National Bank of Canada at National Bank Financial Services Conference (Virtual) Transcript

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

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : I have -- I will start off with a question here. A good place to start, as always, is the -- your outlook for the Quebec economy. How has it been doing recently with the health situation improving and the bumps in the roads and all that, but things are generally improving. Vaccinations are progressing. Do you -- what is your view on the economic performance of Quebec in the next little while and beyond? So I'm sure there's lots to talk about there.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So still feeling -- I mean, you're pretty bullish in your commentary on the Q1 call about various lines of business and still about the same, I surmise?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Not to be a downer, but what are your areas of concern. forbearance are obviously one big unknown, but there's a lot of liquidity in the system, creating distortions and asset prices. The housing narrative -- I mean, tied to that liquidity issue, the housing narrative is back. Public concerns are fleeting again. The public sector finances are stretched, I guess, one way to put it. What -- how do you see the dark spots, I guess, on the horizon?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. I want to talk a bit about, I guess, this is more of a question about the stock that's done well. And I get a lot of investors asking me, "What's driving that?" And one thing I can point to is that the results are consistently steady and well balanced. I mean, in Q1, we saw one of the biggest takeaways, in my opinion, a positive pretax, pre-provision profit growth across all segments. I mean, that's not an easy task. So my question, given the importance of that type of performance, how do you think all of your businesses can maintain that type of performance over the course of the year? Because I know, on a consolidated basis, you're targeting positive PTPP growth. Is that across all segments kind of performance likely as well?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Now the top line is obviously a focus with all the margin compression and asset growth that's maybe a bit slower, but then expenses in the past year were used as a toggle to help the bottom line performance, and investors were seeing a lot of very low expense growth. My question is, as we're getting out of the downturn and you're starting to look ahead to better growth days this year, next year, especially, like, the discipline between improving -- sorry, the decision-making between improving efficiency and investment, how are you approaching that these days?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So are you dusting off previous project initiatives that were maybe shelved last year and then seeing some new stuff come in and no or...?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : One business that doesn't get as many questions as it deserves is the wealth business. And National has got a differentiated business model, a few areas that may be less understood by the Street. Like, what would you highlight as your key differentiating factors in wealth domestically, obviously? And how that positions you for better growth this year?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Great. I've got a couple of questions here, good ones from the crowd. I'll start with this one here. One of the impacts of huge fiscal and monetary support has been very strong asset price inflation, evident in stock markets and housing markets. Is there any possibility of a wealth tax in Canada to redistribute some of this unequal benefit within society? If so, what shape could this be in? And how big of a challenge would it be for your earnings power?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. The other one, does the Fed removing SLR forbearance for the big U.S. banks create a meaningful business opportunity for you as they need to manage their leverage assets more judiciously? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 24, 2021 / 12:35PM, NA.TO - National Bank of Canada at National Bank Financial Services Conference (Virtual)

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : We'll get into that yield curve topic in a minute, but the loan growth outlook, I'm going to ask several of the presenters today about their loan growth outlook. And I'm seeing probably across the industry $100 billion of excess deposits from where we were last year. And it's great from a customer health standpoint for banks to have all that liquidity. But as an inhibitor of loan growth, is that something that we should be thinking of, whether borrowers just drain those resources before they need to borrow? Could that push loan growth back a couple of years?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Right. And then that was my next question was National was one of the banks that had sequential loan growth anywhere in the Canadian commercial portfolio. Is that -- could we tie that into the relative strength of the Quebec economy? Or any other factors that you might identify?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. You mentioned M&A super cycle. That's a good segue to the capital markets business, which has been on fire, like many others. But in National's case, I think the type of growth you've been delivering, not just last year but in prior years, it does dispel some of the concerns related to Canada-centric business model. Some people view that as -- it means growth is going to be lower, not the case. But longer term, you've got to start making plans today for what you see in the future. And I'm wondering if there's anything on the -- what were your expansion plans outside of Canada? Is there anything to talk about there in capital markets?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Got you. And ABA Bank, I think it's an interesting time to ask about ABA Bank, given that the year that we had was surprisingly, to many, how strong ABA did last year. And it's been strong for a number of years, and you're very cautious in your commentary saying, "Let's see how it does in a downturn before we make any bold statements." Well, we've had the downturn, I guess. What's your updated thinking on ABA? And whether you can maybe put more capital to work there or some other insight?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. We've got about a minute left here. A capital question. And on the Q1 call, you were pretty very clear that once the restrictions are lifted, if and when, you're ready to jump back in with dividend increases and buybacks. My question is on buybacks. And historically, the Canadian banks have done it obviously, but just not massive programs as you might see elsewhere. Given the size of the excess capital positions and you don't have to talk about the other banks, obviously, but given the size of the excess capital position, is there any reason why we should expect a different, maybe more aggressive type of a -- level of activity on the buyback front in the next year or 2?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Well, I think that's a good way to end the discussion here. Thanks for coming again. Always great to talk to you, and good luck with your meetings today.