National Bank of Canada Q4 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 : Just want to follow-up on the QuTbec market, but a different angle here. I'm seeing your loan growth, both Commercial and Personal, coming in a bit below what peers are delivering. Mind you in -- across Canada. Just wondering if there's any deliberate action on your part to curtail loan growth, given the more conservative outlook? And I've got a follow-up.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Shifting to Credigy. I just want to get a sense, and it sounds like the pipeline is pretty tangible there. I want to get a sense for the funding, how big you want that portfolio to get before you start, I don't know, looking for funding alternatives, made it partners or anything of that nature that comes to mind when you think about growth of that book, in particular?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Not a near-term constraint? 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. DECEMBER 04, 2019 / 6:00PM, NA.TO - Q4 2019 National Bank of Canada Earnings Call

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Last one for me and sticking to Credigy, but also lumping in the international business. If I exclude corporate, we're just over 10% of the bank's earnings this quarter that was a target for the bank. I'm just wondering, given that ABA is still probably going to grow quite nicely in 2020, Credigy is going to gear up for a good year as well, like where do you see that number going? And what's your comfort level, I guess, and it's becoming a bigger part of the bank growth story?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : That's actually a pretty good segue to my set of questions. If I look at the notional value associated with your total derivatives, it's up quite handsomely over last year. If I look at the risk density that you report on the counterparty credit risk exposure, it's also up year-over-year, really across all of 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. DECEMBER 04, 2019 / 6:00PM, NA.TO - Q4 2019 National Bank of Canada Earnings Call corporate, I guess, sovereign and financial institutions. Just trying to kind of get a feel for what sort of risks are you taking, presumably in Financial Markets for the trading revenue that may or may not manifest itself right now based on what we see in the capital ratios are RWAs? I'm just trying to get a better feel for that. I don't know who's the best position to answer that.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : But is the -- I guess, is the credit quality of the counterparty deteriorating here? I mean, you've got on Page 40, 41 of your -- of the supplementary regulatory capital disclosure. I mean, it looks like you've got still around 2,400 obligors, but the average LGD has gone from 28% to 37%. The risk density has gone from 16% to 20%. Just trying to kind of understand if you're taking basically additional risk to generate the trading revenue or not?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : I appreciate that. Bill, I'll take you up on the offer after the quarter.