National Bank of Canada Q4 2020 Earnings Call Transcript

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

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. Maybe I'll go to Louis, but maybe the business heads want to chime in as well. Louis, you said something I thought kind of interesting. The allowances are pretty healthy and you'd rather grow the loan book to grow into them as opposed to release the reserves. And I think that makes REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 02, 2020 / 6:00PM, NA.TO - Q4 2020 National Bank of Canada Earnings Call sense. Obviously, you were very careful with your volume growth pre-pandemic. I'm just curious to understand, for example, in capital markets, do you think part of the growth will have to come from more balance sheet intensive businesses next year? Or where do you see risk taking, if you will, on loan growth to grow into those reserves that you're talking about? How important is that going to be? And what sort of implications could that have on RWA?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. So just to be crystal clear, Louis, the M&A pipeline capital markets, this would be what providing acquisition financing, for example?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And is there any -- I mean, would this cause the RWA to grow faster than the loan growth? Is it possible the riskiness of this relative to the kind of the back book, if you will...

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And I guess is Louis requiring you to even look further into your crystal ball, I guess. But when you think about this mix of volume growth, can you quantify what sort of spread you would be generating on these types of activities or what you would hope to be generating or what you would be targeting to generate on these things?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Fair enough. Okay. That's fine. That's fine. No, but I mean I think like Lucie mentioned that, for example, mortgages are coming on at about 3 basis point better spread than those that are rolling off. I'm just trying to kind of get a feel for, is this reason to feel optimistic about margins at the -- at all bank level, non-trading margins at all bank level as well?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Figured I'd throw a couple in there. Also, sticking to the mortgage theme here or topic, a lot of people are going to be renewing mortgages in the next year, a few years anyway, if rates hold the way they are and having a lot of extra spending money, saving 50 to 100 basis points on their mortgages. Like is there a strategy in place or is there anything that you think you can do to kind of translate those household savings into some sort of growth opportunity for the retail business? And then I've got a follow-up on commercial.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : I guess that would be easy or easy enough cross-sell to the wealth business. The commercial question -- well, it's more like kind of surprised. I saw the 2% sequential growth in commercial. I suppose that's somewhat tied to Quebec having reopened a bit more quickly over the summer. Wondering how you see commercial lending evolve over the next year. I know any forecast is tough these days, but it's typically a later cycle kind of growth driver, certainly what we saw before COVID. Or if you're seeing opportunities that you may have shied away from before COVID that are now more attractive from a risk-reward standpoint?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : It does. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 02, 2020 / 6:00PM, NA.TO - Q4 2020 National Bank of Canada Earnings Call