National Bank releases its fourth quarter and 2013 results Français

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Dec 04, 2013, 07:19 ET

At 92 cents per share, quarterly dividend up 6%
Two-for-one common stock split

This press release presents unaudited financial information that is based on the Bank's unaudited interim consolidated financial statements and on its audited annual consolidated financial statements, both of which have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) and set out in the CPA Canada Handbook. It is to be read in conjunction with the Bank's 2013 Annual Report (which includes the audited annual consolidated financial statements and accompanying management's discussion and analysis) available on the Bank's website at nbc.ca. Additional information about National Bank of Canada, including the Annual Information Form, can be obtained from the SEDAR website at sedar.com or on the Bank's website at nbc.ca.

MONTREAL, Dec. 4, 2013 /CNW Telbec/ - For the fourth quarter of 2013, National Bank posted $337 million in net income versus $351 million in the fourth quarter of 2012. Diluted earnings per share for the quarter ended October 31, 2013 stood at $1.89 compared to $1.97 in the same quarter of 2012.

Excluding the specified items described on page 2, the fourth-quarter net income totalled $370 million, up 8% from $343 million in the same quarter of 2012, and the quarter's diluted earnings per share stood at $2.09, up 8% from $1.93 in the fourth quarter of 2012.

For 2013, the Bank's net income totalled $1,554 million versus $1,634 million in 2012, and diluted earnings per share stood at $8.80 compared to $9.32 in 2012. Excluding the specified items described on page 2, net income for 2013 was a record $1,491 million, up 7% from $1,396 million in 2012, and diluted earnings per share was a record $8.41, up 7% from $7.86 in 2012.

"Our efforts to further enhance customer service while maintaining sound cost, risk and capital management continued to deliver positive results in the fourth quarter of 2013 and the year as a whole. All three of our business segments turned in strong performances. We remain optimistic for 2014 with Canadian growth expected to accelerate from 1.6% in 2013 to 2.2% next year. Quebec is expected to be a main contributor to this improvement. Real GDP growth for the province should pick up from around 1% in 2013 to 2% in 2014 with a much better performance from business investment and exports," said President and Chief Executive Officer, Louis Vachon.

Highlights:

$337 million in net income for the fourth quarter of 2013 versus $351 million in the same quarter of 2012;
Diluted earnings per share of $1.89 for the fourth quarter of 2013 versus $1.97 in the same quarter of 2012;
$1,554 million in net income for 2013 versus $1,634 million in 2012;
Diluted earnings per share of $8.80 for 2013 versus diluted earnings per share of $9.32 in 2012;
Common Equity Tier 1 (CET1) capital ratio under Basel III of 8.7% as at October 31, 2013 versus a pro forma CET1 ratio under Basel III of 7.3% as at October 31, 2012.

Highlights Excluding Specified Items⁽¹⁾:

$370 million in net income for the fourth quarter of 2013, up 8% from $343 million in the same quarter of 2012;
Diluted earnings per share of $2.09 for the fourth quarter of 2013, up 8% from $1.93 in the same quarter of 2012;
Record net income of $1,491 million for 2013, up 7% from $1,396 million last year;
Record diluted earnings per share of $8.41 for 2013, up 7% from diluted earnings per share of $7.86 in 2012.

Financial Indicators

	Results Q4 2013		Results excluding specified items	⁽¹⁾	Results 2013		Results excluding specified items	⁽¹⁾

Growth in diluted earnings per share	(4)	%	8	%	(6)	%	7	%
Return on common shareholders' equity	16.6	%	18.4	%	20.6	%	19.7	%
Dividend payout ratio	38	%	40	%	38	%	40	%
CET1 capital ratio under Basel III	8.7	%			8.7	%

(1)	See the Financial Reporting Method section on page 2.

FINANCIAL REPORTING METHOD

(unaudited) (millions of Canadian dollars, except per share amounts)

When assessing its results, the Bank uses certain measures that do not comply with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) and set out in the CPA Canada Handbook. Securities regulators require companies to caution readers that net income and other measures adjusted using non-IFRS criteria are not standard under IFRS and cannot be easily compared with similar measures used by other companies.

FINANCIAL INFORMATION

		Quarter ended							Year ended
		October 31, 2013			October 31, 2012			% Change	October 31, 2013			October 31, 2012			% Change

Excluding specified items
	Personal and Commercial		177			165		7		713			686		4
	Wealth Management		64			49		31		236			188		26
	Financial Markets		125			113		11		541			461		17
	Other		4			16				1			61
Net income excluding specified items			370			343		8		1,491			1,396		7
	Items related to holding restructured notes⁽¹⁾		(2)			81				104			113
	Reversal of provisions for income tax contingencies⁽²⁾		−			−				37			29
	Impairment of intangible assets⁽³⁾		−			(13)				(29)			(13)
	Acquisition-related items⁽⁴⁾		(9)			(10)				(23)			(27)
	Items related to the Natcan transaction⁽⁵⁾		(1)			1				(5)			198
	Severance pay⁽⁶⁾		(9)			(48)				(9)			(59)
	Vacant premises and lease terminations⁽⁷⁾		(12)			(3)				(12)			(3)
Net income			337			351		(4)		1,554			1,634		(5)

Diluted earnings per share excluding specified items		$	2.09		$	1.93		8	$	8.41		$	7.86		7
	Items related to holding restructured notes⁽¹⁾		(0.01)			0.50				0.65			0.70
	Reversal of provisions for income tax contingencies⁽²⁾		−			−				0.23			0.18
	Impairment of intangible assets⁽³⁾		−			(0.09)				(0.18)			(0.09)
	Acquisition-related items⁽⁴⁾		(0.06)			(0.07)				(0.15)			(0.17)
	Items related to the Natcan transaction⁽⁵⁾		(0.01)			0.01				(0.04)			1.22
	Severance pay⁽⁶⁾		(0.05)			(0.29)				(0.05)			(0.36)
	Vacant premises and lease terminations⁽⁷⁾		(0.07)			(0.02)				(0.07)			(0.02)
Diluted earnings per share		$	1.89		$	1.97		(4)	$	8.80		$	9.32		(6)

Return on common shareholders' equity
	Including specified items		16.6	%		19.8	%			20.6	%		24.5	%
	Excluding specified items		18.4	%		19.2	%			19.7	%		20.7	%

(1)	During the quarter ended October 31, 2013, $3 million in financing costs ($2 million net of income taxes) was recorded related to holding restructured notes (2012: a $111 million gain ($81 million net of income taxes) resulting from a rise in the fair value of restructured notes). During the year ended October 31, 2013, the Bank recorded $142 million in revenues ($104 million net of income taxes) related to holding restructured notes and arising mainly from an increase in fair value (2012: $155 million, $113 million net of income taxes).
(2)	During the year ended October 31, 2013, $37 million in income tax provisions was reversed (2012: $29 million) following a revaluation of contingent income tax liabilities.
(3)	During the year ended October 31, 2013, the Bank recognized $39 million in impairment losses ($29 million net of income taxes) on technological developments (2012: $18 million, $13 million net of income taxes).
(4)	The acquisition-related items consisted of (i) $8 million in charges ($6 million net of income taxes) for the fourth quarter of 2013 (2012: $14 million, $10 million net of income taxes) and of $27 million in charges ($19 million net of income taxes) for 2013 (2012: $38 million, $27 million net of income taxes) consisting mainly of retention bonuses related to the Wealth Management acquisitions and (ii) the Bank's $5 million share ($3 million net of income taxes) in integration charges and intangible asset amortization related to its interest in TMX for the fourth quarter of 2013 and of $6 million ($4 million net of income taxes) for 2013.
(5)	With respect to its share in the integration costs incurred by Fiera, the Bank recorded an amount of $1 million ($1 million net of income taxes) for the fourth quarter of 2013 and an amount of $6 million ($5 million net of income taxes) for 2013. During the quarter ended October 31, 2012, the Bank had recorded recoveries of charges related to the Natcan transaction as well as an amount of $1 million ($1 million net of income taxes) for its share in the integration costs incurred by Fiera. During the year ended October 31, 2012, a $246 million gain ($212 million net of income taxes) had been recorded following the sale of Natcan's operations. This gain had consisted of a $275 million sale price, from which $29 million in goodwill, intangible assets and direct charges was deducted. A total of $16 million ($11 million net of income taxes) in other charges related to this transaction had been recorded. Lastly, the Bank had also recorded $3 million ($3 million net of income taxes) for its share of the integration costs incurred by Fiera.
(6)	During the quarter ended October 31, 2013, the Bank recorded $12 million ($9 million net of income taxes) in severance pay related to the streamlining of certain activities (2012: $65 million, $48 million net of income taxes following an optimization of certain organizational structures). During the year ended October 31, 2012, the Bank had recognized $80 million ($59 million net of income taxes) in severance pay related to the optimization of certain organizational structures.
(7)	During the quarter ended October 31, 2013, the Bank recorded an amount of $16 million for vacant premises ($12 million net of income taxes) (2012: $4 million, $3 million net of income taxes) after the leases were terminated.

HIGHLIGHTS
(unaudited) (millions of Canadian dollars)
		Quarter ended							Year ended
		October 31, 2013			October 31, 2012			% Change	October 31, 2013			October 31, 2012			% Change

Operating results
Total revenues		$	1,254		$	1,350		(7)	$	5,163		$	5,313		(3)
Net income			337			351		(4)		1,554			1,634		(5)
Net income attributable to the Bank's shareholders			318			333		(5)		1,479			1,561		(5)
Return on common shareholders' equity			16.6	%		19.8	%			20.6	%		24.5	%
Earnings per share (dollars)
	Basic	$	1.91		$	1.99		(4)	$	8.87		$	9.40		(6)
	Diluted		1.89			1.97		(4)		8.80			9.32		(6)

EXCLUDING SPECIFIED ITEMS⁽¹⁾
Operating results
Total revenues		$	1,263		$	1,240		2	$	5,033		$	4,915		2
Net income			370			343		8		1,491			1,396		7
Net income attributable to the Bank's shareholders			351			325		8		1,416			1,323		7
Return on common shareholders' equity			18.4	%		19.2	%			19.7	%		20.7	%
Earnings per share (dollars)
	Basic	$	2.11		$	1.94		9	$	8.48		$	7.93		7
	Diluted		2.09			1.93		8		8.41			7.86		7

Per common share (dollars)
Dividends declared		$	0.87		$	0.79			$	3.40		$	3.08
Book value										45.81			40.04
Stock trading range
	High		90.48			77.51				90.48			81.27
	Low		77.72			73.89				72.35			63.27
	Close		90.48			77.18				90.48			77.18

									As at October 31, 2013			As at October 31, 2012			% Change

Financial position
Total assets									$	188,204		$	177,903		6
Loans and acceptances										97,338			90,922		7
Deposits										101,886			93,249		9
Subordinated debt and equity										11,587			10,710		8
Capital ratios under Basel III⁽²⁾
	Common Equity Tier 1 (CET1)									8.7	%		7.3	%
	Tier 1									11.4	%		10.1	%
	Total									15.0	%		14.1	%
Impaired loans, net of total allowances										(183)			(190)
	As a % of loans and acceptances									(0.2)	%		(0.2)	%
Assets under administration and under management										258,010			232,027
Total personal savings										157,515			146,683
Interest coverage										11.47			12.23
Asset coverage										3.84			3.45

Other information
Number of employees										19,691			19,920		(1)
Number of branches in Canada										453			451		−
Number of banking machines										937			923		2

(1)	See the Financial Reporting Method section on page 2.
(2)	The ratios are calculated using the "all-in" methodology and the October 31, 2012 ratios are presented on a pro forma basis.

Analysis of Results

Total Revenues
For the fourth quarter of 2013, the Bank's total revenues amounted to $1,254 million, a $96 million year-over-year decrease that came particularly from a rise in the value of restructured notes that had been recorded in the fourth quarter of 2012. Excluding specified items, fourth-quarter total revenues amounted to $1,263 million, rising 2% or $23 million year over year. The revenue growth experienced in each of the business segments was tempered by the fact that, in the fourth quarter of 2012, a gain had been recorded on the sale of investments as part of the TMX transaction.

For 2013, total revenues amounted to $5,163 million versus $5,313 million in 2012, down 3% as a $246 million gain on the sale of Natcan's operations had been realized in 2012. This decrease was partly offset by higher amounts of net interest income, credit fees, trading activity revenues, trust service revenues, and mutual fund revenues.

Non-Interest Expenses
For the fourth quarter of 2013, non-interest expenses stood at $808 million, a $61 million year-over-year decrease that was mainly due to the fact that, in the fourth quarter of 2012, the severance pay and intangible asset impairment that had been recognized were higher than the severance pay and vacant premises provision recorded in the fourth quarter of 2013. Excluding all specified items that affect non-interest expense, non-interest expenses for the quarter stood at $772 million, relatively stable year over year owing to cost control initiatives.

For 2013, non-interest expenses stood at $3,165 million compared to $3,173 million last year, an $8 million decrease that was particularly attributable to higher severance pay last year and to acquisition-related costs recorded in 2012. Excluding specified items, non-interest expenses rose 2% year over year and the efficiency ratio improved from 59.3% in 2012 to 58.6% this year.

Provisions for Credit Losses
For the fourth quarter of 2013, the Bank recorded $48 million in provisions for credit losses, $2 million more than in the same quarter of 2012, mainly because of losses on personal loans.

For 2013, the Bank recorded $181 million in provisions for credit losses, essentially unchanged from $180 million in 2012. The higher provisions taken for losses on personal and commercial loans were partly offset by recoveries of corporate loan losses.

As at October 31, 2013, gross impaired loans stood at $395 million, up $8 million since October 31, 2012 mainly as a result of loans in the Personal and Commercial segment offset by a reduction in Financial Markets. Impaired loans represented 6.5% of the tangible capital adjusted for allowances as at October 31, 2013, an improvement from 7.5% as at October 31, 2012. As at October 31, 2013, the allowances for credit losses exceeded gross impaired loans by $183 million compared to $190 million as at October 31, 2012.

Income Taxes
For the fourth quarter of 2013, income taxes stood at $61 million compared to $84 million in the same quarter of 2012. The tax rate was 15% for this fourth quarter compared to 19% in the fourth quarter of 2012.

For 2013 and 2012, the effective income tax rates were 14% and 17%, respectively. Excluding specified items, the 2013 and 2012 effective income tax rates were 16% and 19%, respectively.

Results by Segment

The Bank's segment reporting is consistent with that adopted for the fiscal year beginning November 1, 2012, with the following changes having been made to better reflect how management monitors performance. The distribution of banking products through independent networks has been reclassified from the Personal and Commercial segment to the Wealth Management segment. Banking activities with energy sector companies have been transferred from the Financial Markets segment to the Personal and Commercial segment. These changes had no impact on the Bank's consolidated results.

Personal and Commercial
In the Personal and Commercial segment, fourth-quarter net income totalled $177 million, up 15% from $154 million in the fourth quarter of 2012. Excluding specified items, the fourth-quarter net income was up 7% year over year. Fourth-quarter total revenues increased by $24 million year over year owing to higher net interest income, which rose $15 million, and to a $9 million increase in non-interest income. The higher net interest income came mainly from growth in personal loan volume, tempered by a narrowing of the net interest margin, which was 2.26% in the fourth quarter of 2013 compared to 2.34% in the same quarter of 2012, mainly due to a decline in loan spreads. However, the net interest margin has remained stable when compared to the third quarter of 2013.

Personal Banking's total revenues rose $20 million, mainly due to higher loan volumes, specifically consumer loans and mortgage loans, tempered somewhat by a narrowing net interest margin. Commercial Banking's total revenues were up $4 million, mainly due to growth in net interest income.

For the fourth quarter of 2013, the Personal and Commercial segment's non-interest expenses were down $11 million or 3% year over year as severance pay had been recorded in the same quarter of 2012. At 56%, the efficiency ratio for the fourth quarter of 2013 improved by 1% when compared to the same quarter last year excluding specified items. Provisions for credit losses were increased by $5 million due to growth in loan volumes.

For 2013, the segment posted net income of $713 million, up $38 million or 6% from $675 million in 2012. Excluding specified items, the 2013 net income grew 4% year over year. Total revenues for 2013 grew 3% year over year, with Personal Banking's revenues rising mainly on higher consumer and mortgage loan volumes and Commercial Banking's revenues rising 2% mainly as a result of financing activity revenues. The segment's 2013 provisions for credit losses were $18 million higher than they were in 2012. Excluding specified items, the 2013 efficiency ratio was 55%, improving by 1% when compared to 2012.

Wealth Management
In the Wealth Management segment, fourth-quarter net income totalled $57 million compared to $34 million in the same quarter last year. Excluding specified items, the segment's fourth-quarter net income totalled $64 million, up 31% from $49 million in the same quarter of 2012. The segment's total revenues grew 5%, mainly due to an increase in fee-based revenues resulting from growth in assets under administration and under management.

Excluding specified items, all of which were related to the segment's acquisitions, fourth-quarter non-interest expenses stood at $202 million versus $206 million in the same quarter of 2012, a decrease that owes essentially to stringent cost control.

Excluding specified items, essentially a $246 million pre-tax gain on the sale of Natcan's operations recorded in the second quarter of 2012, Wealth Management posted net income of $236 million in 2013 compared to $188 million in 2012. Driving this net income growth were favourable synergies generated by the segment's recent transactions as well as growth in assets under administration and under management.

Financial Markets
In the Financial Markets segment, net income totalled $125 million for the fourth quarter of 2013, up $29 million from $96 million in the same quarter of 2012. On a taxable equivalent basis, the segment's fourth-quarter total revenues amounted to $331 million compared to $322 million in the fourth quarter of 2012. Year over year, fourth-quarter trading activity revenues remained stable, banking service revenues rose 17%, particularly due to greater financing needs among clients, and other income was up $6 million, mainly due to sustained revenue growth at the Credigy Ltd. subsidiary. Revenues from financial market fees were down given a slowdown in new capital issuances on the markets.

At $163 million, the segment's fourth-quarter non-interest expenses were down $27 million year over year, particularly because severance pay had been recorded in the fourth quarter of 2012 following an optimization of the segment's organizational structure. For the fourth quarter of 2013, the segment posted $2 million in recoveries of credit losses, whereas in the fourth quarter of 2012, the credit loss provisions were nil.

For 2013, the segment's net income totalled $541 million, up $108 million from 2012. Excluding specified items, net income rose $80 million or 17% from 2012. On a taxable equivalent basis, total revenues amounted to $1,379 million versus $1,303 million last year, a $76 million year-over-year increase owing mainly to a combined $125 million increase in trading activity revenues and banking service revenues offset by a $23 million decrease in gains on available-for-sale securities and another $23 million decrease in financial market fees. Other income was down, mainly because of a lower contribution from associate Maple Financial Group Inc., partly offset by higher revenues from the Credigy Ltd. subsidiary. Non-interest expenses stood at $657 million, down $50 million from 2012 for the same reasons mentioned above. As for provisions for credit losses, the segment recorded $14 million in recoveries of credit losses in 2013, whereas in 2012, the Bank had taken $3 million in provisions for credit losses.

Financial Markets Revenues
(taxable equivalent basis)⁽¹⁾
(millions of Canadian dollars)

			Q4	Fiscal Year
		2013	2012	2013	2012

Trading activity revenues
	Equity	78	61	288	246
	Fixed income	49	68	237	212
	Commodity and foreign exchange	19	16	88	73
		146	145	613	531
Financial market fees		60	72	257	280
Gains on available-for-sale securities, net		2	(3)	26	49
Banking services		61	52	234	191
Other		62	56	249	252
		331	322	1,379	1,303

(1)

For additional information, refer to the Segment Disclosures section on page 12.

Other
For the Other heading of segment results, the fourth quarter of 2013 saw a $22 million net loss versus $67 million in net income in the fourth quarter of 2012. Excluding the specified items, the fourth-quarter posted net income of $4 million versus $16 million in the fourth quarter of 2012. The lower net income was mainly due to the fact that, in the fourth quarter of 2012, a gain on the sale of investments had been recorded as part of the TMX transaction.

For 2013, net income totalled $88 million versus $173 million in 2012. Excluding specified items, the $1 million in net income for 2013 compares to $61 million in net income for 2012. Aside from the items affecting the quarter, this decrease in net income was due to Treasury activities, which had experienced a record year in 2012.

Balance Sheet

As at October 31, 2013, the Bank had total assets of $188.2 billion compared to $177.9 billion as at October 31, 2012, an increase of $10.3 billion or 6%.

Liquidity
Cash and deposits with financial institutions posted a slight $0.4 billion increase. Securities were down $1.2 billion from October 31, 2012, with the decline coming from securities at fair value through profit or loss and from available-for-sale securities. Securities purchased under reverse repurchase agreements and securities borrowed rose $5.9 billion since October 31, 2012, mainly due to greater business activity in the Financial Markets segment.

Loans and Acceptances
As at October 31, 2013, loans and acceptances have increased since October 31, 2012 owing to growth across all credit business. The following table provides a breakdown of the main loan and acceptance portfolios.

Main Portfolios
(millions of Canadian dollars)

	As at October 31, 2013	As at October 31, 2012

Loans and acceptances
Consumer loans	26,064	24,635
Residential mortgages	36,573	33,538
Credit card receivables	1,925	1,894
Business and government	33,354	31,432
	97,916	91,499

As at October 31, 2013, loans and acceptances totalled $97.9 billion, up $6.4 billion or 7% since October 31, 2012. Consumer loans were up 6%, due primarily to home equity lines of credit and indirect consumer loans. Rising 9%, residential mortgages were also up as at October 31, 2013. Loans and acceptances to business and government also increased, rising 6% since October 31, 2012 mainly because of corporate financing activities and loans to companies in the energy sector.

Deposit Liability
As at October 31, 2013, the Bank's deposit liability stood at $101.9 billion, rising $8.7 billion or 9% from $93.2 billion as at October 31, 2012. The following table provides a breakdown of total personal savings.

Total Personal Savings
(millions of Canadian dollars)

	As at October 31, 2013	As at October 31, 2012

Balance sheet
Deposits	42,652	40,814

Off-balance-sheet
Full-service brokerage	94,550	87,291
Mutual funds	16,633	15,027
Other	3,680	3,551
	114,863	105,869
Total	157,515	146,683

At $42.7 billion as at October 31, 2013, personal deposits were up $1.9 billion since October 31, 2012 owing essentially to lower interest rates that favoured transactional deposit accounts and the CashPerformer account. Personal savings included in assets under administration and under management were up 8% since the start of the fiscal year. Driving this increase was synergy-related business growth resulting from the recent Wealth Management transactions as well as a rise in stock markets.

At $56.9 billion, business and government deposits rose $7.6 billion or 15% since October 31, 2012, as businesses increased liquidity levels. Deposits from deposit-taking institutions declined $0.7 billion or 23% since October 31, 2012. The growth in other financing activities since October 31, 2012 came mainly from obligations related to securities sold short, which rose $0.8 billion.

Equity
As at October 31, 2013, the Bank's equity was $9.2 billion compared to $8.2 billion as at October 31, 2012. This increase was primarily due to an increase in retained earnings and to the exercise of stock options.

As at November 29, 2013, there were 162,931,289 common shares and 7,457,750 stock options outstanding.

Capital Management

The Bank's capital management policy sets out the principles and practices that the Bank incorporates into its capital management strategy and the basic criteria it adopts to ensure that it has sufficient capital at all times and is prudently managing such capital to satisfy any future capital requirements. For additional information on the capital management framework, see the Capital Management section of the 2013 Annual Report.

Canadian financial institutions must use a disclosure template for their "all-in" regulatory capital and must present a reconciliation of all regulatory capital elements back to the balance sheet. These two requirements are presented in Supplementary Financial Information for the Fourth Quarter Ended October 31, 2013, which is available on the Bank's website at nbc.ca. Furthermore, a complete list of capital instruments and their main features is now available on the Bank's website under Investor Relations > Capital & Debt Information > Regulatory Capital > Main Features of Regulatory Capital Instruments. Since the first quarter of 2013, Canadian financial institutions must meet the "all-in" ratios established by OSFI, i.e., a 7.0% Common Equity Tier 1 (CET1) ratio (including a 2.5% conservation buffer). Tier 1 capital and total capital requirements must be met by the beginning of 2014. The Bank is already in compliance with these ratios.

As at October 31, 2013, the Bank's CET1 capital ratio under Basel III, determined using the "all-in" methodology, was 8.7% versus a pro forma ratio under Basel III of 7.3% as at October 31, 2012. The higher CET1 capital ratio was essentially due to net income, net of dividends, to a delay in applying the new Credit Valuation Adjustment (CVA) charge, which had been included in the pro forma ratio the previous year, and to the common share issuance related primarily to exercised stock options. The Tier 1 capital ratio and the total capital ratio determined using the "all-in" methodology stood at 11.4% and 15.0%, respectively, as at October 31, 2013, compared to pro forma ratios of 10.1% and 14.1% last year. The increase was mainly due to the above-discussed factors. The risk-weighted assets (RWA), calculated under the Basel III rules, decreased and amounted to $61.3 billion as at October 31, 2013 compared to a pro forma Basel III RWA of $62.2 billion as at October 31, 2012. This decrease was primarily attributable to a delay in implementing the CVA charge. At 18.4 as at October 31, 2013, the assets-to-capital multiple slightly increased from 18.3 as at October 31, 2012.

Regulatory Capital and Capital Ratios Under Basel III ⁽¹⁾
(millions of Canadian dollars)

As at October 31		2013		2012

Common Equity Tier 1 Capital (CET1)		5,350		4,565
Tier 1 capital		7,002		6,302
Total capital		9,186		8,752
Risk-weighted assets		61,251		62,190
Capital ratios
	Common Equity Tier 1 (CET1)	8.7	%	7.3	%
	Tier 1	11.4	%	10.1	%
	Total	15.0	%	14.1	%

(1)	The 2013 figures are presented on an "all-in" basis and the 2012 figures are presented on a pro forma basis.

Dividends
On December 3, 2013, the Board of Directors declared regular dividends on the various series of first preferred shares and a dividend of 92 cents per common share, up 6%, payable on February 1, 2014 to shareholders of record on December 27, 2013.

Events After the Balance Sheet Date

Acquisition of TD Waterhouse Institutional Services
On November 12, 2013, the Bank completed the acquisition, through a subsidiary, of Toronto-Dominion Bank's institutional services known as TD Waterhouse Institutional Services. At $250 million, the purchase price is subject to a price adjustment mechanism based on the assets retained over a one-year period. This acquisition marks another major step in the Bank's expansion of its wealth management platform across Canada.

The Bank has not finalized the initial accounting of the acquisition, as it has yet to complete the valuation of assets acquired and liabilities assumed, including intangible assets and goodwill. The assets and liabilities of TD Waterhouse Institutional Services are mainly comprised of amounts due from clients, dealers and brokers and amounts due to clients, dealers and brokers, respectively.

Repurchase of Subordinated Debt
On November 15, 2013, the Bank repurchased, at their nominal value and for cancellation, $500 million in notes maturing in November 2018.

Redemption of Preferred Shares
On December 3, 2013, the Board approved the redemption of all the issued and outstanding non-cumulative 5-year rate-reset Series 24 First Preferred Shares and redemption of all the issued and outstanding non-cumulative 5-year rate-reset Series 26 First Preferred Shares. These redemptions are subject to the approval of the Office of the Superintendent of Financial Institutions (Canada).

Stock Split
On December 3, 2013, the Board declared a stock dividend of one common share on each of the issued and outstanding common shares, payable on February 13, 2014. The effect will be the same as a two-for-one split of common shares. All common share numbers and per-share calculations will be adjusted retrospectively to reflect the stock dividend.

CONSOLIDATED BALANCE SHEETS
(unaudited) (millions of Canadian dollars)

As at October 31	2013	2012

ASSETS
Cash and deposits with financial institutions	3,596	3,249

Securities
At fair value through profit or loss	44,000	44,524
Available-for-sale	9,744	10,374
	53,744	54,898

Securities purchased under reverse repurchase agreements and securities borrowed	21,449	15,529

Loans
Residential mortgage	36,573	33,538
Personal and credit card	27,989	26,529
Business and government	24,400	23,182
	88,962	83,249
Customers' liability under acceptances	8,954	8,250
Allowances for credit losses	(578)	(577)
	97,338	90,922

Other
Derivative financial instruments	5,904	6,696
Due from clients, dealers and brokers	1,101	1,661
Investments in associates and joint ventures	684	625
Premises and equipment	404	440
Goodwill	1,064	1,063
Intangible assets	898	778
Other assets	2,022	2,042
	12,077	13,305
	188,204	177,903

LIABILITIES AND EQUITY
Deposits
Personal	42,652	40,814
Business and government	56,878	49,314
Deposit-taking institutions	2,356	3,121
	101,886	93,249

Other
Acceptances	8,954	8,250
Obligations related to securities sold short	18,909	18,124
Obligations related to securities sold under repurchase agreements and securities loaned	19,746	19,539
Derivative financial instruments	4,858	5,600
Due to clients, dealers and brokers	2,442	1,959
Liabilities related to transferred receivables	15,323	15,398
Other liabilities	4,499	5,074
	74,731	73,944
Subordinated debt	2,426	2,470

EQUITY
Equity attributable to the Bank's shareholders
Preferred shares	677	762
Common shares	2,160	2,054
Contributed surplus	58	58
Retained earnings	5,034	4,091
Accumulated other comprehensive income	214	255
	8,143	7,220
Non-controlling interests	1,018	1,020
	9,161	8,240
	188,204	177,903

CONSOLIDATED STATEMENTS OF INCOME
(unaudited) (millions of Canadian dollars)

		Quarter ended		Year ended
		October 31, 2013	October 31, 2012	October 31, 2013	October 31, 2012

Interest income
Loans		830	775	3,247	3,037
Securities at fair value through profit or loss		200	217	942	926
Available-for-sale securities		51	43	201	147
Deposits with financial institutions		6	4	20	17
		1,087	1,039	4,410	4,127
Interest expense
Deposits		267	195	1,003	805
Liabilities related to transferred receivables		98	123	408	427
Subordinated debt		25	25	102	87
Other		102	103	448	470
		492	446	1,961	1,789
Net interest income		595	593	2,449	2,338

Non-interest income
Underwriting and advisory fees		69	85	301	318
Securities brokerage commissions		80	82	335	343
Mutual fund revenues		56	52	219	200
Trust service revenues		81	73	314	280
Credit fees		92	96	391	369
Card revenues		31	26	121	113
Deposit and payment service charges		61	58	235	229
Trading revenues (losses)		38	135	186	233
Gains (losses) on available-for-sale securities, net		12	27	82	123
Insurance revenues, net		27	27	118	111
Foreign exchange revenues, other than trading		22	23	90	94
Share in the net income of associates and joint ventures		5	4	26	29
Other		85	69	296	533
		659	757	2,714	2,975
Total revenues		1,254	1,350	5,163	5,313
Provisions for credit losses		48	46	181	180
		1,206	1,304	4,982	5,133

Non-interest expenses
Compensation and employee benefits		465	543	1,858	1,953
Occupancy		71	54	237	205
Technology		109	115	458	414
Communications		17	17	68	70
Professional fees		58	47	221	195
Other		88	93	323	336
		808	869	3,165	3,173
Income before income taxes		398	435	1,817	1,960
Income taxes		61	84	263	326
Net income		337	351	1,554	1,634

Net income attributable to
Preferred shareholders		8	11	40	43
Common shareholders		310	322	1,439	1,518
Bank shareholders		318	333	1,479	1,561
Non-controlling interests		19	18	75	73
		337	351	1,554	1,634

Earnings per share (dollars)
	Basic	1.91	1.99	8.87	9.40
	Diluted	1.89	1.97	8.80	9.32
Dividends per common share (dollars)		0.87	0.79	3.40	3.08

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited) (millions of Canadian dollars)

				Quarter ended		Year ended
				October 31, 2013	October 31, 2012	October 31, 2013	October 31, 2012

Net income				337	351	1,554	1,634

Other comprehensive income, net of income taxes

	Items that may be subsequently reclassified to net income

		Net foreign currency translation adjustments
			Net unrealized foreign currency translation gains (losses) on investments in foreign operations	24	5	51	(20)
			Impact of hedging net foreign currency gains (losses)	(19)	(4)	(45)	5
				5	1	6	(15)
		Net change in available-for-sale securities
			Net unrealized gains (losses) on available-for-sale securities	20	2	49	63
			Net (gains) losses on available-for-sale securities reclassified to net income	(9)	(20)	(41)	(79)
				11	(18)	8	(16)
		Net change in cash flow hedges
			Net gains (losses) on derivative financial instruments designated as cash flow hedges	(2)	(3)	(26)	(2)
			Net (gains) losses on designated derivative financial instruments reclassified to net income	(4)	(11)	(28)	(54)
				(6)	(14)	(54)	(56)
	Item that will not be subsequently reclassified to net income
		Actuarial gains and losses on employee benefit plans		(65)	(69)	53	(233)

	Share in the other comprehensive income of associates and joint ventures			(1)	(1)	(1)	1

Total other comprehensive income, net of income taxes				(56)	(101)	12	(319)

Comprehensive income				281	250	1,566	1,315

Comprehensive income attributable to
	Bank shareholders			262	232	1,491	1,246
	Non-controlling interests			19	18	75	69
				281	250	1,566	1,315

INCOME TAXES - OTHER COMPREHENSIVE INCOME

The following table presents the income tax expense or recovery for each component of other comprehensive income:


				Quarter ended		Year ended
				October 31, 2013	October 31, 2012	October 31, 2013	October 31, 2012
Net foreign currency translation adjustments
	Net unrealized foreign currency translation gains (losses) on investments in foreign operations			1	−	2	(1)
	Impact of hedging net foreign currency gains (losses)			(5)	2	(11)	6
				(4)	2	(9)	5
Net change in available-for-sale securities
	Net unrealized gains (losses) on available-for-sale securities			6	6	20	26
	Net (gains) losses on available-for-sale securities reclassified to net income			(3)	(12)	(17)	(34)
				3	(6)	3	(8)
Net change in cash flow hedges
	Net gains (losses) on derivative financial instruments designated as cash flow hedges			(1)	(2)	(10)	(1)
	Net (gains) losses on designated derivative financial instruments reclassified to net income			(1)	(4)	(10)	(20)
				(2)	(6)	(20)	(21)
Actuarial gains and losses on employee benefit plans				(22)	(26)	21	(86)
				(25)	(36)	(5)	(110)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited) (millions of Canadian dollars)

Year ended October 31		2013	2012

Preferred shares at beginning		762	762
Issuance of Series 28 preferred shares		200	−
Repurchase of Series 15 and 21 preferred shares for cancellation		(285)	−
Preferred shares at end		677	762

Common shares at beginning		2,054	1,970
Issuances of common shares
	Stock Option Plan	107	93
	Acquisition of Wellington West Holdings Inc.	−	2
	Other	(1)	2
Repurchase of common shares for cancellation		−	(13)
Common shares at end		2,160	2,054

Contributed surplus at beginning		58	46
Stock option expense		16	15
Stock options exercised		(13)	(10)
Other		(3)	7
Contributed surplus at end		58	58

Retained earnings at beginning		4,091	3,366
Net income attributable to the Bank's shareholders		1,479	1,561
Dividends
	Preferred shares	(40)	(43)
	Common shares	(552)	(498)
Premium paid on common shares repurchased for cancellation		−	(62)
Share issuance and other expenses		(4)	−
Actuarial gains and losses on employee benefit plans		53	(233)
Other		7	−
Retained earnings at end		5,034	4,091

Accumulated other comprehensive income at beginning		255	337
Net foreign currency translation adjustments		6	(15)
Net change in unrealized gains (losses) on available-for-sale securities		8	(16)
Net change in gains (losses) on cash flow hedges		(54)	(52)
Share in the other comprehensive income of associates and joint ventures		(1)	1
Accumulated other comprehensive income at end		214	255

Equity attributable to the Bank's shareholders		8,143	7,220

Non-controlling interests at beginning		1,020	1,024
Net income attributable to non-controlling interests		75	73
Other comprehensive income attributable to non-controlling interests		−	(4)
Distributions to non-controlling interests		(77)	(73)
Non-controlling interests at end		1,018	1,020

Equity		9,161	8,240

ACCUMULATED OTHER COMPREHENSIVE INCOME

As at October 31		2013	2012

Accumulated other comprehensive income
Net foreign currency translation adjustments		(6)	(12)
Net unrealized gains (losses) on available-for-sale securities		172	164
Net gains (losses) on instruments designated as cash flow hedges		47	101
Share in the other comprehensive income of associates and joint ventures		1	2
		214	255

SEGMENT DISCLOSURES

(unaudited) (millions of Canadian dollars)


	Personal and		Wealth			Financial
	Commercial		Management			Markets		Other		Total
Quarter ended October 31	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012

Net interest income⁽¹⁾	414	399	70	67	156	159	(45)	(32)	595	593
Non-interest income	245	236	218	207	175	163	21	151	659	757
Total revenues	659	635	288	274	331	322	(24)	119	1,254	1,350
Non-interest expenses	367	378	210	226	163	190	68	75	808	869
Contribution	292	257	78	48	168	132	(92)	44	446	481
Provisions for credit losses	50	45	1	1	(2)	−	(1)	−	48	46
Income before income taxes (recovery)	242	212	77	47	170	132	(91)	44	398	435
Income taxes (recovery)⁽¹⁾	65	58	20	13	45	36	(69)	(23)	61	84
Net income	177	154	57	34	125	96	(22)	67	337	351
Non-controlling interests	−	−	−	−	2	1	17	17	19	18
Net income attributable to the Bank's shareholders	177	154	57	34	123	95	(39)	50	318	333
Average assets	78,696	73,384	8,232	8,112	88,685	75,116	21,384	29,082	196,997	185,694


	Personal and		Wealth			Financial
	Commercial		Management			Markets		Other		Total
Year ended October 31	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012

Net interest income⁽²⁾	1,614	1,581	272	255	785	584	(222)	(82)	2,449	2,338
Non-interest income	985	950	865	1,068	594	719	270	238	2,714	2,975
Total revenues	2,599	2,531	1,137	1,323	1,379	1,303	48	156	5,163	5,313
Non-interest expenses	1,435	1,434	846	881	657	707	227	151	3,165	3,173
Contribution	1,164	1,097	291	442	722	596	(179)	5	1,998	2,140
Provisions for credit losses	192	174	3	3	(14)	3	−	−	181	180
Income before income taxes (recovery)	972	923	288	439	736	593	(179)	5	1,817	1,960
Income taxes (recovery)⁽²⁾	259	248	76	86	195	160	(267)	(168)	263	326
Net income	713	675	212	353	541	433	88	173	1,554	1,634
Non-controlling interests	−	−	−	1	8	3	67	69	75	73
Net income attributable to the Bank's shareholders	713	675	212	352	533	430	21	104	1,479	1,561
Average assets	76,696	70,524	8,159	7,980	87,063	76,084	21,587	26,756	193,505	181,344

(1)

Net interest income and income taxes (recovery) of the operating segments are presented on a taxable equivalent basis. Taxable equivalent basis is a calculation method that consists in grossing up certain tax-exempt income by the amount of income tax that would have been otherwise payable. For the operating segments as a whole, Net interest income was grossed up by $43 million ($43 million in 2012). An equivalent amount was added to Income taxes (recovery). The effect of these adjustments is reversed under the Other heading.

(2)

For the year ended October 31, 2013, Net interest income was grossed up by $209 million ($172 million in 2012). An equivalent amount was added to Income taxes (recovery). The effect of these adjustments is reversed under the Other heading.

Personal and Commercial
The Personal and Commercial segment encompasses the banking, financing, and investing services offered to individuals and businesses as well as insurance operations.

Wealth Management
The Wealth Management segment comprises investment solutions, trust services, banking services, lending services and other wealth management solutions offered through internal and third-party distribution networks.

Financial Markets
The Financial Markets segment encompasses banking services, investment banking services and financial solutions for institutional clients. The segment is also active in proprietary trading and investment activities.

Other
This heading encompasses treasury activities, including the Bank's liquidity management and funding operations, certain non-recurring items and the unallocated portion of corporate units.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

From time to time, National Bank of Canada (the Bank) makes written and oral forward-looking statements, such as those contained in the Major Economic Trends and the Outlook for National Bank sections of the 2013 Annual Report, in other filings with Canadian securities regulators, and in other communications, for the purpose of describing the economic environment in which the Bank will operate during fiscal 2014 and the objectives it has set for itself for that period. These forward-looking statements are made in accordance with current securities legislation. They include, among others, statements with respect to the economy—particularly the Canadian and U.S. economies—market changes, observations regarding the Bank's objectives and its strategies for achieving them, Bank projected financial returns and certain risks faced by the Bank. These forward-looking statements are typically identified by future or conditional verbs or words such as "outlook," "believe," "anticipate," "estimate," "project," "expect," "intend," "plan," and similar terms and expressions.

By their very nature, such forward-looking statements require assumptions to be made and involve inherent risks and uncertainties, both general and specific. Assumptions about the performance of the Canadian and U.S. economies in 2014 and how that will affect the Bank's business are among the main factors considered in setting the Bank's strategic priorities and objectives and in determining its financial targets, including provisions for credit losses. In determining its expectations for economic growth, both broadly and in the financial services sector in particular, the Bank primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.

There is a strong possibility that express or implied projections contained in these forward-looking statements will not materialize or will not be accurate. The Bank recommends that readers not place undue reliance on these statements, as a number of factors, many of which are beyond the Bank's control, could cause actual future results, conditions, actions or events to differ significantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include strategic risk, credit risk, market risk, liquidity risk, operational risk, regulatory risk, reputation risk, and environmental risk (all of which are described in greater detail in the Risk Management section that begins on page 60 of the 2013 Annual Report); the general economic environment and financial market conditions in Canada, the United States and certain other countries in which the Bank conducts business, including the effects of uncertainty surrounding U.S. government debt negotiations; changes to regulations affecting the Bank's business, capital and liquidity; the situation with respect to the restructured notes of the master asset vehicle (MAV) conduits, in particular the realizable value of underlying assets; changes in the accounting policies the Bank uses to report its financial condition, including uncertainties associated with assumptions and critical accounting estimates; tax laws in the countries in which the Bank operates, primarily Canada and the United States; and changes to capital and liquidity guidelines and to the manner in which they are to be presented and interpreted.

The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management and Other Risk Factors sections of the 2013 Annual Report. Investors and others who base themselves on the Bank's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The Bank also cautions readers not to place undue reliance on these forward-looking statements.

The forward-looking information contained in this document is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.

INFORMATION FOR SHAREHOLDERS AND INVESTORS

Disclosure of Fourth Quarter 2013 Results

Conference Call

A conference call for analysts and institutional investors will be held on Wednesday, December 4, 2013 at 1:30 p.m. EST.
Access by telephone in listen-only mode: 1-866-862-3930 or 416-695-7806. The access code is 3390539#.
A recording of the conference call can be heard until December 13, 2013 by dialing 1-800-408-3053 or 905-694-9451.
The access code is 5955220#.

Webcast

The conference call will be webcast live at nbc.ca/investorrelations.
A recording of the webcast will also be available on National Bank's website after the call.

Financial Documents

The quarterly financial statements are available at all times on National Bank's website at nbc.ca/investorrelations.
The Supplementary Financial Information and a slide presentation will be available on the Investor Relations page of National Bank's website shortly before the start of the conference call.
The 2013 Annual Report (which includes the audited annual financial statements and accompanying management's discussion and analysis) will also be available on National Bank's website.

SOURCE: National Bank of Canada

Ghislain Parent
Chief Financial Officer and
Executive Vice-President
Finance and Treasury
514-394-6807

Jean Dagenais
Senior Vice-President
Finance, Taxation and
Investor Relations
514-394-6233

Claude Breton
Assistant Vice-President
Public Affairs
514-394-8644

Hélène Baril
Senior Director
Investor Relations
514-394-0296

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