National Bank of Canada at Scotiabank Financials Summit Transcript

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

Question: Meny Grauman - Scotiabank - Analyst : <_ALACRA_META_ABSTRACT>Yeah, you were very busy early in the summer. So you can imagine where I want to start. I want to start with CWB. You announced the deal in June. There was an important vote yesterday. And maybe just to start, is there anything to update us on the transaction? Maybe as a further part to this question, I thought maybe we'd hear some regulatory rumblings, just given the regional issues potentially in a QuTbec-based bank buying an Alberta-based bank. You don't hear anything. So the follow-up question in terms of an update is just, could we actually see an earlier close than what you originally indicated in terms of the end of calendar 2025? Laurent Ferreira - National Bank of Canada - President, Chief Executive Officer, Executive Director So first of all, thank you very much for having me. This is a great conference and we run a really tight ship, so it's always nice to be here. Things are progressing really well on our deal. So discussions with OSFI and Competition Bureau, applications were in the week after the announcement. So things are progressing well. And our view, and that's what we said to the Competition Bureau, and they're working hard on the transaction, is that this is a good trade for competition. And if you look at complementary platforms, geographies, products. And so some of the early feedback we're getting from the Bureau is that, yes, we kind of see the same thing. So we're working really hard towards an early 2025 close. So that's the mindset of the team right now.

Question: Meny Grauman - Scotiabank - Analyst : Because that's the other question in terms of you've been very clear in terms of wanting to grow commercial and wealth outside of QuTbec. Is doing this deal sort of an admission that the growth rate -- it's going fine, but the growth rates aren't blowing you away? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:10PM, NA.TO - National Bank of Canada at Scotiabank Financials Summit

Question: Meny Grauman - Scotiabank - Analyst : And what about the ROE dilution? I mean, a lot of people are focused on ROE in particular these days, a lot of conversations with your peers about ROE. So peer-leading ROE, this is dilutive, at least initially. And so people are saying, why do a deal to take down that ROE?

Question: Meny Grauman - Scotiabank - Analyst : And you mentioned that non-interest revenue is a percentage of overall revenue, very low for CWB. Is the expectation that you could bring it all the way up to --

Question: Meny Grauman - Scotiabank - Analyst : And then is there anything else you can add in terms of either the revenue synergy side of this deal that you haven't said? Or -- I'm getting a lot of questions about the capital side, people are looking at the capital picture and saying, okay, obviously there's an opportunity here. CWB is a standardized bank. You're advanced. How does this all come together?

Question: Meny Grauman - Scotiabank - Analyst : You talked about the branch growth. Is the intention to make the CWB branches fully retail and commercial? Like -- or is it -- are they going to stay, or some of them going to stay purely commercial banking centers?

Question: Meny Grauman - Scotiabank - Analyst : And the question I also get just in terms of the CWB brand and does that go away or has that been decided?

Question: Meny Grauman - Scotiabank - Analyst : That's always a good guide. And I want to move on to other parts of the business. Obviously, a lot of strength and success to talk about. But just a final question here in terms of culture. I alluded at the beginning when the deal was first announced, I think everyone agreed strategically it made a huge amount of sense. The question was sometimes a little bit from the regulatory side, but more from a cultural side. How does a Montreal-based bank gel with an Edmonton-based bank? It seems like not naturally the best combination from that perspective.

Question: Meny Grauman - Scotiabank - Analyst : I wanted to talk about the business as it is now. And again, Lot's here to talk about big picture. I thought it would be helpful, I think, clearly see the outperformance of National Bank. I think you have to give QuTbec some of the credit. So maybe we'll see if you push back on that at all. But just an update in terms of the QuTbec economy, where it stands now, your outlook. Obviously, you're very well positioned to give us a little bit of insight into that.

Question: Meny Grauman - Scotiabank - Analyst : I wanted to talk about financial markets. It strikes me. At the beginning of the year, the guidance here was for very low earnings growth. And here we are, year to date, up 23%, I think your strongest business segment. Despite the introduction of the DRD, you're able to deliver those kinds of numbers, and better than you had expected, and better than other segments. So really the question is, how have you been able to achieve that? From the outside, it's definitely hard to understand. It's nice to see but help us understand how that happened.

Question: Meny Grauman - Scotiabank - Analyst : But it's sustainable in the sense -- you're saying there's nothing that you can point to this year to say that's not going to repeat, that's not sustainable.

Question: Meny Grauman - Scotiabank - Analyst : You talked about obviously the Canada focus with some niche in the US. The question is why not go bigger in the US? You're clearly showing an ability to deliver in Canada. So why not take that secret sauce and build something very, very powerful in the US market?

Question: Meny Grauman - Scotiabank - Analyst : If we talk about financial markets, business that we don't talk as much about is wealth, but it's put up very good results. So maybe we'll keep the metaphor, the secret sauce. What's the secret sauce in wealth? You talked about financial markets, but how are you able to deliver in wealth and especially outside of QuTbec?

Question: Meny Grauman - Scotiabank - Analyst : I wanted to talk about Credigy, a niche business for you. First off, if you could just help us understand how it fits into the overall strategy of the bank. How does Credigy fit in very unique --

Question: Meny Grauman - Scotiabank - Analyst : Can you talk about how the prospect of higher capitals in the US are sort of helping fuel that business? And then what I was thinking about was to the extent that the Basel end game comes in, I mean, softer than expected. Maybe it's not, maybe it is as expected now, but does that sort of temper that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:10PM, NA.TO - National Bank of Canada at Scotiabank Financials Summit

Question: Meny Grauman - Scotiabank - Analyst : And I was just wondering, just in terms of the competitive landscape, as alternative assets become more popular, I mean, Credigy was doing it before. It was cool. But are you seeing tougher competition impact the ability of Credigy to actually get deals done?

Question: Meny Grauman - Scotiabank - Analyst : I wanted to talk about ABA and maybe get to the point in terms of the most fundamental question here, just in terms of how core is this business? And if the right offer came along, would you be willing to sell ABA?

Question: Meny Grauman - Scotiabank - Analyst : Just take a step back in terms of capital deployment, but you're not interested in deploying inorganic capital or capital inorganically in that region.

Question: Meny Grauman - Scotiabank - Analyst : Just going back to the performance of that business, it's actually been better than expected. But we're still seeing gross impaired loans gap up. And so I think you addressed this on the call, but I think it's important. Why shouldn't investors be worried about that when they see that big move in gross impaired loans?

Question: Meny Grauman - Scotiabank - Analyst : One thing I wanted to follow up on that, so you're very well protected on these loans. And so even on impairment, you're not taking losses. But the question that I sometimes get is just, you obviously, there's a whole legal structure behind that for you -- to allow you to enforce on your claims. You're a foreign bank. Is there regulatory risk here? One day you just wake up and they say the security that you had, you actually don't have anymore, and how big of risk is that?

Question: Meny Grauman - Scotiabank - Analyst : I want to wrap up. Just a few minutes left. Just get your thoughts on the global minimum tax. Didn't really come up this earnings season, but I'm bringing it up here because I think it has the potential to be more meaningful for you guys, just given your TEB revenues is larger than peers. So the question is, how should we be thinking about the global minimum tax? How big an impact could it have on your results going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:10PM, NA.TO - National Bank of Canada at Scotiabank Financials Summit

Question: Meny Grauman - Scotiabank - Analyst : Okay. I think that's a good place to end. I want to thank you so much, Laurent.

Question: Meny Grauman - Scotiabank - Analyst : Always great speaking to you.