National Bank of Canada at National Bank Financial Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Well, my first question, we'll dive right into it. We saw a little announcement from National last night, some executive change. Ricardo Pascoe is retiring. He's running the transformation program at National Bank. And that -- those roles and responsibilities will be falling under Laurent and Denis, Co-Heads of the Financial Markets division. Maybe give a bit of a sense -- shall I read anything into that, why it's rolling into Financial Markets? Or is it really just a continuation of an existing strategy, just new people doing it?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Can we get maybe a little sense of what's going on with the transformation plan, like phases, like what have we done and maybe what are the priorities today and where you see going forward? A little bit more...

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. And one of the -- so that's the operational side of things. But one of the outputs that the market and people like me have a singular focus on is operating leverage, subtle changes in message and guidance, and we tend to make a mountain out of a molehill on the sell side... without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MARCH 27, 2019 / 12:30PM, NA.TO - National Bank of Canada at National Bank Financial Financial Services Conference

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Well, that's -- I guess. This year, we took the guidance down a little bit, and you've attributed most of that more cautious, conservative guidance to the revenue line as opposed to the expense line. What areas of the business do you think are facing more headwinds on the top line and how?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Mainly capital markets?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Putting a bit more of a positive spin on things. The QuTbec economy is always front and center in the discussion around National Bank. The economy has been on a roll for a number of years now. Are you still seeing positive changes in behavior of your -- in your client base, both on the retail and in the commercial side, like a greater willingness to spend or invest, things of that nature? Is that still -- is that momentum still building? And how are you tapping into that?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : You brought up the R word, which is on everybody's mind, recession. And I think one of your favorite expressions or the best ones anyway is, "Don't confuse genius with the steep yield curve." And now we've got the inverted yield curve. So how does -- the prospects of a potential recession, how does that affect the way you run the bank? Are there certain activities, lending activities you're shying away from? How does it affect your capital deployment mindset? I mean, it's -- every discussion I have around the banks is recessionary, recessionary, recessionary concerns are top of mind. So I'd like to hear your thoughts there.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So if Canada, in a vacuum, a recession doesn't look...

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So how about -- but does -- what are the things that maybe you're shying away from? Or is it business as usual, some sort of lending activity?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : On deposits. We spend so much time thinking about the asset-gathering loans and stuff like that, but banks have embraced the deposit-gathering mantra and many have said, "That's our #1 priority." National is in the same boat possibly. And what's changed?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And do you incentivize staff more to gather deposits now than you have been doing?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Shifting a bit to more of an overseas perspective, and I want to go on 2 directions here. The global expansion and strategic investments you've made in the past, that's possibly an area where we could see the footprint shrink over time, as maybe you reevaluate some of these positions. And then for the rest of the bank, so whether it's P&C type activities or Financial Markets or Wealth, do you see any other opportunities for growth outside of Canada for these businesses?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Picking your spots, not a big balance sheet strategy?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : You brought up Credigy. We've seen the loan balances post-Lending Club. There's big growth, then deceleration, and now we've had a trough and we're seeing growth now for a couple of quarters in the loan balance. Where is this growth coming from? And -- I mean, the distressed-type market doesn't seem to be primed for growth, I don't -- unless I'm missing something.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Have you looked at other partnership opportunities maybe on the funding side? Because I think you have a certain size or wholesale funding-type capacity or appetite that might come into play in the next few years.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Before I proceed, I should mention that if anybody has any questions from the audience, and we got a full house here, raise your hand, throw something at me and we'll get your question in there. Anyone? Okay. Just to bring it back into the Canadian market. The consumer leverage -- household leverage has been a topic of focus for a number of years, and now it seems to be flattening out. Do you see the -- more of a broad Canada perspective, not so much QuTbec, but do you see the deleveraging of the Canadian consumer as a likely outcome? And if so, is that a growth headwind? Or is it maybe something more than that?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And the budget that just came out, did you -- do you think that it will be stimulative?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : I meant the federal one.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Any question? We've got one. Unidentified Analyst Just what about National Bank's own labor costs?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Well, I think that about wraps up our first presentation. Thank you again, Louis, and have a good day.