National Bank of Canada Q1 2019 Earnings Call Transcript

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

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So Louis, you used the term one-off earlier in describing the market. And I just wanted to tie that into the operating leverage performance that started the year on a soft note. So are you really looking at that performance as a one-off result from a really bad market, which is totally reasonable? 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. FEBRUARY 27, 2019 / 6:00PM, NA.TO - Q1 2019 National Bank of Canada Earnings Call Or does it push you to do something more dramatic? I mean, restructuring charges and stuff like that seems like would be a knee-jerk reaction, but I'd like to hear your thought.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Good to hear. Next question actually is for Bill. And specifically on the -- what's driving the additions to Stage 1 and 2 allowances under IFRS 9? It looks to be like in -- excluding the movements in the Credigy and international business, it looks to be primarily in the commercial book, including $16 million this quarter. Credit conditions are pristine in commercial lending. And what's the behind the scenes driver there?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And in the nonretail, was it some sectors, in particular or was it the wholesale loans versus like the C in P&C? Where was the -- or was it spread across a bunch of categories?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Louis, maybe I'll just -- I'll pick it up there. Maybe just -- I know you've gone through the priority for the capital and you've talked about the buybacks. And I think previously you've talked about not being necessarily valuation-sensitive because you were trying to offset some of the dilution from the past. Is that any different now? I know you kind of talked about the 2.5 million shares left on the current program. But just philosophically, given the outlook for the economy, like do you feel like you need to run with higher capital or do you feel like the capital levels are sufficient and anything above and beyond what's required for organic growth can be returned to shareholders? 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. FEBRUARY 27, 2019 / 6:00PM, NA.TO - Q1 2019 National Bank of Canada Earnings Call

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. And just, again, philosophically, I guess, to get a sense on the expenses. I mean, I think, you said you will not do anything that will hurt the franchise as far as trying to manage to an operating leverage number. I'm just curious to know what are some of the expense levers that you have at your discretion that are not franchise impacting that you can pull on from time to time?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. And just one last one on the Canadian P&C. I think lots of good color around the strategy with M3 and the mortgage volume growth and how that will probably impact, I guess, more so beyond 2019. But if we could just fast forward to a scenario where 25%, 30% of your originations are coming through the M3 relationship, will that be one of these trade-off will pick up a little bit more volume, but it may come at a narrower margin?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Actually Mario asked my question on Credigy there. So I'd only the -- offline call either. Thanks.