National Bank of Canada Q3 2025 Earnings Call Transcript

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

Question: Sohrab Movahedi - Bank of Montreal - Analyst : Okay, thank you. Laurent, can you just talk us through how you decided to size the buyback? Why only 2% with a 13.9% CET1 likely to go up? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2025 / 3:00PM, NA.TO - Q3 2025 National Bank of Canada Earnings Call

Question: Sohrab Movahedi - Bank of Montreal - Analyst : Okay, well, maybe we'll elaborate on that at a different time, but are you suggesting then that the organic growth opportunities ahead of you are likely to be more RWA intensive than historical growth, like is there going to be a shift in risk appetite here? I'm just trying to understand with this sort of a capital level why an embarrassingly low 2% NCIB. So maybe there's growth opportunities, but I'm just trying to understand is that growth going to be more capital intensive or is there any reason not to believe this capital is going to continue to stockpile?

Question: Sohrab Movahedi - Bank of Montreal - Analyst : So your internal capital generation, you did 33 basis points this quarter, I mean -- like we could be sitting with 14%-plus next quarter?

Question: Sohrab Movahedi - Bank of Montreal - Analyst : Okay, thank you very much for taking my question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2025 / 3:00PM, NA.TO - Q3 2025 National Bank of Canada Earnings Call

Question: Doug Young - Desjardins Securities Inc - Analyst : So first question on Canadian banking and I guess (inaudible) just trying to get a sense. It seemed like it was -- your non-interest revenue was kind of flatlined. I figured it would be up a little bit more but maybe there's something in there and then lower them sequentially. Just trying to get a sense, is this a new run rate for the (inaudible). And then I've got a few follow up.

Question: Doug Young - Desjardins Securities Inc - Analyst : Yeah, and I just -- this kind of so it doesn't feel like this is an unusual quarter. It feels like this is kind of like more than normal run rate. Did I get that right or --?

Question: Doug Young - Desjardins Securities Inc - Analyst : Good NII. Okay, that's fair. And then (technical difficulty) portfolio has been now converted to AIRB.

Question: Doug Young - Desjardins Securities Inc - Analyst : And what percentage of CWB's loan book has been shifted over? Is it 80%? Sorry, 10%, 5%, 20%?

Question: Doug Young - Desjardins Securities Inc - Analyst : And that's the first kind of -- that's the first conversion that would happen? Is that, I guess, that the first next time frame is the end of fiscal '26 and we would see another benefit from the AIRB conversion?

Question: Doug Young - Desjardins Securities Inc - Analyst : Okay. And then just lastly at Credigy -- average assets, I think we're down quarter over quarter, you can correct me if I'm wrong, but yeah, I figured the environment would be pretty good for this business or the coming year and opportunities there and I know this can be lumpy and so maybe that's just the case. But I'm just kind of curious if you're seeing increased competitive pressures in the certain businesses that Credigy is going after. Are they kind of gearing up to pivot again to another segment, away from where they stand today? Just maybe a little bit of an update on that business. Etienne Dubuc - National Bank of Canada - Executive Vice President - Financial Markets and Co-President and Co-Chief Executive Officer - National Bank Financial Inc Doug, it's +tienne. So you're right, it's still competitive out there, but Credigy has continued to adapt the strategy and execute, so we continue to have success buying and financing. First and secondly, mortgages, that's about two-thirds of the deal flow this quarter. And we love those, these mortgage deals continue to produce very solid risk adjusted returns for us. We saw really the pace of business accelerate during the second half of the quarter, and we see some good things, some regulatory tailwinds that could drive more activity from US regional banks, including increase M&A activity that's often some source of opportunity there. And so that's something that we're monitoring very closely. Generally, the core of our strategy is high FICO homeowners. And they're on solid ground with a very resilient labor market and solid home prices still in the US. So we're seeing increased deal flow, especially like I said, starting in the second half of Q3, and so that led to about a 5% growth in balances. So looking at the current deal pipeline, we think this momentum continues in the coming quarters. So overall, we feel really good about our guidance of average asset growth in the mid-single digits for whole year 2025. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2025 / 3:00PM, NA.TO - Q3 2025 National Bank of Canada Earnings Call

Question: Jill Shea - UBS AG - Analyst : Thanks for taking the question. Perhaps just on credit quality, really appreciate the color on the impaired PCLs landing closer to that middle of the range of the 25 to 35 basis points. With the 21 basis points that you did this quarter and then just looking at your first half results, not to put too fine a point on it, but it implies the impaired PCLs are back up around 30 basis points or so next quarter. Could you just walk us through the puts and takes this quarter and how you think about just the credit trends that you look forward into next quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2025 / 3:00PM, NA.TO - Q3 2025 National Bank of Canada Earnings Call

Question: Jill Shea - UBS AG - Analyst : Okay, thank you very much. I'll pass the line.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : I just have a couple of questions here on CWB. The first thing is if I look at your shareholders' report, I could see the revenues and I can make the adjustments for the mark and for the synergies and where I land is a revenue number of around $298 million of CWB standalone. And that would be zero growth year over year, so I'm just wondering if you could maybe walk me through what it is that is sort of happening beyond loan growth at CWB that there would be zero revenue growth for this bank on a standalone basis.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, thank you for that. Can you maybe help me reconcile one other thing here, with respect to your results as presented, I mean, one of the things -- if I draw your attention to page 4 of your shareholders' report. In there, you show sort of the CWB impact, and in that consolidated results line, if I scroll down, I see provisions for credit losses adjusted at just $13 million. But in your slide deck, you're suggesting that CWBs impairment on impaired loans is $26 million. So is that to say that the total PCL essentially has a reserve release of CWB of around $13 million or is there something else that I should be thinking about?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : When you say little, is $13 million little or --?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, great. Thank you.

Question: Paul Holden - CIBC World Markets Corp - Analyst : A couple questions for +tienne. I guess, first off, looking at the equity trading results, not exactly what we would have expected versus what peers have produced equity trading down for national year over year. Just want to get a better sense of the drivers of that. I can look at the appendix 12 and see there were some trading day losses, but they look pretty small, so -- Anyways, maybe that's part of the factor, but I imagine it's not the entire explanation. Etienne Dubuc - National Bank of Canada - Executive Vice President - Financial Markets and Co-President and Co-Chief Executive Officer - National Bank Financial Inc Thanks for your question, Paul. It's +tienne. So maybe take a step back and talk about the quarter as a whole because we're really pleased with the third-quarter results for Financial Markets. In a very different market environment than Q2, but still the platform delivered its third best quarter ever, so I think that demonstrates the strength and the diversification of the platform. The results are consistent with the pacing we anticipated heading it to the quarter. We knew there would be lower volumes due to seasonality. We anticipated lower equity volatility, so overall, a more normal market backdrop, and that caused lower equity and affects trading results sequentially, although our market share continues to progress in several key segments there. These businesses are doing well. And as markets normalized, corporate and investment banking caught some great tailwinds and delivered record revenues with, as Laurent alluded to, DCM and M&A leading the way, but really, all segments did well in CIB. So overall, total revenues of Financial Markets were up 13% year over year. And I think the key highlight there is the resiliency and diversification of the platform. And Paul, yeah, there were a few down days during the quarter. I think I counted four, and these are days that -- down days that occurred during equity market rallies. So as you know, we have a very defensive positioning. This was extremely profitable for us in Q2. We are maintaining that defensive positioning because we think it's -- we want to maintain that diversification of cyclical and countercyclical market regimes and to do well in both. So really, since our focus is on liquidity providing and structuring, we won't benefit as much as some peers from when credit tightens a lot like it did this quarter. So really what you saw is the source of our defensive positioning inequities as a result, but overall, really pleased with the performance of the business.

Question: Paul Holden - CIBC World Markets Corp - Analyst : Okay, yeah, makes sense. Okay, thank you for that +tienne.