit losses on debt
securities at fair value through
other comprehensive income reclassified to
net income - - - -
-------------------------------------------------------- ---- ---- -------- --------
3 (12) 9 (27)
------------------------------------------------------- ---- ---- -------- --------
Net change in cash flow hedges
Net gains (losses) on derivative financial
instruments designated as cash flow hedges 2 10 (8) 12
Net (gains) losses on designated derivative
financial instruments reclassified
to net income 6 2 10 5
--------------------------------------------------------- ---- ---- -------- --------
8 12 2 17
------------------------------------------------------- ---- ---- -------- --------
Share in the other comprehensive income of
associates and joint ventures - (1) - (1)
---------------------------------------------------------- ---- ---- -------- --------
Items that will not be subsequently reclassified
to net income
Remeasurements of pension plans and other
post-employment benefit plans 1 27 (12) 62
Net gains (losses) on equity securities designated
at fair value through
other comprehensive income (1) (8) 2 (6)
Net fair value change attributable to the
credit risk on financial liabilities
designated at fair value through profit or
loss (8) 108 (61) 116
--------------------------------------------------------- ---- ---- -------- --------
(8) 127 (71) 172
---- ---- -------- --------
(8) 128 (58) 151
---------------------------------------------------------- ---- ---- -------- --------
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
Consolidated Statements of Changes in Equity
(unaudited) (millions of Canadian dollars)
Six months ended April
30
----------------------------------------------------------- ---------------------------
2023 2022(1)
------------------------------------------------------------ ----------- -----------
Preferred shares and other equity instruments at
beginning and at end (Note 10) 3,150 2,650
------------------------------------------------------------ ----------- -----------
Common shares at beginning (Note 10) 3,196 3,160
Issuances of common shares pursuant to the Stock
Option Plan 60 52
Repurchases of common shares for cancellation - (24)
Impact of shares purchased or sold for trading 5 8
Common shares at end 3,261 3,196
------------------------------------------------------------ ----------- -----------
Contributed surplus at beginning 56 47
Stock option expense (Note 12) 9 8
Stock options exercised (6) (6)
Contributed surplus at end 59 49
------------------------------------------------------------ ----------- -----------
Retained earnings at beginning 15,140 12,854
Net income attributable to the Bank's shareholders
and holders of other equity instruments 1,729 1,820
Dividends on preferred shares and distributions on
other equity instruments (Note 10) (80) (56)
Dividends on common shares (Note 10) (655) (587)
Premium paid on common shares repurchased for cancellation
(Note 10) - (221)
Remeasurements of pension plans and other post-employment
benefit plans (56) 172
Net gains (losses) on equity securities designated
at fair value through other comprehensive income 6 (17)
Net fair value change attributable to the credit
risk on financial liabilities
designated at fair value through profit or loss (158) 325
Impact of a financial liability resulting from put
options written to non-controlling interests 7 (2)
Other 10 5
------------------------------------------------------------ ----------- -----------
Retained earnings at end 15,943 14,293
------------------------------------------------------------ ----------- -----------
Accumulated other comprehensive income at beginning 202 (32)
Net foreign currency translation adjustments (25) 113
Net change in unrealized gains (losses) on debt securities
at fair value through other comprehensive income 24 (76)
Net change in gains (losses) on cash flow hedges 5 50
Share in the other comprehensive income of associates
and joint ventures 1 (1)
------------------------------------------------------------ ----------- -----------
Accumulated other comprehensive income at end 207 54
------------------------------------------------------------ ----------- -----------
-
Equity attributable to the Bank's shareholders and
holders of other equity instruments 22,620 20,242
------------------------------------------------------------ ----------- -----------
Non-controlling interests at beginning 2 3
Net income attributable to non-controlling interests (1) (1)
Non-controlling interests at end 1 2
------------------------------------------------------------ ----------- -----------
Equity 22,621 20,244
------------------------------------------------------------ ----------- -----------
Accumulated Other Comprehensive Income
As at April As at April
30, 2023 30, 2022
---------------------------------------------------------------- ----------- -----------
Accumulated other comprehensive income
Net foreign currency translation adjustments 179 (16)
Net unrealized gains (losses) on debt securities at
fair value through other comprehensive income (10) (5)
Net gains (losses) on instruments designated as cash
flow hedges 36 73
Share in the other comprehensive income of associates
and joint ventures 2 2
----------------------------------------------------------------- ----------- -----------
207 54
---------------------------------------------------------------- ----------- -----------
The accompanying notes are an integral part of these
unaudited interim condensed consolidated financial statements.
(1) For the six-month period ended April 30, 2022 , certain amounts have been adjusted to reflect a change in accounting policy related to cloud computing arrangements. For additional information, see Note 1.
Consolidated Statements of Cash Flows
(unaudited) (millions of Canadian dollars)
Six months ended April
30
--------------------------------------------------------------- ------------------------
2023 2022(1)
----------------------------------------------------------------- ----------- -----------
Cash flows from operating activities
Net income 1,728 1,819
Adjustments for
Provisions for credit losses 171 1
Amortization of premises and equipment, including right-of-use
assets 105 101
Amortization of intangible assets 157 141
Deferred taxes (58) 94
Losses (gains) on sales of non-trading securities,
net (41) (107)
Share in the net income of associates and joint ventures (7) (20)
Stock option expense 9 8
Change in operating assets and liabilities
Securities at fair value through profit or loss (5,736) 6,723
Securities purchased under reverse repurchase agreements
and securities borrowed 9,659 (4,225)
Loans and acceptances, net of securitization (9,444) (12,125)
Deposits 15,120 5,746
Obligations related to securities sold short (3,096) 1,095
Obligations related to securities sold under repurchase
agreements and securities loaned 4,584 6,999
Derivative financial instruments, net 1,722 (5,848)
Interest and dividends receivable and interest payable 170 25
Current tax assets and liabilities (271) (415)
Other items (1,448) (1,998)
---------------------------------------------------------------- ----------- -----------
13,324 (1,986)
--------------------------------------------------------------- ----------- -----------
Cash flows from financing activities
Issuances of common shares (including the impact of
shares purchased for trading) 59 54
Repurchases of common shares for cancellation - (245)
Redemption of subordinated debt (750) -
Repayments of lease liabilities (50) (50)
Dividends paid on shares and distributions on other
equity instruments (732) (643)
(1,473) (884)
--------------------------------------------------------------- ----------- -----------
Cash flows from investing activities
Net change in investments in associates and joint ventures - 119
Purchases of non-trading securities (5,149) (5,882)
Maturities of non-trading securities 1,473 912
Sales of non-trading securities 2,443 3,878
Net change in premises and equipment, excluding right-of-use
assets (181) (156)
Net change in intangible assets (130) (178)
----------------------------------------------------------------- ----------- -----------
(1,544) (1,307)
--------------------------------------------------------------- ----------- -----------
Impact of currency rate movements on cash and cash
equivalents 324 721
------------------------------------------------------------------ ----------- -----------
Increase (decrease) in cash and cash equivalents 10,631 (3,456)
Cash and cash equivalents at beginning 31,870 33,879
----------------------------------------------------------------- ----------- -----------
Cash and cash equivalents at end (2) 42,501 30,423
----------------------------------------------------------------- ----------- -----------
Supplementary information about cash flows from operating
activities
Interest paid 5,166 1,127
Interest and dividends received 7,317 3,798
Income taxes paid 428 786
----------------------------------------------------------------- ----------- -----------
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.
(1) For the six-month period ended April 30, 2022, certain amounts have been adjusted to reflect a change in accounting policy related to cloud computing arrangements. For additional information, see Note 1.
(2) This item is the equivalent of Consolidated Balance Sheet item Cash and deposits with financial institutions. It includes an amount of $7.3 billion as at April 30, 2023 ($7.7 billion as at October 31, 2022) for which there are restrictions and of which $4.4 billion ($5.3 billion as at October 31, 2022) represent the balances that the Bank must maintain with central banks, other regulatory agencies, and certain counterparties.
Notes to the Interim Condensed Consolidated Financial Statements
(unaudited) (millions of Canadian dollars)
Note Note Share Capital and Other Equity
1 Basis of Presentation 60 10 Instruments 81
Note Note
2 Fair Value of Financial Instruments 61 11 Capital Disclosure 82
Note Financial Instruments Designated Note
3 at Fair Value Through 12 Share-Based Payments 83
Note Employee Benefits - Pension
Profit or Loss 66 13 Plans and Other
Note
4 Securities 67 Post-Employment Benefit Plans 84
Note Loans and Allowances for Credit Note
5 Losses 68 14 Income Taxes 85
Note Note
6 Other Assets 79 15 Earnings Per Share 85
Note Note
7 Deposits 80 16 Segment Disclosures 86
Note Note Event After the Consolidated
8 Other Liabilities 80 17 Balance Sheet Date 87
Note
9 Subordinated Debt 80
Note 1 - Basis of Presentation
On May 30, 2023, the Board of Directors authorized the publication of the Bank's unaudited interim condensed consolidated financial statements (the consolidated financial statements) for the quarter and six-month period ended April 30, 2023.
The Bank's consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (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. IFRS represent Canadian generally accepted accounting principles (GAAP). None of the OSFI accounting requirements are exceptions to IFRS.
These consolidated financial statements were prepared in accordance with IAS 34 - Interim Financial Reporting and using the same accounting policies as those described in Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022. Since these interim consolidated financial statements do not include all of the annual financial statement disclosures required under IFRS, they should be read in conjunction with the audited annual consolidated financial statements and accompanying notes for the year ended October 31, 2022. Future accounting policy changes that have not yet come into effect are described in Note 2 to the audited annual consolidated financial statements for the year ended October 31, 2022.
Certain comparative amounts have been adjusted to reflect an accounting policy change related to cloud computing arrangements, as described in Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022.
Judgment, Estimates and Assumptions
In preparing consolidated financial statements in accordance with IFRS, management must exercise judgment and make estimates and assumptions that affect the reporting date carrying amounts of assets and liabilities, net income, and related information. Some of the Bank's accounting policies, such as measurement of expected credit losses (ECLs), require particularly complex judgments and estimates. See Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022 for a summary of the most significant estimation processes used to prepare the consolidated financial statements in accordance with IFRS and for the valuation techniques used to determine the carrying values and fair values of assets and liabilities.
The geopolitical landscape, rising inflation, higher interest rates, and the Russia-Ukraine war continue to create uncertainty. As a result, establishing reliable estimates and applying judgment continue to be substantially complex. The uncertainty regarding certain key inputs used in measuring ECLs is described in Note 5 to these unaudited interim condensed consolidated financial statements.
Unless otherwise indicated, all amounts are expressed in Canadian dollars, which is the Bank's functional and presentation currency.
Note 2 - Fair Value of Financial Instruments
Fair Value and Carrying Value of Financial Instruments by Category
Financial assets and financial liabilities are recognized on the Consolidated Balance Sheet at fair value or at amortized cost in accordance with the categories set out in the accounting framework for financial instruments.
As at April 30,
2023
---------------- ----------- ----------- ------------- ------------- ----------- ------------------------------
Carrying value Carrying Fair
and fair value value value
------------- ------------------------------------------------------ ----------- ----------- -------- -------
Debt Equity
Financial Financial securities securities
instruments instruments classified designated
classified designated as at at Financial Financial
as at at fair fair value fair value instruments instruments
fair value value through through at at
through through other other amortized amortized Total Total
profit profit comprehensive comprehensive cost, cost, carrying fair
or loss or loss income income net net value value
------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
Financial assets
Cash and
deposits
with financial
institutions - - - - 42,501 42,501 42,501 42,501
Securities 92,256 855 9,144 568 14,099 13,741 116,922 116,564
Securities
purchased
under reverse
repurchase
agreements
and securities
borrowed - 39 - - 16,788 16,788 16,827 16,827
Loans and
acceptances,
net of
allowances 11,567 - - - 204,197 202,275 215,764 213,842
Other
Derivative
financial
instruments 14,058 - - - - - 14,058 14,058
Other assets 80 - - - 3,758 3,758 3,838 3,838
--------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
Financial
liabilities
Deposits (1) - 18,625 262,889 262,273 281,514 280,898
Other
Acceptances - - 6,567 6,567 6,567 6,567
Obligations
related
to securities
sold
short 18,721 - - - 18,721 18,721
Obligations
related
to securities
sold
under
repurchase
agreements
and
securities
loaned - - 38,057 38,057 38,057 38,057
Derivative
financial
instruments 16,865 - - - 16,865 16,865
Liabilities
related
to transferred
receivables - 10,419 15,563 15,033 25,982 25,452
Other
liabilities - - 3,109 3,106 3,109 3,106
Subordinated
debt - - 748 757 748 757
--------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
(1) Includes embedded derivative financial instruments.
Note 2 - Fair Value of Financial Instruments (cont.)
As at October 31,
2022
---------------- ----------- ----------- ------------- ------------- ----------- ------------------------------
Carrying value and Carrying Fair
fair value value value
------------- ------------------------------------------------------ ----------- ----------- -------- -------
Debt Equity
Financial Financial securities securities
instruments instruments classified designated
classified designated as at at Financial Financial
as at at fair fair value fair value instruments instruments
fair value value through through at at
through through other other amortized amortized Total Total
profit profit comprehensive comprehensive cost, cost, carrying fair
or loss or loss income income net net value value
------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- -------
Financial assets
Cash and
deposits
with financial
institutions - - - - 31,870 31,870 31,870 31,870
Securities 86,338 1,037 8,272 556 13,516 13,007 109,719 109,210
Securities
purchased
under reverse
repurchase
agreements
and securities
borrowed - - - - 26,486 26,486 26,486 26,486
Loans and
acceptances,
net of
allowances 10,516 - - - 196,228 190,955 206,744 201,471
Other
Derivative
financial
instruments 18,547 - - - - - 18,547 18,547
Other assets 87 - - - 3,221 3,221 3,308 3,308
--------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- ------- Financial liabilities Deposits (1) - 15,355 251,039 249,937 266,394 265,292 Other Acceptances - - 6,541 6,541 6,541 6,541 Obligations related to securities sold short 21,817 - - - 21,817 21,817 Obligations related to securities sold under repurchase agreements and securities loaned - - 33,473 33,473 33,473 33,473 Derivative financial instruments 19,632 - - - 19,632 19,632 Liabilities related to transferred receivables - 11,352 14,925 14,137 26,277 25,489 Other liabilities - - 2,632 2,627 2,632 2,627 Subordinated debt - - 1,499 1,478 1,499 1,478 --------------- ----------- ----------- ------------- ------------- ----------- ----------- -------- ------- (1) Includes embedded derivative financial instruments .
Establishing Fair Value
The fair value of a financial instrument is the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction in the principal market at the measurement date under current market conditions (i.e., an exit price).
Unadjusted quoted prices in active markets provide the best evidence of fair value. When there is no quoted price in an active market, the Bank applies other valuation techniques that maximize the use of relevant observable inputs and that minimize the use of unobservable inputs. Such valuation techniques include the following: using information available from recent market transactions, referring to the current fair value of a comparable financial instrument, applying discounted cash flow analysis, applying option pricing models, or relying on any other valuation technique that is commonly used by market participants and has proven to yield reliable estimates. Judgment is required when applying many of the valuation techniques. The Bank's valuations were based on its assessment of the conditions prevailing as at April 30, 2023 and may change in the future. Furthermore, there may be measurement uncertainty resulting from the choice of valuation model used.
Fair value is established in accordance with a rigorous control framework. The Bank has policies and procedures that govern the process for determining fair value. The Bank's valuation governance structure has remained largely unchanged from that described in Note 3 to the audited annual consolidated financial statements for the year ended October 31, 2022. The valuation techniques used to determine the fair value of financial assets and financial liabilities are also described in this note, and no significant changes have been made to the valuation techniques.
Financial Instruments Recorded at Fair Value on the Consolidated Balance Sheet
Hierarchy of Fair Value Measurements
IFRS establishes a fair value measurement hierarchy that classifies the inputs used in financial instrument fair value measurement techniques according to three levels. This fair value hierarchy requires observable market inputs in an active market to be used whenever such inputs exist. According to the hierarchy, the highest level of inputs are unadjusted quoted prices in active markets for identical instruments and the lowest level of inputs are unobservable inputs. If inputs from different levels of the hierarchy are used, the financial instrument is classified in the same level as the lowest level input that is significant to the fair value measurement. For additional information, see Note 3 to the audited annual consolidated financial statements for the year ended October 31, 2022.
Transfers of financial instruments between Levels 1 and 2 and transfers to (or from) Level 3 are deemed to have taken place at the beginning of the quarter in which the transfer occurred. Significant transfers can occur between the fair value hierarchy levels due to new information on inputs used to determine fair value and the observable nature of those inputs.
During the quarter ended April 30, 2023, $1 million in securities classified as at fair value through profit or loss were transferred from Level 2 to Level 1 as a result of changing market conditions ($21 million in securities classified as at fair value through profit or loss during the quarter ended April 30, 2022). Also, during the quarter ended April 30, 2023, $2 million in securities classified as at fair value through profit or loss were transferred from Level 1 to Level 2 as a result of changing market conditions ($3 million in securities classified as at fair value through profit or loss during the quarter ended April 30, 2022). D uring the six-month periods ended April 30, 2023 and 2022, financial instruments were transferred to (or from) Level 3 due to changes in the availability of observable market inputs as a result of changing market conditions.
The following tables show financial instruments recorded at fair value on the Consolidated Balance Sheet according to the fair value hierarchy.
As at April 30, 2023
----------------------------------------------- ------ ----------------------------------
Total
financial
assets/liabilities
Level Level Level at fair
1 2 3 value
----------------------------------------------- ------ ------ ----- -------------------
Financial assets
Securities
At fair value through profit or loss
Securities issued or guaranteed by
Canadian government 4,389 10,211 - 14,600
Canadian provincial and municipal governments - 8,731 - 8,731
U.S. Treasury, other U.S. agencies and
other foreign governments 3,997 3,319 - 7,316
Other debt securities - 3,911 79 3,990
Equity securities 57,525 524 425 58,474
------------------------------------------------ ------ ------ ----- -------------------
65,911 26,696 504 93,111
----------------------------------------------- ------ ------ ----- -------------------
At fair value through other comprehensive
income
Securities issued or guaranteed by
Canadian government 81 4,008 - 4,089
Canadian provincial and municipal governments - 2,457 - 2,457
U.S. Treasury, other U.S. agencies and
other foreign governments 805 215 - 1,020
Other debt securities - 1,578 - 1,578
Equity securities - 237 331 568
------------------------------------------------ ------ ------ ----- -------------------
886 8,495 331 9,712
----------------------------------------------- ------ ------ ----- -------------------
Securities purchased under reverse repurchase
agreements and
securities borrowed - 39 - 39
Loans - 11,330 237 11,567
Other
Derivative financial instruments 260 13,786 12 14,058
Other assets - Other items - - 80 80
------------------------------------------------- ------ ------ ----- -------------------
67,057 60,346 1,164 128,567
--------------------------------------------------- ------ ------ ----- -------------------
Financial liabilities
Deposits (1) - 18,639 - 18,639
Other
Obligations related to securities sold
short 13,365 5,356 - 18,721
Derivative financial instruments 413 16,439 13 16,865
Liabilities related to transferred receivables - 10,419 - 10,419
13,778 50,853 13 64,644
--------------------------------------------------- ------ ------ ----- -------------------
(1) The amounts include the fair value of embedded derivative financial instruments in deposits.
Note 2 - Fair Value of Financial Instruments (cont.)
As at October 31, 2022
----------------------------------------------- ------- -------------------------------------
Total financial
assets/liabilities
at fair
Level 1 Level 2 Level 3 value
----------------------------------------------- ------- ------- ------- -------------------
Financial assets
Securities
At fair value through profit or loss
Securities issued or guaranteed by
Canadian government 4,736 8,186 - 12,922
Canadian provincial and municipal governments - 9,260 - 9,260
U.S. Treasury, other U.S. agencies and
other foreign governments 10,639 4,445 - 15,084
Other debt securities - 3,324 60 3,384
Equity securities 45,805 504 416 46,725
------------------------------------------------ ------- ------- ------- -------------------
61,180 25,719 476 87,375
----------------------------------------------- ------- ------- ------- -------------------
At fair value through other comprehensive
income
Securities issued or guaranteed by
Canadian government 21 3,191 - 3,212
Canadian provincial and municipal governments - 1,970 - 1,970
U.S. Treasury, other U.S. agencies and
other foreign governments 1,687 191 - 1,878
Other debt securities - 1,212 - 1,212
Equity securities - 236 320 556
------------------------------------------------ ------- ------- ------- -------------------
1,708 6,800 320 8,828
----------------------------------------------- ------- ------- ------- -------------------
Loans - 10,272 244 10,516
Other
Derivative financial instruments 342 18,204 1 18,547
Other assets - Other items - - 87 87
------------------------------------------------- ------- ------- ------- -------------------
63,230 60,995 1,128 125,353
------------------------------------------------ ------- ------- ------- -------------------
Financial liabilities
Deposits (1) - 15,424 8 15,432
Other
Obligations related to securities sold
short 15,213 6,604 - 21,817
Derivative financial instruments 625 18,989 18 19,632
Liabilities related to transferred receivables - 11,352 - 11,352
15,838 52,369 26 68,233
------------------------------------------------ ------- ------- ------- -------------------
(1) The amounts include the fair value of embedded derivative financial instruments in deposits.
Financial Instruments Classified in Level 3
The Bank classifies financial instruments in Level 3 when the valuation technique is based on at least one significant input that is not observable in the markets. The Bank maximizes the use of observable inputs to determine the fair value of financial instruments.
For a description of the valuation techniques and significant unobservable inputs used in determining the fair value of financial instruments classified in Level 3, see Note 3 to the audited annual consolidated financial statements for the year ended October 31, 2022. For the quarter and six-month period ended April 30, 2023, no significant change was made to the valuation techniques and significant unobservable inputs used in determining fair value.
Sensitivity Analysis of Financial Instruments Classified in Level 3
The Bank performs sensitivity analyses for the fair value measurements of Level 3 financial instruments, substituting unobservable inputs with one or more reasonably possible alternative assumptions. For additional information on how a change in an unobservable input might affect the fair value measurements of Level 3 financial instruments, see Note 3 to the audited annual consolidated financial statements for the year ended October 31, 2022. For the six-month period ended April 30, 2023, there were no significant changes in the sensitivity analyses of Level 3 financial instruments .
Change in the Fair Value of Financial Instruments Classified in Level 3
The Bank may hedge the fair value of financial instruments classified in the various levels through offsetting hedge positions. Gains and losses on financial instruments classified in Level 3 presented in the following tables do not reflect the inverse gains and losses on financial instruments used for economic hedging purposes that may have been classified in Level 1 or Level 2 by the Bank. In addition, the Bank may hedge the fair value of financial instruments classified in Level 3 using other financial instruments classified in Level 3. The effect of these hedges is not included in the net amount presented in the following tables. T he gains and losses presented hereafter may comprise changes in fair value based on observable and unobservable inputs.
Six months ended
April 30, 2023
--------------------------------------- ---------- -------------- ------- ----------------------
Securities
Securities at fair
at fair value
value through Loans Derivative
through other and financial
profit comprehensive other instruments Deposits
or loss income assets (1) (2)
-------------------------------------- ---------- -------------- ------- ------------ --------
Fair value as at October 31, 2022 476 320 331 (17) (8)
Total realized and unrealized gains
(losses) included in Net income
(3) 1 - 4 4 -
Total realized and unrealized gains
(losses) included in
Other comprehensive income - 11 - - -
Purchases 36 - - - -
Sales (9) - - - -
Issuances - - 12 - -
Settlements and other - - (30) 7 -
Financial instruments transferred
into Level 3 - - - 2
Financial instruments transferred
out of Level 3 - - - 3 8
--------------------------------------- ---------- -------------- ------- ------------ --------
Fair value as at April 30, 2023 504 331 317 (1) -
--------------------------------------- ---------- -------------- ------- ------------ --------
Change in unrealized gains and losses
included in Net income with respect
to financial assets and financial
liabilities held as at April 30,
2023(4) 13 - 4 4 -
--------------------------------------- ---------- -------------- ------- ------------ --------
Six months ended
April 30, 2022
------------------------------------ ---------- -------------- ------- ----------------------------
Securities
Securities at fair
at fair value
value through Loans
through other and Derivative
profit comprehensive other financial
or loss income assets instruments(1) Deposits(2)
----------------------------------- ---------- -------------- ------- --------------- -----------
Fair value as at October 31, 2021 471 306 297 2 - Total realized and unrealized gains (losses) included in Net income (5) 22 - (20) (6) 2 Total realized and unrealized gains (losses) included in Other comprehensive income - 6 - - - Purchases 31 7 71 - - Sales (26) - - - - Issuances - - 10 - - Settlements and other - - 7 (4) - Financial instruments transferred into Level 3 - - 1 1 (3) Financial instruments transferred out of Level 3 (12) - - - - ------------------------------------ ---------- -------------- ------- --------------- ----------- Fair value as at April 30, 2022 486 319 366 (7) (1) ------------------------------------ ---------- -------------- ------- --------------- ----------- Change in unrealized gains and losses included in Net income with respect to financial assets and financial liabilities held as at April 30, 2022(6) 15 12 (20) (6) 2 ------------------------------------ ---------- -------------- ------- --------------- -----------
(1) The derivative financial instruments include assets and liabilities presented on a net basis.
(2) The amounts include the fair value of embedded derivative financial instruments in deposits.
(3) Total gains (losses) included in Non-interest income was a gain of $9 million.
(4) Total unrealized gains (losses) included in Non-interest income was an unrealized gain of $21 million.
(5) Total gains (losses) included in Non-interest income was a loss of $2 million.
(6) Total unrealized gains (losses) included in Non-interest income was an unrealized gain of $3 million.
Note 3 - Financial Instruments Designated at Fair Value Through Profit or Loss
The Bank chose to designate certain financial instruments at fair value through profit or loss according to the criteria presented in Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2022. Consistent with its risk management strategy and in accordance with the fair value option, which permits the designation if it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring financial assets and financial liabilities or recognizing the gains and losses thereon on different bases, the Bank designated certain securities, certain securities purchased under reverse repurchase agreements, and certain liabilities related to transferred receivables at fair value through profit or loss. The fair value of liabilities related to transferred receivables does not include credit risk, as the holders of these liabilities are not exposed to the Bank's credit risk. The Bank also designated certain deposits that include embedded derivative financial instruments at fair value through profit or loss.
To determine a change in fair value arising from a change in the credit risk of deposits designated at fair value through profit or loss, the Bank calculates, at the beginning of the period, the present value of the instrument's contractual cash flows using the following rates: first, an observed discount rate for similar securities that reflects the Bank's credit spread and, then, a rate that excludes the Bank's credit spread. The difference obtained between the two values is then compared to the difference obtained using the same rates at the end of the period.
Information about the financial assets and financial liabilities designated at fair value through profit or loss is provided in the following tables.
Unrealized Unrealized
gains gains Unrealized
(losses) (losses) gains
for for (losses)
Carrying the the six since
value as quarter months the initial
at ended ended recognition
April 30, April 30, April 30, of the
2023 2023 2023 instrument
------------------------------------- --------- ---------- ---------- -----------
Financial assets designated at fair
value through profit or loss
Securities 855 3 10 3
Securities purchased under reverse
repurchase agreements 39 - - -
----------------------------------- --------- ---------- ---------- -----------
894 3 10 3
------------------------------------- --------- ---------- ---------- -----------
Financial liabilities designated
at fair value through profit or loss
Deposits(1)(2) 18,625 66 (1,066) 2,071
Liabilities related to transferred
receivables 10,419 (7) (107) 410
----------------------------------- --------- ---------- ---------- -----------
(.) 29,044 59 (1,173) 2,481
------------------------------------- --------- ---------- ---------- -----------
Unrealized
Unrealized gains Unrealized
gains (losses) gains
(losses) for (losses)
Carrying for the six since
value as the quarter months the initial
at ended ended recognition
April 30, April 30, April 30, of the
2022 2022 2022 instrument
------------------------------------ ---------- ----------- ----------- ------------
Financial assets designated at fair
value through profit or loss
Securities 1,164 (36) (46) (20)
Financial liabilities designated
at fair value through profit or loss
Deposits(1)(2) 13,735 1,526 1,675 1,601
Liabilities related to transferred
receivables 10,324 273 325 351
----------------------------------- ---------- ----------- ----------- ------------
24,059 1,799 2,000 1,952
------------------------------------ ---------- ----------- ----------- ------------
(1) For the quarter ended April 30, 2023, the change in the fair value of deposits designated at fair value through profit or loss attributable to credit risk, and recorded in Other comprehensive income, resulted in a loss of $27 million ($412 million gain for the quarter ended April 30, 2022). For the six -month period ended April 30, 2023, the corresponding change in this item resulted in a loss of $219 million ($ 441 million gain for the six- month period ended April 30, 2022).
(2) The amount at maturity that the Bank will be contractually required to pay to the holders of these deposits varies and will differ from the reporting date fair value.
Note 4 - Securities
Credit Quality
As at April 30, 2023 and as at October 31, 2022, securities at fair value through other comprehensive income and securities at amortized cost were mainly classified in Stage 1, with their credit quality falling mostly in the "Excellent" category according to the Bank's internal risk-rating categories. For additional information on the reconciliation of allowances for credit losses, see Note 5 to these consolidated financial statements.
Unrealized Gross Gains (Losses) on Securities at Fair Value Through Other Comprehensive Income
As at April 30, 2023
----------------------------------------------- ---------------------------------------------
Gross Gross Carrying
Amortized unrealized unrealized value
cost gains losses (1)
---------------------------------------------- --------- ----------- ----------- --------
Securities issued or guaranteed by
Canadian government 4,220 8 (139) 4,089
Canadian provincial and municipal governments 2,520 23 (86) 2,457
U.S. Treasury, other U.S. agencies and
other foreign governments 1,054 8 (42) 1,020
Other debt securities 1,670 3 (95) 1,578
Equity securities 568 17 (17) 568
----------------------------------------------- --------- ----------- ----------- --------
10,032 59 (379) 9,712
----------------------------------------------- --------- ----------- ----------- --------
As at October 31, 2022
----------------------------------------------- --------------------------------------------------------
Amortized Gross unrealized Gross unrealized Carrying
cost gains losses value(1)
---------------------------------------------- --------- ---------------- ---------------- ---------
Securities issued or guaranteed by
Canadian government 3,386 1 (175) 3,212
Canadian provincial and municipal governments 2,129 1 (160) 1,970
U.S. Treasury, other U.S. agencies and
other foreign governments 2,022 - (144) 1,878
Other debt securities 1,355 - (143) 1,212
Equity securities 570 21 (35) 556
----------------------------------------------- ---------------- ---------------- ---------
9,462 23 (657) 8,828
----------------------------------------------- --------- ---------------- ---------------- ---------
(1) The allowances for credit losses on securities at fair value through other comprehensive income (excluding the equity securities), representing $2 million as at April 30, 2023 ($2 million as at October 31, 2022), are reported in Other comprehensive income. For additional information, see Note 5 to these consolidated financial statements.
Equity Securities Designated at Fair Value Through Other Comprehensive Income
The Bank designated certain equity securities, the main business objective of which is to generate dividend income, at fair value through other comprehensive income without subsequent reclassification of gains and losses to net income. During the six-month period ended April 30, 2023, a dividend income amount of $12 million was recognized for these investments ($7 million for the six-month period ended April 30, 2022), including amounts of $1 million for investments that were sold during the six-month period ended April 30, 2023 ($1 million for investments that were sold during the six-month period ended April 30, 2022).
Six months ended April 30, Six months ended April 30,
2023 2022
------------------- ------------------------------- -------------------------------------------
Equity
Equity securities
securities of Equity securities Equity securities
of private public of private of
companies companies Total companies public companies Total
------------------- ----------- ----------- ----- ----------------- ----------------- -----
Fair value at
beginning 320 236 556 306 311 617
Change in fair value 11 (3) 8 6 (29) (23)
Designated at fair
value through
other comprehensive
income - 44 44 7 44 51
Sales(1) - (40) (40) - (71) (71)
-------------------- ----------- ----------- ----- ----------------- ----------------- -----
Fair value at end 331 237 568 319 255 574
--------------------- ----------- ----------- ----- ----------------- ----------------- -----
(1) The Bank disposed of private and public company equity securities for economic reasons.
Note 4 - Securities (cont.)
Securities at Amortized Cost
As at April As at October
30, 2023 31, 2022
------------------------------------------------------ ----------- -------------
Securities issued or guaranteed by
Canadian government 5,630 5,737
Canadian provincial and municipal governments 1,890 1,826
U.S. Treasury, other U.S. agencies and other foreign
governments 545 150
Other debt securities 6,042 5,810
------------------------------------------------------ ----------- -------------
Gross carrying value 14,107 13,523
Allowances for credit losses 8 7
------------------------------------------------------ ----------- -------------
Carrying value 14,099 13,516
------------------------------------------------------ ----------- -------------
Gains (Losses) on Disposals of Securities at Amortized Cost
During the six-month period ended April 30, 2023, the Bank did not dispose of any securities measured at amortized cost. During the six-month period ended April 30, 2022 , the Bank had sold certain debt securities measured at amortized cost. The carrying value of these securities upon disposal was $287 million, and the Bank had recognized gains of $4 million in Non-interest income - Gains (losses) on non-trading securities, net in the Consolidated Statement of Income.
Note 5 - Loans and Allowances for Credit Losses
Determining and Measuring Expected Credit Losses (ECL)
Determining Expected Credit Losses
Expected credit losses are determined using a three-stage impairment approach that is based on the change in the credit quality of financial assets since initial recognition.
Non-Impaired Loans
Stage 1
Financial assets that have experienced no significant increase in credit risk between initial recognition and the reporting date, and for which 12-month expected credit losses are recorded at the reporting date, are classified in Stage 1.
Stage 2
Financial assets that have experienced a significant increase in credit risk between initial recognition and the reporting date, and for which lifetime expected credit losses are recorded at the reporting date, are classified in Stage 2.
Impaired Loans
Stage 3
Financial assets for which there is objective evidence of impairment, for which one or more events have had a detrimental impact on the estimated future cash flows of these financial assets at the reporting date, and for which lifetime expected credit losses are recorded, are classified in Stage 3.
POCI
Financial assets that are credit-impaired when purchased or originated (POCI) are classified in the POCI category.
For additional information, see Notes 1 and 7 to the audited annual consolidated financial statements for the year ended October 31, 2022.
Credit Quality of Loans
The following tables present the gross carrying amounts of loans as at April 30, 2023 and as at October 31, 2022, according to credit quality and ECL impairment stage of each loan category at amortized cost, and according to credit quality for loans at fair value through profit or loss. For additional information on credit quality according to the Internal Ratings-Based (IRB) categories, see the Internal Default Risk Ratings table on page 78 in the Credit Risk section of the 2022 Annual Report.
As at April 30, 2023
---------------------------- ---------- -------- -------- -------------------------
Non-impaired loans Impaired loans
---------------------------- -------------------- ---------------- -------- -------
Loans
at fair
value
through
profit
Stage Stage Stage or loss
1 2 3 POCI (1) Total
---------------------------- ---------- -------- -------- ------ -------- -------
Residential mortgage
Excellent 29,851 1 - - - 29,852
Good 16,937 140 - - - 17,077
Satisfactory 10,545 3,832 - - - 14,377
Special mention 359 744 - - - 1,103
Substandard 57 196 - - - 253
Default - - 53 - - 53
----------------------------- ---------- -------- -------- ------ -------- -------
IRB Approach 57,749 4,913 53 - - 62,715
Standardized Approach 8,743 198 204 335 11,246 20,726
----------------------------- ---------- -------- -------- ------ -------- -------
Gross carrying amount 66,492 5,111 257 335 11,246 83,441
Allowances for credit
losses(2) 64 81 63 (67) - 141
----------------------------- ---------- -------- -------- ------ -------- -------
Carrying amount 66,428 5,030 194 402 11,246 83,300
----------------------------- ---------- -------- -------- ------ -------- -------
Personal
Excellent 21,692 20 - - - 21,712
Good 8,262 652 - - - 8,914
Satisfactory 5,985 1,797 - - - 7,782
Special mention 1,905 804 - - - 2,709
Substandard 27 208 - - - 235
Default - - 149 - - 149
----------------------------- ---------- -------- -------- ------ -------- -------
IRB Approach 37,871 3,481 149 - - 41,501
Standardized Approach 3,575 80 44 55 - 3,754
----------------------------- ---------- -------- -------- ------ -------- -------
Gross carrying amount 41,446 3,561 193 55 - 45,255
Allowances for credit
losses(2) 79 110 83 (10) - 262
----------------------------- ---------- -------- -------- ------ -------- -------
Carrying amount 41,367 3,451 110 65 - 44,993
----------------------------- ---------- -------- -------- ------ -------- -------
Credit card
Excellent 629 - - - - 629
Good 360 1 - - - 361
Satisfactory 701 59 - - - 760
Special mention 276 191 - - - 467
Substandard 37 79 - - - 116
Default - - - - - -
---------------------------- ---------- -------- -------- ------ -------- -------
IRB Approach 2,003 330 - - - 2,333
Standardized Approach 100 - - - - 100
----------------------------- ---------- -------- -------- ------ -------- -------
Gross carrying amount 2,103 330 - - - 2,433
Allowances for credit
losses(2) 33 101 - - - 134
----------------------------- ---------- -------- -------- ------ -------- -------
Carrying amount 2,070 229 - - - 2,299
----------------------------- ---------- -------- -------- ------ -------- -------
Business and government
(3)
Excellent 7,922 - - - 103 8,025
Good 27,987 1 - - 53 28,041
Satisfactory 31,328 6,354 - - 138 37,820
Special mention 150 1,697 - - - 1,847
Substandard 10 259 301 - - 570
Default - - 43 - - 43
----------------------------- ---------- -------- -------- ------ -------- -------
IRB Approach 67,397 8,311 344 - 294 76,346
Standardized Approach 9,255 57 20 - 27 9,359
----------------------------- ---------- -------- -------- ------ -------- -------
Gross carrying amount 76,652 8,368 364 - 321 85,705
Allowances for credit
losses(2) 163 179 191 - - 533
----------------------------- ---------- -------- -------- ------ -------- -------
Carrying amount 76,489 8,189 173 - 321 85,172
----------------------------- ---------- -------- -------- ------ -------- -------
Total loans and acceptances
Gross carrying amount 186,693 17,370 814 390 11,567 216,834
Allowances for credit
losses(2) 339 471 337 (77) - 1,070
----------------------------- ---------- -------- -------- ------ -------- -------
Carrying amount 186,354 16,899 477 467 11,567 215,764
----------------------------- ---------- -------- -------- ------ -------- -------
(1) Not subject to expected credit losses.
(2) The allowances for credit losses do not include the amounts related to undrawn commitments reported in the Other liabilities item of the Consolidated Balance Sheet.
(3) Includes customers' liability under acceptances.
Note 5 - Loans and Allowances for Credit Losses (cont.)
As at October 31, 2022
---------------------------- --------- --------- --------- ---------------------------
Non-impaired loans Impaired loans
---------------------------- -------------------- ---------------- ----------- -------
Loans at
fair value
through
profit
Stage 1 Stage 2 Stage 3 POCI or loss(1) Total
---------------------------- --------- --------- --------- ----- ----------- -------
Residential mortgage
Excellent 30,465 - - - - 30,465
Good 16,351 12 - - - 16,363
Satisfactory 10,765 3,269 - - - 14,034
Special mention 609 394 - - - 1,003
Substandard 76 140 - - - 216
Default - - 49 - - 49
----------------------------- --------- --------- --------- ----- ----------- -------
AIRB Approach 58,266 3,815 49 - - 62,130
Standardized Approach 7,266 179 211 384 9,959 17,999
----------------------------- --------- --------- --------- ----- ----------- -------
Gross carrying amount 65,532 3,994 260 384 9,959 80,129
Allowances for credit
losses(2) 53 80 61 (76) - 118
----------------------------- --------- --------- --------- ----- ----------- -------
Carrying amount 65,479 3,914 199 460 9,959 80,011
----------------------------- --------- --------- --------- ----- ----------- -------
Personal
Excellent 22,190 22 - - - 22,212
Good 8,792 479 - - - 9,271
Satisfactory 6,928 1,394 - - - 8,322
Special mention 358 775 - - - 1,133
Substandard 26 203 - - - 229
Default - - 130 - - 130
----------------------------- --------- --------- --------- ----- ----------- -------
AIRB Approach 38,294 2,873 130 - - 41,297
Standardized Approach 3,837 78 36 75 - 4,026
----------------------------- --------- --------- --------- ----- ----------- ------- Gross carrying amount 42,131 2,951 166 75 - 45,323 Allowances for credit losses(2) 67 113 75 (16) - 239 ----------------------------- --------- --------- --------- ----- ----------- ------- Carrying amount 42,064 2,838 91 91 - 45,084 ----------------------------- --------- --------- --------- ----- ----------- ------- Credit card Excellent 600 - - - - 600 Good 359 - - - - 359 Satisfactory 689 51 - - - 740 Special mention 287 178 - - - 465 Substandard 37 71 - - - 108 Default - - - - - - ---------------------------- --------- --------- --------- ----- ----------- ------- AIRB Approach 1,972 300 - - - 2,272 Standardized Approach 117 - - - - 117 ----------------------------- --------- --------- --------- ----- ----------- ------- Gross carrying amount 2,089 300 - - - 2,389 Allowances for credit losses(2) 31 95 - - - 126 ----------------------------- --------- --------- --------- ----- ----------- ------- Carrying amount 2,058 205 - - - 2,263 ----------------------------- --------- --------- --------- ----- ----------- ------- Business and government (3) Excellent 6,140 2 - - 147 6,289 Good 27,607 112 - - 53 27,772 Satisfactory 26,567 8,803 - - 145 35,515 Special mention 75 1,172 - - - 1,247 Substandard 41 272 - - - 313 Default - - 367 - - 367 ----------------------------- --------- --------- --------- ----- ----------- ------- AIRB Approach 60,430 10,361 367 - 345 71,503 Standardized Approach 8,096 28 19 - 212 8,355 ----------------------------- --------- --------- --------- ----- ----------- ------- Gross carrying amount 68,526 10,389 386 - 557 79,858 Allowances for credit losses(2) 115 160 197 - - 472 ----------------------------- --------- --------- --------- ----- ----------- ------- Carrying amount 68,411 10,229 189 - 557 79,386 ----------------------------- --------- --------- --------- ----- ----------- ------- Total loans and acceptances Gross carrying amount 178,278 17,634 812 459 10,516 207,699 Allowances for credit losses(2) 266 448 333 (92) - 955 ----------------------------- --------- --------- --------- ----- ----------- ------- Carrying amount 178,012 17,186 479 551 10,516 206,744 ----------------------------- --------- --------- --------- ----- ----------- ------- (1) Not subject to expected credit losses.
(2) The allowances for credit losses do not include the amounts related to undrawn commitments reported in the Other liabilities item of the Consolidated Balance Sheet.
(3) Includes customers' liability under acceptances.
The following table presents the credit risk exposures of off-balance-sheet commitments as at April 30, 2023 and as at October 31, 2022 according to credit quality and ECL impairment stage.
As at October
As at April 30, 2023 31, 2022
---------------------- ------ ------------------------ ------ ----- ---------------
Stage Stage Stage Stage Stage Stage
1 2 3 Total 1 2 3 Total
---------------------- ------ ------- ------ ------- ------ ----- ------ -------
Off-balance-sheet
commitments (1)
Retail
Excellent 15,821 14 - 15,835 15,292 13 - 15,305
Good 3,397 203 - 3,600 3,316 165 - 3,481
Satisfactory 1,224 209 - 1,433 1,170 180 - 1,350
Special mention 224 78 - 302 193 68 - 261
Substandard 17 17 - 34 15 15 - 30
Default - - 1 1 - - 1 1
Non-retail
Excellent 14,795 - - 14,795 13,136 - - 13,136
Good 19,544 - - 19,544 18,723 24 - 18,747
Satisfactory 10,800 3,210 - 14,010 7,894 3,488 - 11,382
Special mention 15 277 - 292 12 246 - 258
Substandard 6 24 - 30 4 24 - 28
Default - - 1 1 - - 18 18
---------------------- ------ ------- ------ ------- ------ ----- ------ -------
IRB Approach 65,843 4,032 2 69,877 59,755 4,223 19 63,997
Standardized Approach 16,617 - 9 16,626 15,432 - - 15,432
----------------------- ------ ------- ------ ------- ------ ----- ------ -------
Total exposure 82,460 4,032 11 86,503 75,187 4,223 19 79,429
Allowances for
credit losses 94 54 - 148 99 63 - 162
----------------------- ------ ------- ------ ------- ------ ----- ------ -------
Total exposure,
net
of allowances 82,366 3,978 11 86,355 75,088 4,160 19 79,267
---------------------- ------ ------- ------ ------- ------ ----- ------ -------
(1) Represent letters of guarantee and documentary letters of credit, undrawn commitments, and backstop liquidity and credit enhancement facilities.
Loans Past Due But Not Impaired (1)
As at October
As at April 30, 2023 31, 2022
---------- ----------------------------------------- ----------- -------- ------------------
Business Business
and and
Residential Credit government Residential Credit government
mortgage Personal card (2) mortgage Personal card (2)
---------- ----------- -------- ------ ---------- ----------- -------- ------ ----------
Past due
but not
impaired
31 to 60
days 70 94 24 13 106 105 23 23
61 to 90
days 41 41 13 18 38 30 11 9
Over 90
days(3) - - 27 - - - 22 -
----------- ----------- -------- ------ ---------- ----------- -------- ------ ----------
111 135 64 31 144 135 56 32
----------- ----------- -------- ------ ---------- ----------- -------- ------ ----------
(1) Loans less than 31 days past due are not presented as they are not considered past due from an administrative standpoint.
(2) Includes customers' liability under acceptances.
(3) All loans more than 90 days past due, except for credit card receivables, are considered impaired (Stage 3).
Impaired Loans
As at April 30,
2023 As at October 31, 2022
---------------------------- ----- ----------------- --------------------------
Allowances Allowances
for for
credit credit
Gross losses Net Gross losses Net
--------------------------- ----- ------------ --- ------ ----------- -----
Loans - Stage 3
Residential mortgage 257 63 194 260 61 199
Personal 193 83 110 166 75 91
Credit card(1) - - - - - -
Business and government(2) 364 191 173 386 197 189
--------------------------- ----- ------------ --- ------ ----------- -----
814 337 477 812 333 479
Loans - POCI 390 (77) 467 459 (92) 551
---------------------------- ----- ------------ --- ------ ----------- -----
1,204 260 944 1,271 241 1,030
--------------------------- ----- ------------ --- ------ ----------- -----
(1) Credit card receivables are considered impaired, at the latest, when payment is 180 days past due, and they are written off at that time.
(2) Includes customers' liability under acceptances.
Note 5 - Loans and Allowances for Credit Losses (cont.)
Allowances for Credit Losses
The following tables present a reconciliation of the allowances for credit losses by Consolidated Balance Sheet item and by type of off-balance-sheet commitment.
Quarter ended
April 30, 2023
-------------------------------- ---------- ---------- ---------- --------- ----------------------
Allowances Allowances
for for
credit credit
losses Provisions losses as
as at for at
January credit Write-offs Recoveries April 30,
31, 2023 losses (1) Disposals and other 2023
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Balance sheet
Cash and deposits with financial 5 2 - - -
institutions (2)(3) 7
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Securities (3)
At fair value through other 1 1 - - -
comprehensive income(4) 2
At amortized cost(2) 8 - - - - 8
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Securities purchased under
reverse repurchase
agreements and securities - - - - -
borrowed (2)(3) -
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Loans (5)
Residential mortgage 135 6 - - - 141
Personal 257 21 (21) - 5 262
Credit card 136 14 (20) - 4 134
Business and government 432 63 (3) - 3 495
Customers' liability under
acceptances 47 (9) - - - 38
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
1,007 95 (44) - 12 1,070
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Other assets (2)(3) - - - - - -
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Off-balance-sheet commitments
(6)
Letters of guarantee and
documentary letters of credit 13 (2) - - - 11
Undrawn commitments 142 (11) - - - 131
Backstop liquidity and credit 6 - - - -
enhancement facilities 6
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
161 (13) - - - 148
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
1,182 85 (44) - 12 1,235
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Quarter ended April
30, 2022
------------------------- ---------- ---------- ------------- --------- --------------------------
Allowances
for Allowances
credit for
losses Provisions credit losses
as at for as at
January credit Recoveries April 30,
31, 2022 losses Write-offs(1) Disposals and other 2022
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Balance sheet
Cash and deposits with
financial
institutions (2)(3) 7 (2) - - - 5
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
Securities (3)
At fair value through
other
comprehensive income(4) 1 - - - - 1
At amortized cost(2) 5 1 - - - 6
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Securities purchased under
reverse repurchase
agreements and securities - - - - -
borrowed (2)(3) -
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Loans (5)
Residential mortgage 80 1 (1) - 1 81
Personal 212 11 (12) - 4 215
Credit card 124 8 (15) - 5 122
Business and government 451 10 (14) - 1 448
Customers' liability
under
acceptances 61 (12) - - - 49
------------------------- ---------- ---------- ------------- --------- ---------- --------------
928 18 (42) - 11 915
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Other assets (2)(3) - - - - - -
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
Off-balance-sheet
commitments
(6)
Letters of guarantee and
documentary letters of
credit 10 1 - - - 11
Undrawn commitments 130 (15) - - - 115
Backstop liquidity and
credit
enhancement facilities 5 - - - - 5
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
145 (14) - - - 131
------------------------- ---------- ---------- ------------- --------- ---------- --------------
1,086 3 (42) - 11 1,058
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
(1) The contractual amount outstanding on financial assets that were written off during the quarter ended April 30, 2023 and that are still subject to enforcement activity was $27 million ($25 million for the quarter ended April 30, 2022).
(2) These financial assets are presented net of the allowances for credit losses on the Consolidated Balance Sheet.
(3) As at April 30, 2023 and 2022, these financial assets were mainly classified in Stage 1 and their credit quality fell mostly within the Excellent category.
(4) The allowances for credit losses are reported in the Accumulated other comprehensive income item of the Consolidated Balance Sheet.
(5) The allowances for credit losses are reported in the Allowances for credit losses item of the Consolidated Balance Sheet.
(6) The allowances for credit losses are reported in the Other liabilities item of the Consolidated Balance Sheet.
Six months ended April
30, 2023
-------------------------------- ---------- ---------- ---------- ---------------------------------
Allowances Allowances
for for
credit credit
losses Provisions losses as
as at for at
October credit Write-offs Recoveries April 30,
31, 2022 losses (1) Disposals and other 2023
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Balance sheet
Cash and deposits with financial 5 2 - - -
institutions (2)(3) 7
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Securities (3)
At fair value through other 2 - - - -
comprehensive income(4) 2
At amortized cost(2) 7 1 - - - 8
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Securities purchased under
reverse repurchase
agreements and securities - - - - -
borrowed (2)(3) -
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Loans (5)
Residential mortgage 118 25 (1) - (1) 141
Personal 239 52 (37) - 8 262
Credit card 126 39 (38) - 7 134
Business and government 418 82 (8) - 3 495
Customers' liability under
acceptances 54 (16) - - - 38
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
955 182 (84) - 17 1,070
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Other assets (2)(3) - - - - - -
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Off-balance-sheet commitments
(6)
Letters of guarantee and
documentary letters of credit 13 (2) - - - 11
Undrawn commitments 143 (12) - - - 131
Backstop liquidity and credit 6 - - - -
enhancement facilities 6
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
162 (14) - - - 148
-------------------------------- ---------- ---------- ---------- --------- ---------- ----------
1,131 171 (84) - 17 1,235
--------------------------------- ---------- ---------- ---------- --------- ---------- ----------
Six months ended
April 30, 2022
------------------------- ---------- ---------- ------------- --------- --------------------------
Allowances
for Allowances
credit for
losses Provisions credit losses
as at for as at
October credit Recoveries April 30,
31, 2021 losses Write-offs(1) Disposals and other 2022
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Balance sheet
Cash and deposits with
financial
institutions (2)(3) 5 - - - - 5
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
Securities (3)
At fair value through
other
comprehensive income(4) 1 - - - - 1
At amortized cost(2) 3 3 - - - 6
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Securities purchased under
reverse repurchase
agreements and securities - - - - -
borrowed (2)(3) -
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Loans (5)
Residential mortgage 71 11 (2) - 1 81
Personal 202 26 (23) - 10 215
Credit card 122 21 (30) - 9 122
Business and government 515 10 (81) - 4 448
Customers' liability
under
acceptances 88 (39) - - - 49
------------------------- ---------- ---------- ------------- --------- ---------- --------------
998 29 (136) - 24 915
------------------------- ---------- ---------- ------------- --------- ---------- --------------
Other assets (2)(3) - - - - - -
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
Off-balance-sheet
commitments
(6)
Letters of guarantee and
documentary letters of
credit 13 (2) - - - 11
Undrawn commitments 143 (28) - - - 115
Backstop liquidity and
credit
enhancement facilities 6 (1) - - - 5
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
162 (31) - - - 131
------------------------- ---------- ---------- ------------- --------- ---------- --------------
1,169 1 (136) - 24 1,058
-------------------------- ---------- ---------- ------------- --------- ---------- --------------
(1) The contractual amount outstanding on financial assets that were written off during the six-month period ended April 30, 2023 and that are still subject to enforcement activity was $52 million ($47 million for the six -month period ended April 30, 2022).
(2) These financial assets are presented net of the allowances for credit losses on the Consolidated Balance Sheet.
(3) As at April 30, 2023 and 2022, these financial assets were mainly classified in Stage 1 and their credit quality fell mostly within the Excellent category.
(4) The allowances for credit losses are reported in the Accumulated other comprehensive income item of the Consolidated Balance Sheet.
(5) The allowances for credit losses are reported in the Allowances for credit losses item of the Consolidated Balance Sheet.
(6) The allowances for credit losses are reported in the Other liabilities item of the Consolidated Balance Sheet.
Note 5 - Loans and Allowances for Credit Losses (cont.)
The following tables present a reconciliation of allowances for credit losses for each loan category at amortized cost according to ECL impairment stage.
Quarter ended April Quarter ended
30, 2023 April 30, 2022
------------------ ----- ----------------------------- ------ ------- -----------------------
Allowances Allowances Allowances Allowances
for for for for
credit losses credit losses credit losses credit losses
on on on on
non-impaired impaired non-impaired impaired
loans loans loans loans
------------------ -------------- ------------- ----- --------------- ---------------- -----
Stage Stage Stage POCI Stage Stage Stage
1 2 3 (1) Total 1 2 3 POCI(1) Total
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Residential mortgage
Balance at beginning 62 84 60 (71) 135 40 63 34 (57) 80
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 3 - - - 3 4 - - - 4
Transfers(2) :
to Stage 1 13 (11) (2) - - 7 (6) (1) - -
to Stage 2 (3) 9 (6) - - (1) 1 - - -
to Stage 3 - (6) 6 - - - - - - -
Net remeasurement
of
loss allowances(3) (9) 9 5 5 10 (5) (1) 6 (1) (1)
Derecognitions(4) (2) (4) (1) - (7) (1) (1) - - (2)
Changes to models - - - - - - - - - -
Provisions for
credit
losses 2 (3) 2 5 6 4 (7) 5 (1) 1
Write-offs - - - - - - - (1) - (1)
Disposals - - - - - - - - - -
Recoveries - - - - - - - 1 - 1
Foreign exchange
movements
and other - - 1 (1) - - 1 - (1) -
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 64 81 63 (67) 141 44 57 39 (59) 81
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 64 81 63 (67) 141 44 57 39 (59) 81
Undrawn
commitments(5) - - - - - - - - - -
------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Personal
Balance at beginning 75 121 79 (11) 264 70 111 63 (25) 219
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 7 - - - 7 12 - - - 12
Transfers(2) :
to Stage 1 29 (28) (1) - - 13 (12) (1) - -
to Stage 2 (3) 5 (2) - - (3) 4 (1) - -
to Stage 3 - (14) 14 - - - (7) 7 - -
Net remeasurement
of
loss allowances(3) (25) 35 11 1 22 (19) 16 5 3 5
Derecognitions(4) (2) (5) (1) - (8) (2) (4) - - (6)
Changes to models - - - - - - - - - -
Provisions for
credit
losses 6 (7) 21 1 21 1 (3) 10 3 11
Write-offs - - (21) - (21) - - (12) - (12)
Disposals - - - - - - - - - -
Recoveries - - 4 - 4 - - 5 - 5
Foreign exchange
movements
and other 1 - - - 1 (1) 1 (1) - (1)
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 82 114 83 (10) 269 70 109 65 (22) 222
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 79 110 83 (10) 262 67 105 65 (22) 215
Undrawn
commitments(5) 3 4 - - 7 3 4 - - 7
------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
(1) No POCI loan was acquired during the quarter ended April 30, 2023 (the total amount of undiscounted initially expected credit losses on the POCI loans acquired during the quarter ended April 30, 2022 was $4 million). The expected credit losses reflected in the purchase price have been discounted.
(2) Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.
(3) Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.
(4) Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).
(5) The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.
Quarter ended April Quarter ended
30, 2023 April 30, 2022
------------------ ------ ----------------------------- ------ ------- -----------------------
Allowances Allowances Allowances Allowances
for for for for
credit losses credit losses credit losses credit losses
on on on on
non-impaired impaired non-impaired impaired
loans loans loans loans
------------------ --------------- ------------- ----- --------------- ---------------- -----
Stage Stage Stage POCI Stage Stage Stage
1 2 3 (1) Total 1 2 3 POCI(1) Total
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Credit card
Balance at beginning 59 117 - - 176 55 103 - - 158
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 3 - - - 3 3 - - - 3
Transfers(2) :
to Stage 1 22 (22) - - - 21 (21) - - -
to Stage 2 (4) 4 - - - (4) 4 - - -
to Stage 3 - (9) 9 - - - (6) 6 - -
Net remeasurement
of
loss allowances(3) (22) 32 7 - 17 (20) 23 4 - 7
Derecognitions(4) (1) (1) - - (2) - (1) - - (1)
Changes to models - - - - - - - - - -
Provisions for
credit
losses (2) 4 16 - 18 - (1) 10 - 9
Write-offs - - (20) - (20) - - (15) - (15)
Disposals - - - - - - - - - -
Recoveries - - 4 - 4 - - 5 - 5
Foreign exchange
movements
and other - - - - - - - - - -
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 57 121 - - 178 55 102 - - 157
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 33 101 - - 134 33 89 - - 122
Undrawn
commitments(5) 24 20 - - 44 22 13 - - 35
------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- ----- Business and government (6) Balance at beginning 197 198 179 - 574 175 202 224 - 601 -------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- ----- Originations or purchases 22 - - - 22 14 - - - 14 Transfers(2) : to Stage 1 15 (15) - - - 12 (12) - - - to Stage 2 (5) 6 (1) - - (4) 5 (1) - - to Stage 3 - (1) 1 - - - - - - - Net remeasurement of loss allowances(3) (5) 27 15 - 37 (22) (2) 6 - (18) Derecognitions(4) (5) (11) (2) - (18) (9) (3) (2) - (14) Changes to models (1) (1) - - (2) - - - - - Provisions for credit losses 21 5 13 - 39 (9) (12) 3 - (18) Write-offs - - (3) - (3) - - (14) - (14) Disposals - - - - - - - - - - Recoveries - - 2 - 2 - - 1 - 1 Foreign exchange movements and other - 1 - - 1 - - - - - -------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- ----- Balance at end 218 204 191 - 613 166 190 214 - 570 -------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- ----- Includes: Amounts drawn 163 179 191 - 533 115 168 214 - 497 Undrawn commitments(5) 55 25 - - 80 51 22 - - 73 ------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- ----- Total allowances for credit losses at end (7) 421 520 337 (77) 1,201 335 458 318 (81) 1,030 -------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- ----- Includes: Amounts drawn 339 471 337 (77) 1,070 259 419 318 (81) 915 Undrawn commitments(5) 82 49 - - 131 76 39 - - 115 ------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
(1) No POCI loan was acquired during the quarter ended April 30, 2023 (the total amount of undiscounted initially expected credit losses on the POCI loans acquired during the quarter ended April 30, 2022 was $4 million ). The expected credit losses reflected in the purchase price have been discounted.
(2) Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.
(3) Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.
(4) Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).
(5) The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.
(6) Includes customers' liability under acceptances. (7) Excludes allowances for credit losses on other financial assets at amortized cost and on off-balance-sheet commitments other than undrawn commitments.
Note 5 - Loans and Allowances for Credit Losses (cont.)
Six months ended April Six months ended April 30,
30, 2023 2022
------------------ ------------------------------------ ----------------------------------------
Allowances Allowances Allowances Allowances
for for for for
credit losses credit losses credit losses credit losses
on on on on
non-impaired impaired non-impaired impaired
loans loans loans loans
------------------ -------------- ------------- ----- --------------- ---------------- -----
Stage Stage Stage POCI Stage Stage Stage
1 2 3 (1) Total 1 2 3 POCI(1) Total
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Residential mortgage
Balance at beginning 53 80 61 (76) 118 50 52 29 (60) 71
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 8 - - - 8 9 - - - 9
Transfers(2) :
to Stage 1 21 (18) (3) - - 10 (9) (1) - -
to Stage 2 (6) 18 (12) - - (2) 2 - - -
to Stage 3 - (14) 14 - - - - - - -
Net remeasurement
of
loss allowances(3) (9) 21 8 8 28 (23) 13 12 3 5
Derecognitions(4) (3) (5) (3) - (11) (1) (2) - - (3)
Changes to models - - - - - - - - - -
Provisions for
credit
losses 11 2 4 8 25 (7) 4 11 3 11
Write-offs - - (1) - (1) - - (2) - (2)
Disposals - - - - - - - - - -
Recoveries - - - - - - - 1 - 1
Foreign exchange
movements
and other - (1) (1) 1 (1) 1 1 - (2) -
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 64 81 63 (67) 141 44 57 39 (59) 81
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 64 81 63 (67) 141 44 57 39 (59) 81
Undrawn
commitments(5) - - - - - - - - - -
------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Personal
Balance at beginning 70 117 75 (16) 246 73 103 63 (29) 210
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 17 - - - 17 24 - - - 24
Transfers(2) :
to Stage 1 48 (45) (3) - - 31 (28) (3) - -
to Stage 2 (7) 9 (2) - - (6) 7 (1) - -
to Stage 3 - (26) 26 - - - (13) 13 - -
Net remeasurement
of
loss allowances(3) (43) 68 18 6 49 (45) 39 8 7 9
Derecognitions(4) (4) (9) (2) - (15) (5) (8) (1) - (14)
Changes to models 1 - - - 1 (2) 8 - - 6
Provisions for
credit
losses 12 (3) 37 6 52 (3) 5 16 7 25
Write-offs - - (37) - (37) - - (23) - (23)
Disposals - - - - - - - - - -
Recoveries - - 9 - 9 - - 10 - 10
Foreign exchange
movements
and other - - (1) - (1) - 1 (1) - -
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 82 114 83 (10) 269 70 109 65 (22) 222
-------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 79 110 83 (10) 262 67 105 65 (22) 215
Undrawn
commitments(5) 3 4 - - 7 3 4 - - 7
------------------- ----- ------- ----- ------ ----- ------ ------- ------ -------- -----
(1) No POCI loan was acquired during the six-month period ended April 30, 2023 (the total amount of undiscounted initially expected credit losses on the POCI loans acquired during the six-month period ended April 30, 2022 was $9 million). The expected credit losses reflected in the purchase price have been discounted.
(2) Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.
(3) Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.
(4) Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).
(5) The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.
Six months ended April Six months ended April 30,
30, 2023 2022
------------------ ------------------------------------- ----------------------------------------
Allowances Allowances Allowances Allowances
for for for for
credit losses credit losses credit losses credit losses
on on on on
non-impaired impaired non-impaired impaired
loans loans loans loans
------------------ --------------- ------------- ----- --------------- ---------------- -----
Stage Stage Stage POCI Stage Stage Stage
1 2 3 (1) Total 1 2 3 POCI(1) Total
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Credit card
Balance at beginning 53 112 - - 165 57 101 - - 158
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 5 - - - 5 6 - - - 6
Transfers(2) :
to Stage 1 47 (47) - - - 43 (43) - - -
to Stage 2 (8) 8 - - - (9) 9 - - -
to Stage 3 - (16) 16 - - - (11) 11 - -
Net remeasurement
of
loss allowances(3) (38) 65 15 - 42 (41) 47 10 - 16
Derecognitions(4) (2) (1) - - (3) (1) (1) - - (2)
Changes to models - - - - - - - - - -
Provisions for
credit
losses 4 9 31 - 44 (2) 1 21 - 20
Write-offs - - (38) - (38) - - (30) - (30)
Disposals - - - - - - - - - -
Recoveries - - 7 - 7 - - 9 - 9
Foreign exchange
movements
and other - - - - - - - - - -
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 57 121 - - 178 55 102 - - 157
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 33 101 - - 134 33 89 - - 122
Undrawn
commitments(5) 24 20 - - 44 22 13 - - 35
------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Business and
government
(6)
Balance at beginning 177 195 197 - 569 177 238 287 - 702
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Originations or
purchases 46 - - - 46 36 - - - 36
Transfers(2) :
to Stage 1 32 (32) - - - 40 (40) - - -
to Stage 2 (11) 14 (3) - - (12) 14 (2) - -
to Stage 3 - (2) 2 - - - (1) 1 - -
Net remeasurement
of
loss allowances(3) (15) 48 5 - 38 (57) (4) 7 - (54)
Derecognitions(4) (10) (19) (4) - (33) (18) (17) (2) - (37)
Changes to models (1) (1) - - (2) - - - - -
Provisions for
credit
losses 41 8 - - 49 (11) (48) 4 - (55)
Write-offs - - (8) - (8) - - (81) - (81)
Disposals - - - - - - - - - -
Recoveries - - 3 - 3 - - 2 - 2
Foreign exchange
movements
and other - 1 (1) - - - - 2 - 2
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Balance at end 218 204 191 - 613 166 190 214 - 570
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 163 179 191 - 533 115 168 214 - 497
Undrawn
commitments(5) 55 25 - - 80 51 22 - - 73
------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Total allowances for
credit losses at
end
(7) 421 520 337 (77) 1,201 335 458 318 (81) 1,030
-------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
Includes:
Amounts drawn 339 471 337 (77) 1,070 259 419 318 (81) 915
Undrawn
commitments(5) 82 49 - - 131 76 39 - - 115
------------------- ------ ------- ----- ------ ----- ------ ------- ------ -------- -----
(1) No POCI loan was acquired during the six-month period ended April 30, 2023 (the total amount of undiscounted initially expected credit losses on the POCI loans acquired during the six-month period ended April 30, 2022 was $9 million). The expected credit losses reflected in the purchase price have been discounted.
(2) Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.
(3) Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.
(4) Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).
(5) The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.
(6) Includes customers' liability under acceptances. (7) Excludes allowances for credit losses on other financial assets at amortized cost and on off-balance-sheet commitments other than undrawn commitments.
Note 5 - Loans and Allowances for Credit Losses (cont.)
Main Macroeconomic Factors
The following tables show the main macroeconomic factors used to estimate the allowances for credit losses on loans. For each scenario, namely, the base scenario, upside scenario, and downside scenario, the average values of the macroeconomic factors over the next 12 months (used for Stage 1 credit loss calculations) and over the remaining forecast period (used for Stage 2 credit loss calculations) are presented.
As at April 30,
2023
------------------ -------- ------ --- --------- ------ --- --------------------------
Base scenario Upside scenario Downside scenario
----------------- ------------------------- -------------------------- --------------------------
Next Remaining Remaining Remaining
12 forecast Next forecast Next forecast
months period 12 months period 12 months period
----------------- -------- ----------- --------- ----------- --------- -----------
Macroeconomic
factors
(1)
GDP growth(2) (0.3) % 1.7 % 0.5 % 1.9 % (5.1) % 2.6 %
Unemployment rate 5.8 % 6.3 % 5.5 % 5.5 % 7.3 % 6.9 %
Housing price
index
growth(2) (6.6) % 1.4 % (0.7) % 1.2 % (13.9) % 0.3 %
BBB spread(3) 2.2 % 2.0 % 1.9 % 1.8 % 3.1 % 2.3 %
S&P/TSX
growth(2)(4) 1.2 % 2.0 % 5.6 % 2.6 % (25.6) % 5.5 %
WTI oil price(5)
(US$ per barrel) 71 69 84 80 43 52
------------------ -------- ------ --- --------- ------ --- --------- ------ ---
As at January 31,
2023
------------------ -------- ------ --- --------- ------ --- --------------------------
Base scenario Upside scenario Downside scenario
----------------- ------------------------- -------------------------- --------------------------
Next Remaining Remaining Remaining
12 forecast Next forecast Next forecast
months period 12 months period 12 months period
----------------- -------- ----------- --------- ----------- --------- -----------
Macroeconomic
factors
(1)
GDP growth(2) 0.3% 1.8% 0.8% 1.9% (5.1)% 2.6%
Unemployment rate 5.8% 6.2% 5.5% 5.6% 7.3% 6.8%
Housing price
index
growth(2) (9.6)% 1.3% (0.8)% 0.4% (13.9)% 0.3%
BBB spread(3) 2.3% 2.1% 2.1% 1.9% 3.3% 2.5%
S&P/TSX
growth(2)(4) 4.2% 2.0% 5.6% 2.6% (25.6)% 5.5%
WTI oil price(5)
(US$ per barrel) 77 75 92 87 46 57
------------------ -------- ------ --- --------- ------ --- --------- ------ ---
As at October 31,
2022
------------------ -------- ------ --- --------- ------ --- --------------------------
Base scenario Upside scenario Downside scenario
----------------- ------------------------- -------------------------- --------------------------
Next Remaining Remaining Remaining
12 forecast Next forecast Next forecast
months period 12 months period 12 months period
----------------- -------- ----------- --------- ----------- --------- -----------
Macroeconomic
factors
(1)
GDP growth(2) 0.6% 1.7% 1.1% 1.6% (5.2)% 2.9%
Unemployment rate 6.0% 6.1% 5.4% 5.4% 7.4% 6.4%
Housing price
index
growth(2) (11.2)% 0.7% -% 0.2% (13.9)% 0.3%
BBB spread(3) 2.4% 2.1% 2.0% 1.9% 3.4% 2.6%
S&P/TSX
growth(2)(4) (4.3)% 2.4% 5.1% 2.6% (25.6)% 5.5%
WTI oil price(5)
(US$ per barrel) 78 77 102 97 44 51
------------------ -------- ------ --- --------- ------ --- --------- ------ ---
(1) All macroeconomic factors are based on the Canadian economy unless otherwise indicated.
(2) Growth rate is annualized.
(3) Yield on corporate BBB bonds less yield on Canadian federal government bonds with 10-year maturity.
(4) Main stock index in Canada.
(5) The West Texas Intermediate (WTI) index is commonly used as a benchmark for the price of oil.
The main macroeconomic factors used for the personal credit portfolio are unemployment rate and growth in the housing price index, based on the economy of Canada or Quebec. The main macroeconomic factors used for the business and government credit portfolio are unemployment rate, spread on corporate BBB bonds, S&P/TSX growth, and WTI oil price. An increase in unemployment rate or BBB spread will generally lead to higher allowances for credit losses, whereas an increase in the other macroeconomic factors (GDP, S&P/TSX, housing price index, and WTI oil price) will generally lead to lower allowances for credit losses.
During the quarter ended April 30, 2023, the macroeconomic risks are similar to those of the previous quarter, with uncertainty remaining high.
Despite greater-than-anticipated resilience in global growth in early 2023, new concerns have emerged, in particular surrounding the U.S. and European banking systems, which could slow growth. The restrictive monetary policy ushered in by the major central banks in response to rising inflation, which is improving but still too high globally, suggests a cautious outlook. In the United States, negotiations over raising the debt ceiling is making investors nervous as the government could find itself short of liquidity during the summer. The U.S. Federal Reserve is pausing interest rate hikes but the underlying inflation and high wages do not suggest rate cuts before the last quarter of the year. Monetary policy that remains so restrictive for so long will translate, in our scenario, into three quarters of economic contraction starting in the fourth quarter. The Bank of Canada was able to announce a rate hike pause before the U.S. Federal Reserve given greater success against inflation but that may not prevent the Canadian economy from experiencing lethargy caused by the high interest rates. A stronger banking system, greater excess savings, and advantageous foreign exchange terms lead us to believe that Canada's economy might be more resilient than the U.S. economy in the coming quarters. After 12 months, the unemployment rate rises 1.2 percentage points to 6.2%. Housing prices decrease by 6.6% year over year. The S&P/TSX sits at 20,427 points after one year, and the price of oil hovers around US$66.
In the upside scenario, an easing of geopolitical tensions boosts confidence. Inflation comes under control as supply chains normalize, and the tight monetary policy does not inflict too much damage on the economy. Governments maintain a sizable fiscal stimulus in Canada and the United States, offsetting the tight monetary policy. Consumer spending is surprisingly high because of the excess savings amassed since the start of the pandemic. After one year, the unemployment rate is more favourable than the base scenario (five-tenths lower). Housing prices remain unchanged, the S&P/TSX is at 21,305 points after one year, and the price of oil hovers around US$84.
In the downside scenario, central bankers have underestimated the impact of their simultaneous tightening measures, and the global economy sinks into a recession, as a decrease in demand is reflected in reduced investment by businesses, which also carry out layoffs. Given budgetary constraints, governments cannot support households and businesses as they did during the pandemic. After 12 months, the economic contraction pushes the unemployment rate to 8.1%. Housing prices decrease considerably. The S&P/TSX sits at 15,015 points after one year, and the price of oil hovers around US$37.
Given the uncertainty surrounding key inputs used to measure credit losses, the Bank has applied expert credit judgment to adjust the modelled expected credit loss results.
Sensitivity Analysis of Allowances for Credit Losses on Non-Impaired Loans
Scenarios
The following table shows a comparison of the Bank's allowances for credit losses on non-impaired loans (Stages 1 and 2) as at April 30, 2023 based on the probability weightings of three scenarios with allowances for credit losses resulting from simulations of each scenario weighted at 100%.
Allowances
for credit
losses on non-impaired
loans
----------------------------- -----------------------
Balance as at April 30, 2023 941
------------------------------ -----------------------
Simulations
100% upside scenario 699
100% base scenario 773
100% downside scenario 1,183
------------------------------ -----------------------
Note 6 - Other Assets
As at April As at October
30, 2023 31, 2022
---------------------------------------------- ----------- -------------
Receivables, prepaid expenses and other items 3,070 2,591
Interest and dividends receivable 1,590 1,057
Due from clients, dealers and brokers 631 842
Defined benefit asset 470 498
Deferred tax assets 450 389
Current tax assets 762 471
Reinsurance assets 6 6
Insurance assets 128 104
----------------------------------------------- ----------- -------------
7,107 5,958
---------------------------------------------- ----------- -------------
Note 7 - Deposits
As at October
As at April 30, 2023 31, 2022
---------------------------- --------- ------------ ---------------------- -------------
On demand After notice Fixed term
(1) (2) (3) Total Total
---------------------------- --------- ------------ ------------ -------- -------------
Personal 4,591 35,986 45,029 85,606 78,811
Business and government 62,134 32,512 97,109 191,755 184,230
Deposit-taking institutions 1,340 121 2,692 4,153 3,353
----------------------------- --------- ------------ ------------ -------- -------------
68,065 68,619 144,830 281,514 266,394
---------------------------- --------- ------------ ------------ -------- -------------
(1) Demand deposits are deposits for which the Bank does not have the right to require a notice of withdrawal and consist essentially of deposits in chequing accounts.
(2) Notice deposits are deposits for which the Bank may legally require a notice of withdrawal and consist mainly of deposits in savings accounts.
(3) Fixed-term deposits are deposits that can be withdrawn by the holder on a specified date and include term deposits, guaranteed investment certificates, savings accounts and plans, covered bonds, and other similar instruments.
The Deposits - Business and government item includes, among other items, covered bonds for which the balance was $13.2 billion as at April 30, 2023 ($10.4 billion as at October 31, 2022). During the six-month period ended April 30, 2023, the Bank issued 280 million Swiss francs and 1.0 billion euros in covered bonds (1.0 billion euros in covered bonds came to maturity, and the Bank issued 1.3 billion euros and US$1.5 billion in covered bonds during the six-month period ended April 30, 2022). For additional information on covered bonds, see Note 27 to the audited annual consolidated financial statements for the year ended October 31, 2022.
In addition, as at April 30, 2023, the Deposits - Business and government item also includes deposits of $ 15.4 billion ($ 12.8 billion as at October 31, 2022) that are subject to the bank bail-in conversion regulations issued by the Government of Canada. These regulations provide certain powers to the Canada Deposit Insurance Corporation (CDIC), notably the power to convert certain eligible Bank shares and liabilities into common shares should the Bank become non-viable.
Note 8 - Other Liabilities
As at April As at October
30, 2023 31, 2022
------------------------------------------------- ----------- -------------
Accounts payable and accrued expenses 2,038 2,582
Subsidiaries' debts to third parties 268 156
Interest and dividends payable 1,769 1,063
Lease liabilities 536 552
Due to clients, dealers and brokers 495 730
Defined benefit liability 116 111
Allowances for credit losses - Off-balance-sheet
commitments (Note 5) 148 162
Deferred tax liabilities 17 14
Current tax liabilities 87 67
Insurance liabilities 10 10
Other items(1)(2)(3) 1,125 914
-------------------------------------------------- ----------- -------------
6,609 6,361
------------------------------------------------- ----------- -------------
(1) As at April 30, 2023, Other items included $6 million in litigation provisions ($11 million as at October 31, 2022).
(2) As at April 30, 2023, Other items included $32 million in provisions for onerous contracts ($33 million as at October 31, 2022 ).
(3) As at April 30, 2023, Other items included the financial liability resulting from put options written to non-controlling interests of Flinks Technology Inc. (Flinks) for an amount of $26 million ($33 million as at October 31, 2022).
Note 9 - Subordinated Debt
Redemption of Subordinated Debt
On February 1, 2023, the Bank redeemed $750 million of medium-term notes maturing on February 1, 2028 at a price equal to their nominal value plus accrued interest.
Note 10 - Share Capital and Other Equity Instruments
Shares and Other Equity Instruments Outstanding
As at October 31,
As at April 30, 2023 2022
------------------------------------- ---------------------- ---------------------
Number
of shares Shares Number Shares
or LRCN or LRCN of shares or LRCN
(1) $ or LRCN $
------------------------------------- ------------ -------- ----------- --------
First Preferred Shares
Series 30 14,000,000 350 14,000,000 350
Series 32 12,000,000 300 12,000,000 300
Series 38 16,000,000 400 16,000,000 400
Series 40 12,000,000 300 12,000,000 300
Series 42 12,000,000 300 12,000,000 300
-------------------------------------- ------------ -------- ----------- --------
66,000,000 1,650 66,000,000 1,650
------------------------------------- ------------ -------- ----------- --------
Other equity instruments
LRCN - Series 1 500,000 500 500,000 500
LRCN - Series 2 500,000 500 500,000 500
LRCN - Series 3 500,000 500 500,000 500
-------------------------------------- ------------ -------- ----------- --------
1,500,000 1,500 1,500,000 1,500
------------------------------------- ------------ -------- ----------- --------
Preferred shares and other equity
instruments 67,500,000 3,150 67,500,000 3,150
--------------------------------------- ------------ -------- ----------- --------
Common shares at beginning of fiscal
year 336,582,124 3,196 337,912,283 3,160
Issued pursuant to the Stock Option
Plan 1,088,870 60 1,193,663 61
Repurchases of common shares for
cancellation - - (2,500,000) (24)
Impact of shares purchased or sold
for trading(2) 48,589 5 (18,295) (1)
Other - - (5,527) -
--------------------------------------- ------------ -------- ----------- --------
Common shares at end of period 337,719,583 3,261 336,582,124 3,196
--------------------------------------- ------------ -------- ----------- --------
(1) Limited Recourse Capital Notes (LRCN).
(2) As at April 30, 2023, a total of 43,339 shares were sold short for trading, representing $5 million ( 5,250 shares were held for trading, representing a negligible amount as at October 31, 2022).
Dividends Declared and Distributions on Other Equity Instruments
Six months ended April
30
---------------------------------- ------------ ---------- ------------------------
2023 2022
------------------------------------ ------------------------ ------------------------
Dividends Dividends
or interest Dividends or interest Dividends
$ per share $ per share
---------------------------------- ------------ ---------- ------------ ----------
First Preferred Shares
Series 30 7 0.5031 7 0.5031
Series 32 6 0.4799 6 0.4799
Series 38 14 0.8784 9 0.5563
Series 40 7 0.5750 7 0.5750
Series 42 7 0.6188 7 0.6188
------------ ---------- ------------ ----------
41 36
---------------------------------- ------------ ------------
Other equity instruments
LRCN - Series 1(1) 10 10
LRCN - Series 2(2) 10 10
LRCN - Series 3(3) 19 -
39 20
---------------------------------- ------------ ------------
Preferred shares and other equity
instruments 80 56
------------ ------------
Common shares 655 1.9400 587 1.7400
735 643
---------------------------------- ------------ ---------- ------------ ----------
(1) The LRCN - Series 1 bear interest at a fixed rate of 4.30% per annum.
(2) The LRCN - Series 2 bear interest at a fixed rate of 4.05% per annum.
(3) The LRCN - Series 3 bear interest at a fixed rate of 7.50% per annum.
Note 10 - Share Capital and Other Equity Instruments (cont.)
Repurchase of Common Shares
On December 12, 2022, the Bank began a normal course issuer bid to repurchase for cancellation up to 7,000,000 common shares (representing approximately 2.1% of its outstanding common shares) over the 12-month period ending on December 11, 2023. On December 10, 2021, the Bank had begun a normal course issuer bid to repurchase for cancellation up to 7,000,000 common shares (representing approximately 2% of its then outstanding common shares) over the 12-month period ended December 9, 2022. Any repurchase through the Toronto Stock Exchange will be done at market prices. The common shares may also be repurchased through other means authorized by the Toronto Stock Exchange and applicable regulations, including private agreements or share repurchase programs under issuer bid exemption orders issued by the securities regulators. A private purchase made under an exemption order issued by a securities regulator will be done at a discount to the prevailing market price. The amounts that are paid above the average book value of the common shares are charged to Retained earnings. During the six-month period ended April 30, 2023, the Bank did not repurchase any common shares. During the six-month period ended April 30, 2022, the Bank had repurchased 2,500,000 common shares for $245 million, which had reduced Common share capital by $24 million and Retained earnings by $221 million.
Note 11 - Capital Disclosure
The Bank and all other major Canadian banks have to maintain the following minimum capital ratios established by OSFI: a CET1 capital ratio of at least 11.0%, a Tier 1 capital ratio of at least 12.5%, and a Total capital ratio of at least 14.5%. All of these ratios include a capital conservation buffer of 2.5% established by the Basel Committee on Banking Supervision and OSFI, a 1.0% surcharge applicable solely to Domestic Systemically Important Banks (D-SIBs) and a 3.0% domestic stability buffer. On December 8, 2022, OSFI expanded the domestic stability buffer range, setting it at 0% to 4.0% instead of the previous range of 0% to 2.5%, and it announced that the buffer would rise from 2.5% to 3.0% effective February 1, 2023. The domestic stability buffer must consist exclusively of CET1 capital. A D--SIB that fails to meet this buffer requirement will not be subject to automatic constraints to reduce capital distributions but must provide a remediation plan to OSFI. Banks also have to meet the requirements of an updated capital output floor calculated under the Basel III revised Standardized Approach . If the capital requirement is less than 65.0% of the capital output floor requirement calculated using the Basel III revised Standardized Approach, the difference is added to the total risk-weighted assets. Lastly, OSFI requires D-SIBs to maintain a Basel III leverage ratio of at least 3.5%. Effective February 1, 2023, OSFI increased the leverage ratio minimum requirement by imposing a Tier 1 capital buffer of 0.5% applicable only to D-SIBs.
OSFI also requires D-SIBs to maintain a risk-based total loss-absorbing capacity (TLAC) ratio of at least 24.5% (including the domestic stability buffer) of risk-weighted assets and a TLAC leverage ratio of at least 7.25% ( increased by 0.5% effective February 1, 2023) . The purpose of TLAC is to ensure that a D-SIB has sufficient loss-absorbing capacity to support its internal recapitalization in the unlikely event it becomes non-viable.
In the second quarter of 2023, the Bank implemented OSFI's guidance relating to the Basel III reforms, notably:
-- a revised Standardized Approach and Internal Ratings-Based (IRB) Approach to credit risk; -- a revised Standardized Approach for operational risk; -- a revised capital output floor; -- a revised Leverage Ratio Framework; and -- revised Pillar 3 disclosure requirements.
The Basel III reforms also affected the market risk and credit valuation adjustment (CVA) risk frameworks, which will be implemented in the first quarter of 2024.
During the quarter and six-month period ended April 30, 2023, the Bank was in compliance with all of OSFI's regulatory capital, leverage, and TLAC requirements.
Regulatory Capital (1) , Leverage Ratio (1) and TLAC (2)
As at April As at October
30, 2023 31, 2022
----------- -------------
Capital
CET1 15,892 14,818
Tier 1 19,037 17,961
Total 20,110 19,727
----------- -------------
Risk-weighted assets 119,111 116,840
Total exposure 448,584 401,780
----------- -------------
Capital ratios
CET1 13.3 % 12.7%
Tier 1 16.0 % 15.4%
Total 16.9 % 16.9%
----------- -------------
Leverage ratio 4.2 % 4.5%
Available TLAC 34,886 32,351
TLAC ratio 29.3 % 27.7%
TLAC leverage ratio 7.8 % 8.1%
----------- -------------
(1) Capital, risk-weighted assets, total exposure, the capital ratios, and the leverage ratio are calculated in accordance with the Basel III rules, as set out in OSFI's Capital Adequacy Requirements Guideline and Leverage Requirements Guideline. The calculation of the figures as at October 31, 2022 had included the transitional measure applicable to expected credit loss provisioning and the temporary measure regarding the exclusion of central bank reserves implemented by OSFI in response to the COVID-19 pandemic. These provisions ceased to apply on November 1, 2022 and April 1, 2023, respectively.
(2) Available TLAC, the TLAC ratio, and the TLAC leverage ratio are calculated in accordance with OSFI's Total Loss Absorbing Capacity Guideline.
Note 12 - Share-Based Payments
Stock Option Plan
During the quarters ended April 30, 2023 and 2022, the Bank did not award any stock options. During the six-month period ended April 30, 2023, the Bank awarded 1,416,060 stock options (1,771,588 stock options during the six-month period ended April 30, 2022) with an average fair value of $14.76 per option ($13.24 in 2022).
As at April 30, 2023, there were 12,170,881 stock options outstanding (11,861,749 stock options as at October 31, 2022).
The average fair value of the options awarded was estimated on the award date using the Black-Scholes model as well as the following assumptions.
Six months ended April
30
------------------------
2023 2022
Risk-free interest rate 3.25% 1.79%
Expected life of options 7 years 7 years
Expected volatility 23.13% 22.68%
Expected dividend yield 4.23% 3.88%
During the quarter ended April 30, 2023, a $4 million compensation expense was recorded for this plan ($4 million for the quarter ended April 30, 2022). During the six-month period ended April 30, 2023, a $9 million compensation expense was recorded for this plan ($8 million for the six-month period ended April 30, 2022).
Note 13 - Employee Benefits - Pension Plans and Other Post-Employment Benefit Plans
The Bank offers pension plans that have a defined benefit component and a defined contribution component. The Bank also offers other post-employment benefit plans to eligible employees. The cost associated with these plans, including the remeasurements recognized in Other comprehensive income, is presented in the following table.
Cost for Pension Plans and Other Post-Employment Benefit Plans
Quarter ended April
30
Other post-employment
Pension plans benefit plans
---------------
2023 2022 2023 2022
------ ------- ----------- ----------
Current service cost 23 31 - -
Interest expense (income), net (6) (5) 1 1
Administrative costs 1 1
------ -------
Expense of the defined benefit component 18 27 1 1
Expense of the defined contribution component 3
------
Expense recognized in Net income 21 27 1 1
------ ------- ----------- ----------
Remeasurements (1)
Actuarial (gains) losses on defined
benefit obligation 32 (725) 1 (19)
Return on plan assets(2) (37) 641
------ -------
Remeasurements recognized in Other comprehensive
income (5) (84) 1 (19)
------ ------- ----------- ----------
16 (57) 2 (18)
------ ------- ----------- ----------
Six months ended
April 30
------------------------------------------------- ----- -------
Pension Other post-employment
plans benefit plans
------- -----------------------
2023 2022 2023 2022
------------------------------------------------- ----- ------- ----------- ----------
Current service cost 46 62 - -
Interest expense (income), net (12) (10) 3 2
Administrative costs 2 2
----- -------
Expense of the defined benefit component 36 54 3 2
Expense of the defined contribution component 4
-----
Expense recognized in Net income 40 54 3 2
----- ------- ----------- ----------
Remeasurements (1)
Actuarial (gains) losses on defined
benefit obligation 362 (910) 7 (23)
Return on plan assets(2) (301) 699
-------------------------------------------------- ----- -------
Remeasurements recognized in Other comprehensive
income 61 (211) 7 (23)
----- ------- ----------- ----------
101 (157) 10 (21)
------------------------------------------------- ----- ------- ----------- ----------
(1) Changes related to the discount rate and to the return on plan assets are reviewed and updated on a quarterly basis. All other assumptions are updated annually.
(2) Excludes interest income.
Note 14 - Income Taxes
Notice of Assessment
In March 2023, the Bank was reassessed by the Canada Revenue Agency (CRA) for additional income tax and interest of approximately $90 million (including estimated provincial tax and interest) in respect of certain Canadian dividends received by the Bank during the 2018 taxation year.
In prior fiscal years, the Bank had been reassessed for additional income tax and interest of approximately $875 million (including provincial tax and interest) in respect of certain Canadian dividends received by the Bank during the 2012-2017 taxation years.
In the reassessments, the CRA alleges that the dividends were received as part of a "dividend rental arrangement".
The CRA may issue reassessments to the Bank for taxation years subsequent to 2018 in regard to certain activities similar to those that were the subject of the above-mentioned reassessments. The Bank remains confident that its tax position was appropriate and intends to vigorously defend its position. As a result, no amount has been recognized in the consolidated financial statements as at April 30, 2023.
Canadian Government's 2022 Tax Measures
On November 4, 2022, the Government of Canada introduced Bill C-32 - An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022 to implement tax measures applicable to certain entities of banking and life insurer groups, as presented in its April 7, 2022 budget. These tax measures include the Canada Recovery Dividend (CRD), which is a one-time, 15% tax on the fiscal 2021 and 2020 average taxable income above $1 billion, as well as a 1.5% increase in the statutory tax rate. On December 15, 2022, Bill C-32 received royal assent. Given that these tax measures were in effect at the financial reporting date, a $32 million tax expense for the CRD and an $8 million tax recovery for the tax rate increase, including the impact related to current and deferred taxes for fiscal 2022, were recognized in the consolidated financial statements as at April 30, 2023.
Proposed Legislation
In its March 28, 2023 budget, the Government of Canada proposed to introduce certain tax measures applicable to the Bank. The measures include the denial of the deduction in respect of dividends received after 2023 on shares that are mark-to-market property for tax purposes, the application of a 2% tax on the net value of equity repurchases occurring as of January 1, 2024, as well as the government's intention to implement the Pillar Two rules (global minimum tax) published by the Organization for Economic Co-operation and Development (OECD) for fiscal years beginning as of December 31, 2023. The proposed measures have not yet been included in a bill at the reporting date.
Note 15 - Earnings Per Share
Diluted earnings per share is calculated by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding after taking into account the dilution effect of stock options using the treasury stock method and any gain (loss) on the redemption of preferred shares.
Quarter ended April Six months ended
30 April 30
2023 2022(1) 2023 2022(1)
----------
Basic earnings per share
Net income attributable to the Bank's shareholders
and holders of other equity instruments 848 890 1,729 1,820
Dividends on preferred shares and distributions
on other equity instruments 35 25 70 51
Net income attributable to common shareholders 813 865 1,659 1,769
Weighted average basic number of common
shares outstanding (thousands) 337,497 337,381 337,241 337,724
---------- --------- --------
Basic earnings per share (dollars) 2.41 2.56 4.92 5.24
---------- --------- --------
Diluted earnings per share
Net income attributable to common shareholders 813 865 1,659 1,769
---------- --------- --------
Weighted average basic number of common
shares outstanding (thousands) 337,497 337,381 337,241 337,724
Adjustment to average number of common shares
(thousands)
Stock options(2) 3,474 4,037 3,384 4,126
---------- --------- --------
Weighted average diluted number of common
shares outstanding (thousands) 340,971 341,418 340,625 341,850
---------- --------- --------
Diluted earnings per share (dollars) 2.38 2.53 4.87 5.17
---------- --------- --------
(1) For the quarter and six-month period ended April 30, 2022, certain amounts have been adjusted to reflect a change in accounting policy related to cloud computing arrangements. For additional information, see Note 1.
(2) For the quarter and six-month period ended April 30, 2023, as the exercise price of the options was lower than the average price of the Bank's common shares, no options were excluded from the diluted earnings per share calculation (no options were excluded from the diluted earnings per share calculation for the quarter and six-month period ended April 30, 2022).
Note 16 - Segment Disclosures
The Bank carries out its activities in four business segments, which are defined below. For presentation purposes, other activities are grouped in the Other heading. Each reportable segment is distinguished by services offered, type of clientele, and marketing strategy. The presentation of segment disclosures is consistent with the presentation adopted by the Bank for the fiscal year beginning November 1, 2022. This presentation reflects a revision to the method used for the sectoral allocation of technology investment expenses , which are now immediately allocated to the various business segments, whereas certain expenses , notably costs incurred during the research phase of projects , had previously been recorded in the Other heading of segment results. This revision is consistent with the accounting policy change applied in fiscal 2022 related to cloud computing arrangements. For the quarter and six-month period ended April 30, 2022 , certain amounts have been adjusted to reflect this accounting policy change (for additional information, see Note 1).
Personal and Commercial
The Personal and Commercial segment encompasses the banking, financing, and investing services offered to individuals, advisors, and businesses as well as insurance operations.
Wealth Management
The Wealth Management segment comprises investment solutions, trust services, banking services, lending services, and other wealth management solutions offered through internal and third-party distribution networks.
Financial Markets
The Financial Markets segment encompasses corporate banking and investment banking and financial solutions for large and mid-size corporations, public sector organizations, and institutional investors.
U.S. Specialty Finance and International (USSF&I)
The USSF&I segment encompasses the specialty finance expertise provided by the Credigy subsidiary; the activities of the ABA Bank subsidiary, which offers financial products and services to individuals and businesses in Cambodia; and the activities of targeted investments in certain emerging markets.
Other
This heading encompasses treasury activities; liquidity management; Bank funding; asset/liability management activities; the activities of the Flinks subsidiary, a fintech company specialized in financial data aggregation and distribution; certain specified items; and the unallocated portion of corporate units.
Quarter ended April 30(1)
----------------
Personal
and Wealth Financial
Commercial Management Markets USSF&I Other Total
---------------- ----------------
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
-----------------
Net interest
income(2) 802 670 190 127 (212) 355 269 277 (167) (116) 882 1,313
Non-interest
income(2) 298 292 427 452 884 277 16 8 (28) 97 1,597 1,126
-----------------
Total revenues 1,100 962 617 579 672 632 285 285 (195) (19) 2,479 2,439
Non-interest
expenses 601 552 372 357 283 258 98 88 20 44 1,374 1,299
-----------------
Income before
provisions
for credit
losses and
income
taxes 499 410 245 222 389 374 187 197 (215) (63) 1,105 1,140
Provisions for
credit
losses 37 11 - - 19 (16) 26 9 3 (1) 85 3
-----------------
Income before
income
taxes (recovery) 462 399 245 222 370 390 161 188 (218) (62) 1,020 1,137
Income taxes
(recovery)(2) 127 106 67 59 102 103 33 36 (156) (56) 173 248
-----------------
Net income 335 293 178 163 268 287 128 152 (62) (6) 847 889
Non-controlling
interests - - - - - - - - (1) (1) (1) (1)
-----------------
Net income
attributable
to the Bank's
shareholders
and holders of
other
equity
instruments 335 293 178 163 268 287 128 152 (61) (5) 848 890
Average assets(3) 147,316 137,636 8,518 8,327 172,361 149,029 22,562 18,230 70,458 71,404 421,215 384,626
-----------------
Total assets 148,914 141,068 8,699 8,426 168,164 142,421 23,243 18,634 68,664 59,021 417,684 369,570
Six months ended April 30(1)
Personal
and Wealth Financial
Commercial Management Markets USSF&I Other Total
-----------------
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
------------------
Net interest
income(4) 1,627 1,339 398 246 (303) 753 568 547 (309) (240) 1,981 2,645
Non-interest
income(4) 597 581 856 925 1,664 541 36 23 (73) 190 3,080 2,260
------------------
Total revenues 2,224 1,920 1,254 1,171 1,361 1,294 604 570 (382) (50) 5,061 4,905
Non-interest
expenses 1,207 1,107 736 717 570 521 196 168 68 66 2,777 2,579
------------------
Income before
provisions
for credit
losses and income
taxes 1,017 813 518 454 791 773 408 402 (450) (116) 2,284 2,326
Provisions for
credit
losses 98 6 - - 10 (32) 61 27 2 - 171 1
------------------
Income before
income
taxes (recovery) 919 807 518 454 781 805 347 375 (452) (116) 2,113 2,325
Income taxes
(recovery)(4)(5) 253 214 142 121 215 213 72 75 (297) (117) 385 506
------------------
Net income 666 593 376 333 566 592 275 300 (155) 1 1,728 1,819
Non-controlling
interests - - - - - - - - (1) (1) (1) (1)
------------------
Net income
attributable
to the Bank's
shareholders
and
holders of other
equity
instruments 666 593 376 333 566 592 275 300 (154) 2 1,729 1,820
Average assets(3) 146,714 136,852 8,521 8,329 172,819 153,467 22,076 18,100 72,981 69,935 423,111 386,683
------------------
Total assets 148,914 141,068 8,699 8,426 168,164 142,421 23,243 18,634 68,664 59,021 417,684 369,570
(1) For the quarter and six-month period ended April 30, 2022, certain amounts have been reclassified, notably due to a revised method for the sectoral allocation of technology investment expenses. In addition, certain amounts have been adjusted to reflect a change in accounting policy related to cloud computing arrangements (for additional information, see Note 1).
(2) The Net interest income, Non-interest income, and Income taxes (recovery) items of the business segments are presented on a taxable equivalent basis. Taxable equivalent basis is a calculation method that consists of grossing up certain revenues taxed at lower rates by the income tax to a level that would make it comparable to revenues from taxable sources in Canada. For the business segments as a whole, Net interest income was grossed up by $76 million ($49 million in 2022), Non-interest income was grossed up by $56 million ($3 million in 2022), and an equivalent amount was recognized in Income taxes (recovery). The effect of these adjustments is reversed under the Other heading.
(3) Represents an average of the daily balances for the period, which is also the basis on which sectoral assets are reported in the business segments.
(4) During the six-month period ended April 30, 2023, for the business segments as whole, Net interest income was grossed up by $154 million ($109 million in 2022), Non-interest income was grossed up by $108 million ($7 million in 2022), and an equivalent amount was recognized in Income taxes (recovery). The effect of these adjustments has been reversed under the Other heading.
(5) During the six-month period ended April 30, 2023, the Bank recorded a $32 million tax expense with respect to the Canada Recovery Dividend, i.e., a one-time, 15% tax on the fiscal 2021 and 2020 average taxable income above $1 billion, as well as an $8 million tax recovery related to a 1.5% increase in the statutory tax rate, which includes the impact related to current and deferred taxes for fiscal 2022. These items are recorded in the Other heading. For additional information on these tax measures, see Note 14.
Note 17 - Event After the Consolidated Balance Sheet Date
On May 2, 2023, the Bank concluded that it had lost significant influence over TMX Group Limited (TMX) and therefore, as of this date, ceased using the equity method to account for this investment. The Bank designated its investment in TMX as a financial asset measured at fair value through other comprehensive income in an amount of $191 million. Following the fair value measurement, a $91 million gain will be recorded in the Non-interest income - Other item of the Consolidated Statement of Income and will be reported in the Other heading of segment results during the third quarter of 2023. As at April 30, 2023, the Bank's ownership interest in TMX was 2.5%.
Information for Shareholders and Investors
Investor Relations
Financial analysts and investors who want to obtain financial information on the Bank may contact the Investor Relations Department.
600 De La Gauchetière Street West, 7(th) Floor
Montreal, Quebec H3B 4L2
Toll-free: 1-866-517-5455
Email: investorrelations@nbc.ca
Website: nbc.ca/investorrelations
Communications and Corporate Social Responsibility
600 De La Gauchetière Street West, 18(th) Floor
Montreal, Quebec H3B 4L2
Telephone: 514-394-8644
Email: pa@nbc.ca
Quarterly Report Publication Dates for Fiscal 2023
(subject to approval by the Board of Directors of the Bank)
First quarter March 1
Second quarter May 31
Third quarter August 30
Fourth quarter December 1
Disclosure of
Second Quarter 2023 Results
Conference Call
* A conference call for analysts and institutional
investors will be held on Wednesday, May 31, 2023 at
1:00 p.m. EDT.
* Access by telephone in listen-only mode:
1-800-806-5484 or
416-340-2217 . The access code is
9583004 # .
* A recording of the conference call can be heard until
August 31, 2023 by dialing 1-800-408-3053 or
905-694-9451. The access code is 5604431#.
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 Report to Shareholders (which includes the
quarterly consolidated financial statements) is
available at all times on National Bank's website at
nbc.ca/investorrelations .
* The Report to Shareholders, the Supplementary
Financial Information, the Supplementary Regulatory
Capital and Pillar 3 Disclosure, and a slide
presentation will be available on the Investor
Relations page of National Bank's website on the
morning of the day of the conference call.
Transfer Agent and Registrar
For information about stock transfers, address changes, dividends, lost certificates, tax forms, and estate transfers, shareholders of record may contact the transfer agent, Computershare Trust Company of Canada, at the address or telephone number below.
Computershare Trust Company of Canada
Share Ownership Management
100 University Avenue, 8(th) Floor
Toronto, Ontario M5J 2Y1
Telephone: 1-888-838-1407
Fax: 1-888-453-0330
Email: service@computershare.com
Website: computershare.com
Shareholders whose shares are held by a market intermediary are asked to contact the market intermediary concerned.
Direct Deposit Service for Dividends
Shareholders may elect to have their dividend payments deposited directly via electronic funds transfer to their bank account at any financial institution that is a member of the Canadian Payments Association. To do so, they must send a written request to the transfer agent, Computershare Trust Company of Canada.
Dividend Reinvestment and Share Purchase Plan
National Bank has a Dividend Reinvestment and Share Purchase Plan for holders of its common and preferred shares under which they can acquire common shares of the Bank without paying commissions or administration fees. P articipants acquire common shares through the reinvestment of cash dividends paid on the shares they hold or through optional cash payments of at least $1 per payment, up to a maximum of $5,000 per quarter.
For additional information, shareholders may contact National Bank's registrar and transfer agent, Computershare Trust Company of Canada, at 1--888--838--1407. To participate in the plan, National Bank's beneficial or non-registered common shareholders must contact their financial institution or broker.
Dividends
Dividends paid are "eligible dividends" in accordance with the Income Tax Act (Canada).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
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(END) Dow Jones Newswires
May 31, 2023 08:48 ET (12:48 GMT)
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