National Bank reports its 2018 annual and fourth quarter results and raises its quarterly dividend by 5% to 65 cents per share

The financial information reported in this document is based on the unaudited interim condensed consolidated financial statements for the fourth quarter of fiscal 2018 and on the audited annual consolidated financial statements for the year ended October 31, 2018 and is prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), unless otherwise indicated. IFRS represent Canadian generally accepted accounting principles (GAAP). All amounts are presented in Canadian dollars.

MONTREAL, Dec. 5, 2018 /CNW Telbec/ - For the fourth quarter of 2018, National Bank is reporting net income of $566 million, an 8% increase from $525 million in the fourth quarter of 2017. Diluted earnings per share stood at $1.52 for the fourth quarter of 2018 compared to $1.39 in the same quarter of fiscal 2017. Diluted earnings per share excluding specified items (described on page 2) stood at $1.53 for the quarter ended October 31, 2018 compared to $1.40 in the same quarter of 2017, a 9% increase owing to net income growth in the main business segments.

For fiscal 2018, the Bank's net income totalled $2,232 million, a 10% increase from $2,024 million in fiscal 2017. Diluted earnings per share stood at $5.94 for the year ended October 31, 2018 compared to $5.38 in fiscal 2017. These increases were driven by net income growth across all the business segments. Diluted earnings per share excluding specified items stood at $5.99 for the year ended October 31, 2018, a 10% increase from $5.45 in fiscal 2017.

"Fiscal 2018 ended with record net income of over $2.2 billion driven by strong performance across all business lines and an improved efficiency ratio," said Louis Vachon, President and Chief Executive Officer of National Bank. "The Bank also reported a CET1 capital ratio of 11.7%, the highest in our history, providing us with flexibility to invest in our business and return capital to shareholders. The Bank repurchased 7.5 million common shares under its normal course issuer bid and twice raised its common share dividend, a 7% increase for 2018."

Highlights
(millions of Canadian dollars)	Quarter ended October 31							Year ended October 31
		2018			2017		% Change		2018			2017		% Change
Net income		566			525		8		2,232			2,024		10
Diluted earnings per share (dollars)	$	1.52		$	1.39		9	$	5.94		$	5.38		10
Return on common shareholders' equity		17.8	%		17.8	%			18.4	%		18.1	%
Dividend payout ratio		41	%		42	%			41	%		42	%
Excluding specified items^(1)
Net income excluding specified items		569			531		7		2,249			2,049		10
Diluted earnings per share excluding specified items (dollars)	$	1.53		$	1.40		9	$	5.99		$	5.45		10
Return on common shareholders' equity excluding specified items		17.9	%		18.0	%			18.5	%		18.3	%
Dividend payout ratio excluding specified items		40	%		41	%			40	%		41	%
									As at October 31,  2018			As at October 31, 2017
CET1 capital ratio under Basel III									11.7	%		11.2	%
Leverage ratio under Basel III									4.0	%		4.0	%

(1)	See the Financial Reporting Method section on page 2 for additional information on non-GAAP financial measures.

Financial Reporting Method

As stated in Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2018, the Bank early adopted IFRS 9 on November 1, 2017. As permitted by IFRS 9, the Bank did not restate comparative consolidated financial statements. Note 3 to the audited annual consolidated financial statements for the year ended October 31, 2018 presents the impacts of IFRS 9 adoption on the Bank's Consolidated Balance Sheet as at November 1, 2017. Since interim consolidated financial statements do not include all of the annual financial statement disclosures required under IFRS, they should be read in conjunction with the audited annual consolidated financial statements and accompanying notes for the year ended October 31, 2018.

Non-GAAP Financial Measures

The Bank uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures are not calculated in accordance with GAAP, which are based on IFRS. Presenting non-GAAP financial measures helps readers to better understand how management analyzes results, shows the impacts of specified items on the results of the reported periods, and allows readers to assess results without the specified items if they consider such items not to be reflective of the underlying financial performance of the Bank's operations. Securities regulators require companies to caution readers that non-GAAP financial measures do not have a standardized meaning under GAAP and therefore may not be comparable to similar measures used by other companies.

Financial Information
(millions of Canadian dollars, except per share amounts)		Quarter ended October 31							Year ended October 31
			2018			2017		% Change		2018			2017		% Change
Net income excluding specified items^(1)
	Personal and Commercial		257			234		10		948			903		5
	Wealth Management		127			115		10		506			431		17
	Financial Markets		192			183		5		764			698		9
	U.S. Specialty Finance and International		55			55		−		222			184		21
	Other		(62)			(56)				(191)			(167)
Net income excluding specified items			569			531		7		2,249			2,049		10
	Acquisition-related items^(2)		(3)			(6)				(17)			(25)
Net income			566			525		8		2,232			2,024		10
Diluted earnings per share excluding specified items		$	1.53		$	1.40		9	$	5.99		$	5.45		10
	Acquisition-related items^(2)		(0.01)			(0.01)				(0.05)			(0.07)
Diluted earnings per share		$	1.52		$	1.39		9	$	5.94		$	5.38		10
Return on common shareholders' equity
	Including specified items		17.8	%		17.8	%			18.4	%		18.1	%
	Excluding specified items		17.9	%		18.0	%			18.5	%		18.3	%

(1)	For the quarter and year ended October 31, 2017, certain amounts have been reclassified.
(2)	During the quarter ended October 31, 2018, the Bank recorded $4 million ($3 million net of income taxes) in charges related to the acquisitions (2017: $7 million, $6 million net of income taxes). For the year ended October 31, 2018, these charges were $20 million ($17 million net of income taxes) compared to $30 million ($25 million net of income taxes) in fiscal 2017.

Highlights
(millions of Canadian dollars, except per share amounts)		Quarter ended October 31							Year ended October 31
			2018			2017		% Change		2018			2017		% Change
Operating results
Total revenues			1,814			1,704		6		7,166			6,609		8
Net income			566			525		8		2,232			2,024		10
Net income attributable to the Bank's shareholders			550			506		9		2,145			1,940		11
Return on common shareholders' equity			17.8	%		17.8	%			18.4	%		18.1	%
Earnings per share
	Basic	$	1.53		$	1.40		9	$	6.01		$	5.44		10
	Diluted		1.52			1.39		9		5.94			5.38		10
Operating results on a taxable equivalent basis^(1)and excluding specified items^(2)
Total revenues on a taxable equivalent basis and excluding specified items			1,876			1,760		7		7,420			6,864		8
Net income excluding specified items			569			531		7		2,249			2,049		10
Return on common shareholders' equity excluding specified items			17.9	%		18.0	%			18.5	%		18.3	%
Efficiency ratio on a taxable equivalent basis and excluding specified items			55.1	%		55.2	%			54.6	%		55.9	%
Earnings per share excluding specified items^(2)
	Basic	$	1.54		$	1.42		8	$	6.06		$	5.52		10
	Diluted		1.53			1.40		9		5.99			5.45		10
Common share information
Dividends declared		$	0.62		$	0.58			$	2.44		$	2.28
Book value										34.40			31.51
Share price
	High		65.63			62.74				65.63			62.74
	Low		58.93			55.29				58.69			46.83
	Close		59.76			62.61				59.76			62.61
Number of common shares (thousands)			335,071			339,592				335,071			339,592
Market capitalization			20,024			21,262				20,024			21,262
(millions of Canadian dollars)										As at October 31, 2018			As at October 31,  2017		% Change
Balance sheet and off-balance-sheet
Total assets										262,471			245,827		7
Loans and acceptances, net of allowances^(3)										146,082			136,457		7
Net impaired loans^(4) as a % of loans and acceptances										0.3	%		0.2	%
Deposits										170,830			156,671		9
Equity attributable to common shareholders										11,526			10,700		8
Assets under administration and under management										485,080			477,358		2
Regulatory ratios under Basel III
Capital ratios^(5)
	Common Equity Tier 1 (CET1)									11.7	%		11.2	%
	Tier 1^(6)									15.5	%		14.9	%
	Total^(6)									16.8	%		15.1	%
Leverage ratio^(5)										4.0	%		4.0	%
Liquidity coverage ratio (LCR)										147	%		132	%
Other information
Number of employees –  worldwide										23,450			21,635		8
Number of branches in Canada										428			429		−
Number of banking machines in Canada										937			931		1

(1)	For additional information, see the Results by Business Segment section on page 18.
(2)	See the Financial Reporting Method section on page 2 for additional information on non-GAAP financial measures.
(3)	The Purchased receivables amount of $2,014 million, which was presented separately on the Consolidated Balance Sheet as at October 31, 2017, is now reported in Loans and acceptances, net of allowances.
(4)	Net impaired loans are presented net of allowances for credit losses on Stage 3 loan amounts drawn and do not include purchased or originated credit-impaired loans.
(5)	The ratios are calculated using the "all-in" methodology.
(6)	The ratios as at October 31, 2017 included the redemption of the Series 28 preferred shares on November 15, 2017.

Financial Analysis

This press release should be read in conjunction with the 2018 Annual Report (which includes the audited annual consolidated financial statements and MD&A) available on the Bank's website at nbc.ca. Additional information about the Bank, including the Annual Information Form, can be obtained from the Bank's website at nbc.ca and SEDAR's website at sedar.com.

Consolidated Results

On November 1, 2017, the Bank changed the presentation of certain Consolidated Balance Sheet items; in particular, the Purchased receivables item is now reported in Loans. As a result of this change, for the quarter ended October 31, 2017, a $40 million amount reported in Non-interest income was reclassified to Net interest income ($204 million for the year ended October 31, 2017). The reclassification had no impact on Net income.

Total Revenues
For the fourth quarter of 2018, the Bank's total revenues amounted to $1,814 million, up $110 million or 6% from the same quarter of 2017. This year-over-year increase was driven by growth in the net interest income of the Personal and Commercial segment owing to higher loan and deposit volumes and an improved net interest margin, by growth in the net interest income of the Wealth Management segment owing in part to higher deposit volumes, by growth in commission revenues and corporate banking revenues recorded by the Financial Markets segment, and by growth in the net interest income of ABA Bank. Revenues from trust services and credit fee revenues also posted year-over-year growth. Total revenues on a taxable equivalent basis and excluding specified items amounted to $1,876 million in the fourth quarter of 2018, up 7% from $1,760 million in the fourth quarter of 2017.

For the year ended October 31, 2018, total revenues amounted to $7,166 million compared to $6,609 million in fiscal 2017, an 8% year-over-year increase driven essentially by the same factors as those provided for the quarter, by higher net interest income from Credigy, and by increases in trading revenues, mutual fund revenues, and card revenues. These revenue increases were tempered by lower revenues from securities brokerage commissions and lower gains on securities. For the year ended October 31, 2018, total revenues on a taxable equivalent basis and excluding specified items amounted to $7,420 million, an 8% increase from $6,864 million in fiscal 2017.

Provisions for Credit Losses
For the fourth quarter of 2018, the Bank recorded $73 million in provisions for credit losses compared to $70 million in the same quarter of 2017. The higher provisions stem mainly from higher credit loss provisions recorded for Personal Banking loans and for USSF&I segment loans that were essentially attributable to the ABA Bank subsidiary. This increase was partly offset by lower credit loss provisions recorded for Commercial Banking loans.

For the year ended October 31, 2018, the Bank recorded $327 million in provisions for credit losses, $83 million more than in fiscal 2017. The higher provisions stem mainly from higher credit loss provisions recorded for Personal and Commercial Banking loans and for USSF&I segment loans that were essentially attributable to the Credigy subsidiary. During the year ended October 31, 2017, the provisions for credit losses had included a $40 million reversal of the sectoral provision on non-impaired loans in the oil and gas producer and service company loan portfolio, and a $40 million increase in the collective allowance for credit risk on non-impaired loans had been recorded to reflect growth in the Bank's overall credit portfolio.

As at October 31, 2018, gross impaired loans stood at $630 million compared to $599 million as at November 1, 2017. Also as at October 31, 2018, net impaired loans stood at $404 million compared to $360 million as at November 1, 2017, a $44 million increase arising mainly from commercial loan portfolios. Following IFRS 9 adoption on November 1, 2017, all loans classified in Stage 3 of the expected credit loss model constitute impaired loans and do not include purchased or originated credit-impaired loans.

Non-Interest Expenses
For the fourth quarter of 2018, non-interest expenses stood at $1,036 million, up 6% compared to the fourth quarter of 2017. The increase in non-interest expenses was attributable to higher compensation and employee benefits, higher technology investment expenses made as part of the Bank's transformation plan, and by higher advertising expenses. Non-interest expenses excluding specified items stood at $1,034 million in the fourth quarter of 2018 compared to $971 million in the fourth quarter of 2017.

For the year ended October 31, 2018, non-interest expenses stood at $4,063 million, up 5% year over year. The reasons for this increase are the same as those provided above for the fourth quarter. Furthermore, the expansion of ABA Bank's banking network led to an overall increase in non-interest expenses. The increase was tempered somewhat by lower professional fees related to the servicing fees of Credigy's business activities. Non-interest expenses excluding specified items stood at $4,052 million for the year ended October 31, 2018, up 6% from $3,838 million in fiscal 2017.

Income Taxes
For the fourth quarter of 2018, income taxes stood at $139 million compared to $133 million in the same quarter of 2017. The 2018 fourth-quarter effective income tax rate was 20%, unchanged from the fourth quarter of 2017.

For the year ended October 31, 2018, the effective income tax rate stood at 20% compared to 19% in fiscal 2017.

Results by Segment

The Bank carries out its activities in four business segments. For presentation purposes, other operating activities and Corporate Treasury activities are grouped in the Other heading. Each reportable segment is distinguished by services offered, type of clientele, and marketing strategy.

Personal and Commercial
(millions of Canadian dollars)		Quarter ended October 31					Year ended October 31
		2018		2017^(1)		% Change	2018		2017^(1)		% Change
Operating results
Net interest income		572		537		7	2,212		2,069		7
Non-interest income		259		249		4	1,027		988		4
Total revenues		831		786		6	3,239		3,057		6
Non-interest expenses		431		417		3	1,720		1,672		3
Contribution		400		369		8	1,519		1,385		10
Provisions for credit losses^(2)		50		50		−	226		153		48
Income before income taxes		350		319		10	1,293		1,232		5
Income taxes		93		85		9	345		329		5
Net income		257		234		10	948		903		5
Net income excluding the impact of the sectoral provision^(2)							948		874		8
Net interest margin^(3)		2.33	%	2.30	%		2.32	%	2.26	%
Average interest-bearing assets		97,276		92,777		5	95,344		91,633		4
Average assets		103,102		97,805		5	100,619		96,433		4
Average gross loans and acceptances		102,839		97,483		5	100,572		96,060		5
Net impaired loans^(4) under IFRS 9		372					372
Net impaired loans under IAS 39				199					199
Net impaired loans^(4) as a % of average loans and acceptances		0.4	%	0.2	%		0.4	%	0.2	%
Average deposits		60,716		56,606		7	58,051		54,302		7
Efficiency ratio		51.9	%	53.1	%		53.1	%	54.7	%

(1)	For the quarter and year ended October 31, 2017, certain amounts have been reclassified.
(2)	Given the adoption of IFRS 9 on November 1, 2017, the Bank accounts for all provisions for credit losses within the business segments. For the quarter and year ended October 31, 2017, only provisions for credit losses on impaired loans had been recognized in the business segments, whereas provisions for credit losses on non-impaired loans had been recognized in the Other heading. During the year ended October 31, 2017, the Bank recorded a $40 million reversal ($29 million net of income taxes) to the sectoral provision on non-impaired loans taken for the oil and gas producer and service company loan portfolio. Given the materiality of this sectoral provision, recorded in accordance with GAAP, net income excluding the impact of the sectoral provision has been presented to provide a better assessment of the segment's results.
(3)	Net interest margin is calculated by dividing net interest income by average interest-bearing assets.
(4)	Net impaired loans are presented net of allowances for credit losses on Stage 3 loan amounts drawn.

In the Personal and Commercial segment, net income totalled $257 million in the fourth quarter of 2018, up 10% from $234 million in the fourth quarter of 2017. The segment's fourth-quarter total revenues increased by $45 million year over year owing to growth in net interest income, which rose $35 million, and to a $10 million increase in non-interest income. The increase in net interest income came from higher personal and commercial loan and deposit volumes and a wider net interest margin (2.33% in fourth quarter 2018 versus 2.30% in fourth quarter 2017) driven mainly by deposit margins.

Personal Banking's fourth-quarter total revenues rose $21 million year over year. Its net interest income was up $17 million owing to growth in loan and deposit volumes and to widening deposit margins, and its non-interest income was up $4 million owing mainly to growth in insurance revenues. Commercial Banking's fourth-quarter total revenues rose $24 million year over year, essentially due to higher net interest income that was driven by growth in loan and deposit volumes and by improved deposit margins. Also contributing to Commercial Banking's revenue growth were increases in revenues from credit fees and revenues from bankers' acceptances.

For the fourth quarter of 2018, the segment's non-interest expenses were up $14 million year over year. This increase was mainly due to increases in compensation and employee benefits and operations support charges. At 51.9%, the fourth-quarter efficiency ratio improved by 1.2 percentage points when compared to the fourth quarter of 2017. For the fourth quarter of 2018, the Bank recorded $50 million in provisions for credit losses, unchanged from the fourth quarter of 2017, as higher provisions on personal loans were offset by lower provisions on commercial loans.

For the year ended October 31, 2018, the Personal and Commercial segment's net income totalled $948 million, up from $903 million in fiscal 2017. The fiscal 2018 net income was up 8% when compared to the net income excluding the impact of the $29 million, net of income taxes, sectoral provision recorded for the same period of 2017. The segment's total revenues grew 6% year over year. The growth in Personal Banking's total revenues was due to the same reasons as those provided for the quarter as well as to higher card revenues and internal commission revenues generated by the distribution of Wealth Management products. In addition, in the first quarter of 2017, a gain had been realized following a change to the distribution model for property and casualty insurance. Growth in Commercial Banking's total revenues was driven by higher loan and deposit volumes, improved deposit margins, and increases in revenues from credit fees, bankers' acceptances, and foreign exchange activities. For the year ended October 31, 2018, non-interest expenses were up $48 million year over year. The reasons for this increase were essentially the same as those provided for the quarter as well as higher technology investment expenses. The segment's contribution increased $134 million or 10%. At 53.1% for the year ended October 31, 2018, the efficiency ratio improved by 1.6 percentage points versus fiscal 2017. The segment's fiscal 2018 provisions for credit losses were up $73 million year over year due to higher credit loss provisions on personal loans, commercial loans, and credit card receivables. Also contributing to this increase was the $40 million reversal of the sectoral provision recorded in second quarter 2017.

Wealth Management
(millions of Canadian dollars)		Quarter ended October 31					Year ended October 31
		2018		2017^(1)		% Change	2018		2017^(1)		% Change
Operating results
Net interest income		131		118		11	510		431		18
Fee-based revenues		248		233		6	987		906		9
Transaction-based and other revenues		66		61		8	262		267		(2)
Total revenues		445		412		8	1,759		1,604		10
Non-interest expenses		276		263		5	1,092		1,046		4
Contribution		169		149		13	667		558		20
Provisions for credit losses^(2)		2		1			3		3		−
Income before income taxes		167		148		13	664		555		20
Income taxes		43		39		10	175		147		19
Net income		124		109		14	489		408		20
Specified items after income taxes^(3)		3		6			17		23
Net income excluding specified items^(3)		127		115		10	506		431		17
Average assets		13,134		12,115		8	12,551		11,652		8
Average loans and acceptances		11,704		10,353		13	11,104		9,924		12
Net impaired loans^(4) under IFRS 9		17					17
Net impaired loans under IAS 39				4					4
Average deposits		32,185		30,087		7	31,592		31,192		1
Assets under administration and under management		485,080		477,358		2	485,080		477,358		2
Efficiency ratio excluding specified items^(3)		61.3	%	62.3	%		61.1	%	63.7	%

(1)	For the quarter and year ended October 31, 2017, certain amounts have been reclassified.
(2)	Given the adoption of IFRS 9 on November 1, 2017, the Bank accounts for all provisions for credit losses within the business segments. For the quarter and year ended October 31, 2017, only provisions for credit losses on impaired loans had been recognized in the business segments, whereas provisions for credit losses on non-impaired loans had been recognized in the Other heading.
(3)	See the Financial Reporting Method section on page 2 for additional information on non-GAAP financial measures.
(4)	Net impaired loans are presented net of allowances for credit losses on Stage 3 loan amounts drawn.

In the Wealth Management segment, net income totalled $124 million in the fourth quarter of 2018, a 14% increase from $109 million in the same quarter of 2017. At $127 million, fourth-quarter net income excluding specified items (with the specified items including the acquisition-related items) rose 10% from $115 million in the same quarter of 2017. The segment's fourth-quarter total revenues amounted to $445 million, up 8% from $412 million in the same quarter of 2017. This increase was driven mainly by growth in net interest income, owing to higher deposit volumes, and by growth in fee-based revenues given net inflows across all solutions. Furthermore, transaction-based and other revenues rose due to a higher number of transactions in the fourth quarter of 2018.

For the fourth quarter of 2018, non-interest expenses stood at $276 million, a 5% year-over-year increase that was mainly due to higher variable compensation, as business volume growth generated higher revenues, and to an increase in operations support charges. The efficiency ratio excluding specified items was 61.3% in the fourth quarter of 2018, an improvement of 1.0 percentage points from the same quarter of 2017. For the fourth quarter of 2018, the Bank recorded $2 million in provisions for credit losses compared to $1 million in the fourth quarter of 2017.

For the year ended October 31, 2018, the Wealth Management segment's net income totalled $489 million, up 20% from $408 million in fiscal 2017. For the year ended October 31, 2018, net income excluding specified items totalled $506 million, up 17% or $75 million from fiscal 2017. The segment's total revenues for the year ended October 31, 2018 were $1,759 million compared to $1,604 million the previous year. This increase was due to higher net interest income owing to improved margins and by growth in fee-based revenues given net inflows across various solutions and sound stock market performance in fiscal 2018. The fiscal 2018 non-interest expenses stood at $1,092 million compared to $1,046 million in fiscal 2017, for an increase resulting from higher variable compensation and external management fees (due to business volume growth that generated higher revenues) and from higher operations support charges related to the segment's initiatives. As for the efficiency ratio, it improved to 61.1% for the year ended October 31, 2018 compared to 63.7% for fiscal 2017. Provisions for credit losses remained stable compared to fiscal 2017.

Assets under administration and under management increased by $7.7 billion or 2% from a year ago, mainly due to net inflows into various solutions, tempered by a drop in stock prices at the end of fiscal 2018.

Financial Markets
(taxable equivalent basis)^(1)
(millions of Canadian dollars)		Quarter ended October 31					Year ended October 31
		2018		2017^(2)		% Change	2018		2017^(2)		% Change
Operating results
Global markets
	Equities	138		131		5	564		496		14
	Fixed-income	65		76		(14)	265		294		(10)
	Commodities and foreign exchange	28		20		40	126		103		22
		231		227		2	955		893		7
Financial market fees		95		65		46	349		304		15
Corporate banking		101		90		12	377		327		15
Gains on investment and other		9		31		(71)	62		94		(34)
Total revenues on a taxable equivalent basis		436		413		6	1,743		1,618		8
Non-interest expenses		174		163		7	697		665		5
Contribution on a taxable equivalent basis		262		250		5	1,046		953		10
Provisions for credit losses^(3)		−		−			4		−
Income before income taxes on a taxable equivalent basis		262		250		5	1,042		953		9
Income taxes on a taxable equivalent basis		70		67		4	278		255		9
Net income		192		183		5	764		698		9
Average assets		97,976		93,030		5	100,721		94,991		6
Average loans and acceptances		16,005		13,931		15	15,116		13,118		15
Net impaired loans^(4)		−		−			−		−
Average deposits		25,234		21,660		17	23,510		20,926		12
Efficiency ratio on a taxable equivalent basis^(1)		39.9	%	39.5	%		40.0	%	41.1	%

(1)	For additional information, see the Results by Business Segment section on page 18.
(2)	For the quarter and year ended October 31, 2017, certain amounts have been reclassified.
(3)	Given the adoption of IFRS 9 on November 1, 2017, the Bank accounts for all provisions for credit losses within the business segments. For the quarter and year ended October 31, 2017, only provisions for credit losses on impaired loans had been recognized in the business segments, whereas provisions for credit losses on non-impaired loans had been recognized in the Other heading.
(4)	Net impaired loans are presented net of allowances for credit losses on Stage 3 loan amounts drawn.

In the Financial Markets segment, net income totalled $192 million in the fourth quarter of 2018 compared to $183 million in the fourth quarter of 2017, and fourth-quarter total revenues on a taxable equivalent basis amounted to $436 million compared to $413 million in the fourth quarter of 2017. Revenues from global markets grew 2%. Specifically, while revenues from equity securities and from commodity and foreign exchange activities grew 5% and 40%, respectively, these increases were partly offset by a decrease in fixed-income revenues. Year over year, fourth-quarter financial market fee revenues were up 46%, particularly due to merger and acquisition activities, whereas gains on investments and other revenue decreased. Revenues from corporate banking activities were up 12%, particularly due to growth in lending volume.

The segment's fourth-quarter non-interest expenses were $174 million, up $11 million year over year, mainly due to the higher variable compensation associated with revenue growth as well as to higher operations support charges. The efficiency ratio on a taxable equivalent basis was 39.9% compared to 39.5% in the fourth quarter of 2017. The segment's provisions for credit losses were nil in the fourth quarters of both 2018 and 2017.

For the year ended October 31, 2018, the segment's net income totalled $764 million, up $66 million or 9% from the same period of 2017. The 2018 total revenues on a taxable equivalent basis amounted to $1,743 million, up $125 million from $1,618 million in fiscal 2017. Global market revenues were up 7%, as revenues from equity securities and commodities and foreign exchange revenues rose 14% and 22%, respectively, whereas revenues from fixed-income securities were down 10%. Revenues from financial market fees were up 15%, particularly due to sound performance in merger and acquisition activities. Fiscal 2018 corporate banking revenues were up 15% compared to fiscal 2017. Lastly, higher gains were recorded on investments and other revenues in the year ended October 31, 2017.

For the year ended October 31, 2018, non-interest expenses were up 5% compared to fiscal 2017, due to the same reasons as those provided for the quarter. At 40.0% for the year ended October 31, 2018, the efficiency ratio on a taxable equivalent basis improved by 1.1 percentage points versus fiscal 2017. The segment recorded $4 million in provisions for credit losses on non-impaired loans for the year ended October 31, 2018, whereas no provisions had been recorded in 2017.

U.S. Specialty Finance and International
(millions of Canadian dollars)		Quarter ended October 31					Year ended October 31
		2018		2017^(1)		% Change	2018		2017^(1)		% Change
Operating results
Net interest income		147		139		6	584		466		25
Non-interest income		11		15		(27)	55		75		(27)
Total revenues		158		154		3	639		541		18
	Credigy	100		111		(10)	446		409		9
	ABA Bank and International	58		43		35	193		132		46
Non-interest expenses		65		56		16	251		225		12
	Credigy	38		38		−	156		163		(4)
	ABA Bank and International	27		18		50	95		62		53
Contribution		93		98		(5)	388		316		23
Provisions for credit losses^(2)		22		19		16	94		48		96
Income before income taxes		71		79		(10)	294		268		10
Income taxes		16		24		(33)	72		84		(14)
Net income		55		55		−	222		184		21
Non-controlling interests		8		6		33	38		29		31
Net income attributable to the Bank's shareholders		47		49		(4)	184		155		19
Average assets		9,957		8,658		15	9,270		7,519		23
Average loans and acceptances		8,218		7,565		9	7,853		6,062		30
Net impaired loans^(3) under IFRS 9		15					15
Net impaired loans under IAS 39				3					3
Purchased or originated credit-impaired loans		1,576		1,990		(21)	1,576		1,990		(21)
Average other revenue-bearing assets		1		113			15		449
Average deposits		2,289		1,418		61	1,907		1,265		51
Efficiency ratio		41.1	%	36.4	%		39.3	%	41.6	%

(1)	For the quarter and year ended October 31, 2017, certain amounts have been reclassified.
(2)	Given the adoption of IFRS 9 on November 1, 2017, the Bank accounts for all provisions for credit losses within the business segments. For the quarter and year ended October 31, 2017, only provisions for credit losses on impaired loans had been recognized in the business segments, whereas provisions for credit losses on non-impaired loans had been recognized in the Other heading.
(3)	Net impaired loans are presented net of allowances for credit losses on Stage 3 loan amounts drawn and do not include purchased or originated credit-impaired loans.

In the U.S. Specialty Finance and International segment, net income totalled $55 million in the fourth quarter of 2018, stable when compared to the same quarter of 2017. The segment's fourth-quarter total revenues amounted to $158 million compared to $154 million in the fourth quarter of 2017. Higher revenues at the ABA Bank subsidiary, driven by loan and deposit growth, were partly offset by lower revenues at the Credigy subsidiary compared to the same quarter of 2017, particularly given the reimbursement of certain assets.

For the fourth quarter of 2018, non-interest expenses stood at $65 million, a $9 million year-over-year increase attributable to ABA Bank's growing banking network. As for the non-interest expenses of the Credigy subsidiary, they were unchanged. The segment recorded $22 million in provisions for credit losses, $3 million more than in the same quarter of 2017, essentially due to the credit loss provisions recorded by the ABA Bank subsidiary.

The segment's effective income tax rate was down in the fourth quarter of 2018 compared to the same quarter of 2017, as the U.S. tax reform resulted in a lower income tax rate for Credigy.

For the year ended October 31, 2018, the segment generated net income of $222 million compared to $184 million in fiscal 2017. Its annual total revenues amounted to $639 million versus $541 million in fiscal 2017, representing 18% growth that was driven partly by an increase in Credigy's revenues, particularly due to growth in loan volumes, and partly by ABA Bank's revenues, which increased steadily due to growth in loan and deposit volumes.

For the year ended October 31, 2018, non-interest expenses stood at $251 million, a $26 million year-over-year increase attributable to ABA Bank's growing banking network. As for Credigy's non-interest expenses, they were down 4% year over year, notably due to lower servicing fees. For the year ended October 31, 2018, the segment's provisions for credit losses were $94 million and consisted mainly of credit loss provisions recorded for the Credigy subsidiary.

For the year ended October 31, 2018, the effective tax rate was down when compared to fiscal 2017, as the U.S. tax reform resulted in a lower tax rate for the Credigy subsidiary.

Other
(taxable equivalent basis)^(1)
(millions of Canadian dollars)	Quarter ended October 31		Year ended October 31
	2018	2017^(2)	2018	2017^(2)
Operating results
Net interest income	(60)	(38)	(189)	(93)
Non-interest income	64	31	220	126
Total revenues on a taxable equivalent basis	4	(7)	31	33
Non-interest expenses	90	77	303	249
Contribution on a taxable equivalent basis	(86)	(84)	(272)	(216)
Provisions for credit losses^(3)	(1)	−	−	40
Income before income taxes on a taxable equivalent basis	(85)	(84)	(272)	(256)
Income taxes (recovery) on a taxable equivalent basis	(23)	(28)	(81)	(87)
Net loss	(62)	(56)	(191)	(169)
Non-controlling interests	8	13	49	55
Net loss attributable to the Bank's shareholders	(70)	(69)	(240)	(224)
Specified items after income taxes^(4)	−	−	−	2
Net loss excluding specified items^(4)	(62)	(56)	(191)	(167)
Average assets	43,513	39,694	42,601	37,756

(1)	For additional information, see the Results by Business Segment section on page 18.
(2)	For the quarter and year ended October 31, 2017, certain amounts have been reclassified.
(3)	Given the adoption of IFRS 9 on November 1, 2017, the Bank accounts for all provisions for credit losses within the business segments. For the quarter and year ended October 31, 2017, only provisions for credit losses on impaired loans had been recognized in the business segments, whereas provisions for credit losses on non-impaired loans had been recognized in the Other heading. For the year ended October 31, 2017, the $40 million in provisions for credit losses had consisted of an increase in the collective allowance for credit risk on non-impaired loans.
(4)	See the Financial Reporting Method section on page 2 for additional information on non-GAAP financial measures.

For the Other heading of segment results, there was a net loss of $62 million in the fourth quarter of 2018 compared to a net loss of $56 million in the same quarter of 2017. This change was mainly due to an increase in non-interest expenses, particularly due to technology investments made as part of the Bank's transformation plan and for business development purposes.

For the year ended October 31, 2018, net loss stood at $191 million compared to a net loss of $169 million in fiscal 2017. This change was due to an increase in non-interest expenses, for the same reasons as those provided above for the fourth quarter, and from a higher contribution from Treasury activities during 2017. These items more than offset the impact of the $40 million increase ($29 million net of income taxes) to the collective allowance for credit risk on non-impaired loans recorded in the second quarter of 2017 to reflect growth in the Bank's overall credit portfolio. The net loss excluding specified items was $191 million for the year ended October 31, 2018 compared to a $167 million net loss in fiscal 2017.

Consolidated Balance Sheet

The presentation of the Consolidated Balance Sheet as at October 31, 2018 reflects the adoption of IFRS 9 on November 1, 2017. For additional information on IFRS 9 adoption, refer to Notes 1 and 3 of the Bank's audited annual consolidated financial statements for the year ended October 31, 2018. Comparative information has not been restated.

Consolidated Balance Sheet Summary
(millions of Canadian dollars)			As at October 31, 2018		As at October 31, 2017^(1)		% Change
Assets
Cash and deposits with financial institutions			12,756		8,802		45
Securities			69,783		65,343		7
Securities purchased under reverse repurchase agreements and securities borrowed			18,159		20,789		(13)
Loans and acceptances (net of allowances)			146,082		136,457		7
Other			15,691		14,436		9
			262,471		245,827		7
Liabilities and equity
Deposits			170,830		156,671		9
Other			76,539		75,589		1
Subordinated debt			747		9
Equity attributable to the Bank's shareholders			13,976		12,750		10
Non-controlling interests			379		808		(53)
			262,471		245,827		7

(1)	On November 1, 2017, the Bank changed the presentation of certain Consolidated Balance Sheet items, and the figures as at October 31, 2017 were reclassified to reflect those changes.

Assets
As at October 31, 2018, the Bank had total assets of $262.5 billion, a 7% or $16.7 billion increase from $245.8 billion as at October 31, 2017. At $12.8 billion as at October 31, 2018, cash and deposits with financial institutions rose $4.0 billion since the same date last year, mainly due to growth in deposits with the U.S. Federal Reserve. Since October 31, 2017, securities rose $4.5 billion, essentially due to an $8.3 billion or 17% increase in securities at fair value through profit or loss, as securities issued or guaranteed by the Canadian government were up $5.9 billion and securities issued or guaranteed by Canadian provincial and municipal governments were up $2.9 billion. Securities other than those measured at fair value through profit or loss declined $3.8 billion. Securities purchased under reverse repurchase agreements and securities borrowed decreased by $2.6 billion, mainly related to Treasury operations.

At $146.7 billion as at October 31, 2018, loans and acceptances rose $9.6 billion or 7% since October 31, 2017. Residential mortgages (including home equity lines of credit) were up 5% due to sustained demand for mortgage credit and business growth at ABA Bank, and personal loans rose 2%. Loans and acceptances to business and government rose 12% or $5.7 billion since October 31, 2017 due to business growth at Commercial Banking and Financial Markets. The following table provides a breakdown of the main loan and acceptance portfolios.

(millions of Canadian dollars)			As at October 31, 2018		As at October 31, 2017^(1)
Loans and acceptances
Residential mortgage and home equity lines of credit			75,773		72,251
Personal			15,235		14,973
Credit card			2,325		2,247
Business and government			53,407		47,681
			146,740		137,152

(1)	The Purchased receivables amount of $2,014 million, which was presented separately on the Consolidated Balance Sheet as at October 31, 2017, is now reported in Loans and acceptances.

Liabilities
As at October 31, 2018, the Bank had total liabilities of $248.1 billion compared to $232.3 billion as at October 31, 2017.

The Bank's total deposit liability stood at $170.8 billion as at October 31, 2018, up $14.1 billion from $156.7 billion as at October 31, 2017. The following table provides a breakdown of total personal savings.

(millions of Canadian dollars)			As at October 31, 2018		As at October 31, 2017
Balance sheet
Deposits^(1)			55,688		52,175
Off-balance-sheet
Brokerage			123,458		124,212
Mutual funds			31,874		32,192
Other			440		408
			155,772		156,812
Total personal savings			211,460		208,987

(1)	The Bank changed the classification of certain amounts reported in the Deposits item of the Consolidated Balance Sheet. As at October 31, 2017, a $1,544 million amount from Deposits – Personal was reclassified to Deposits – Business and government.

As at October 31, 2018, personal deposits stood at $55.7 billion, rising $3.5 billion since October 31, 2017, essentially due to the Bank's initiatives to increase this type of deposit as well as to growth at the ABA Bank subsidiary. As at October 31, 2018, total personal savings amounted to $211.5 billion, up from $209.0 billion as at October 31, 2017. Overall, off-balance-sheet personal savings stood at $155.8 billion as at October 31, 2018 compared to $156.8 billion one year earlier, a decrease that was essentially due to a decline in the stock markets at the end of 2018.

Business and government deposits totalled $110.3 billion, rising $11.2 billion since October 31, 2017. This increase came mainly from growth in banking and government business activities and in Treasury funding activities. Other liabilities stood at $76.5 billion, rising 1% since October 31, 2017 due to a $2.4 billion increase in obligations related to securities sold short, partly offset by a $1.8 billion decrease in obligations related to securities sold under repurchase agreements and securities loaned and a $0.6 billion decrease in derivative financial instruments. Since October 31, 2017, subordinated debt increased due to a $750 million issuance of medium-term notes on February 1, 2018.

Equity
As at October 31, 2018, equity attributable to the Bank's shareholders was $14.0 billion, up $1.2 billion since October 31, 2017. This increase came from net income net of dividends, from remeasurements of pension plans and other post-employment benefit plans, and from the issuances of Series 40 and Series 42 preferred shares for $600 million, tempered by a $200 million redemption of Series 28 preferred shares for cancellation. In addition, the issuances of common shares under the stock option plan were more than offset by the repurchases of common shares for cancellation and the impact of shares purchased or sold for trading. As for non-controlling interests, they were down $429 million, essentially due to the $400 million redemption of trust units issued by NBC Asset Trust.

As at November 30, 2018, there were 335,782,996 common shares outstanding and 13,055,458 stock options outstanding. For additional information on share capital, see Note 19 to the audited annual consolidated financial statements for the year ended October 31, 2018.

Income Taxes

In September 2018, the Bank was reassessed by the Canada Revenue Agency (CRA) for additional income tax and interest of approximately $130 million (including estimated provincial tax and interest) in respect of certain Canadian dividends received by the Bank during 2013.

In May 2017, the Bank had been reassessed for additional income tax and interest of approximately $77 million (including provincial tax and interest) in respect of certain Canadian dividends received by the Bank during 2012.

The transactions to which these reassessments relate are similar to those prospectively addressed by the synthetic equity arrangement rules introduced in the 2015 Canadian federal budget.

Also in July 2018, the CRA confirmed in writing that, except for the above-mentioned reassessment for 2012, it would not pursue the proposed reassessment in respect of 2011 and 2012 that had been communicated to the Bank in March 2017.

The CRA may issue reassessments to the Bank for taxation years subsequent to 2013 in regard to activities similar to those that were the subject of the 2013 and 2012 reassessments. The Bank remains confident that its tax position was appropriate and intends to vigorously defend its position. As a result, no amount has been recognized in the consolidated financial statements as at October 31, 2018.

Capital Management

Regulatory Capital Ratios
As at October 31, 2018, the Bank's CET1, Tier 1 and Total capital ratios were, respectively, 11.7%, 15.5% and 16.8%, i.e., above the regulatory requirements, compared to ratios of, respectively, 11.2%, 14.9% and 15.1% as at October 31, 2017. The increase in the CET1 capital ratio stems essentially from net income net of dividends, common share issuances under the Stock Option Plan, and remeasurements of pension plans and other post-employment benefit plans, factors that were tempered by the growth in risk-weighted assets, by the common share repurchases made during the year ended October 31, 2018 and by the impact of IFRS 9 adoption on November 1, 2017. Both the Tier 1 and the Total capital ratios increased, essentially due to the same items. The increase in the Tier 1 capital ratio was also due to the $600 million issuances of Series 40 and 42 preferred shares, partly offset by the $400 million redemption of NBC Asset Trust units, while the $750 million issuance of medium-term notes on February 1, 2018 contributed to the higher Total capital ratio. As at October 31, 2018, the leverage ratio was 4.0%, unchanged from October 31, 2017.

Regulatory Capital and Ratios Under Basel III^(1)
(millions of Canadian dollars)			As at October 31, 2018			As at October 31, 2017
Capital
	CET1		8,608			7,856
	Tier 1^(2)		11,410			10,457
	Total^(2)		12,352			10,661
Risk-weighted assets
	CET1 capital		73,654			70,173
	Tier 1 capital		73,670			70,327
	Total capital		73,685			70,451
Total exposure			284,337			262,539
Capital ratios
	CET1		11.7	%		11.2	%
	Tier 1^(2)		15.5	%		14.9	%
	Total^(2)		16.8	%		15.1	%
Leverage ratio			4.0	%		4.0	%

(1)	Figures are presented on an "all-in" basis.
(2)	Figures as at October 31, 2017 included the redemption of the Series 28 preferred shares on November 15, 2017.

Dividends
On December 4, 2018, the Board of Directors declared regular dividends on the various series of first preferred shares and a dividend of 65 cents per common share, up 3 cents or 5%, payable on February 1, 2019 to shareholders of record on December 31, 2018.

Consolidated Balance Sheets
(unaudited) (millions of Canadian dollars)
			As at October 31,  2018^(1)		As at November 1, 2017^(1)	As at October 31, 2017
Assets
Cash and deposits with financial institutions			12,756		8,801	8,802
Securities
At fair value through profit or loss			55,817		52,228	47,536
Available-for-sale						8,552
At fair value through other comprehensive income			5,668		6,424
Held-to-maturity						9,255
At amortized cost			8,298		6,653
			69,783		65,305	65,343
Securities purchased under reverse repurchase agreements and securities borrowed			18,159		20,789	20,789
Loans
Residential mortgage			53,651		51,609	51,634
Personal			37,357		35,590	35,590
Credit card			2,325		2,247	2,247
Business and government			46,606		41,690	41,690
			139,939		131,136	131,161
Customers' liability under acceptances			6,801		5,991	5,991
Allowances for credit losses			(658)		(673)	(695)
			146,082		136,454	136,457
Other
Derivative financial instruments			8,608		8,423	8,423
Investments in associates and joint ventures			645		631	631
Premises and equipment			601		558	558
Goodwill			1,412		1,409	1,409
Intangible assets			1,314		1,239	1,239
Other assets			3,111		2,226	2,176
			15,691		14,486	14,436
			262,471		245,835	245,827
Liabilities and equity
Deposits			170,830		156,787	156,671
Other
Acceptances			6,801		5,991	5,991
Obligations related to securities sold short			17,780		15,363	15,363
Obligations related to securities sold under repurchase agreements and securities loaned			19,998		21,767	21,767
Derivative financial instruments			6,036		6,612	6,612
Liabilities related to transferred receivables			20,100		20,122	20,098
Other liabilities			5,824		5,791	5,758
			76,539		75,646	75,589
Subordinated debt			747		9	9
Equity
Equity attributable to the Bank's shareholders
Preferred shares			2,450		2,050	2,050
Common shares			2,822		2,768	2,768
Contributed surplus			57		58	58
Retained earnings			8,472		7,567	7,706
Accumulated other comprehensive income			175		158	168
			13,976		12,601	12,750
Non-controlling interests			379		792	808
			14,355		13,393	13,558
			262,471		245,835	245,827

(1)	The Consolidated Balance Sheets as at October 31, 2018 and as at November 1, 2017 reflect the adoption of IFRS 9 on November 1, 2017. For additional information on IFRS 9 adoption, see Notes 1 and 3 to the audited annual consolidated financial statements for the year ended October 31, 2018. Comparative information has not been restated.

Consolidated Statements of Income
(unaudited) (millions of Canadian dollars)
			Quarter ended October 31				Year ended October 31
			2018^(1)		2017		2018^(1)		2017
Interest income
Loans			1,506		1,286		5,632		4,715
Securities at fair value through profit or loss			186		132		771		598
Available-for-sale securities					47				227
Securities at fair value through other comprehensive income			44				152
Held-to-maturity securities					44				130
Securities at amortized cost			50				174
Deposits with financial institutions			55		39		206		114
			1,841		1,548		6,935		5,784
Interest expense
Deposits			748		502		2,562		1,780
Liabilities related to transferred receivables			110		107		414		403
Subordinated debt			6		1		18		16
Other			151		57		559		149
			1,015		667		3,553		2,348
Net interest income^(2)			826		881		3,382		3,436
Non-interest income
Underwriting and advisory fees			104		71		388		349
Securities brokerage commissions			48		50		195		216
Mutual fund revenues			110		105		438		412
Trust service revenues			150		136		587		518
Credit fees			104		95		403		361
Card revenues			39		33		159		132
Deposit and payment service charges			73		76		280		279
Trading revenues (losses)			248		134		840		374
Gains (losses) on available-for-sale securities, net					39				140
Gains (losses) on non-trading securities, net			9				77
Insurance revenues, net			29		25		121		117
Foreign exchange revenues, other than trading			23		19		95		81
Share in the net income of associates and joint ventures			9		11		28		35
Other			42		29		173		159
			988		823		3,784		3,173
Total revenues			1,814		1,704		7,166		6,609
Provisions for credit losses			73		70		327		244
			1,741		1,634		6,839		6,365
Non-interest expenses
Compensation and employee benefits			616		601		2,466		2,358
Occupancy			60		59		236		236
Technology			157		148		620		568
Communications			15		14		63		61
Professional fees			65		64		244		254
Other			123		90		434		380
			1,036		976		4,063		3,857
Income before income taxes			705		658		2,776		2,508
Income taxes			139		133		544		484
Net income			566		525		2,232		2,024
Net income attributable to
Preferred shareholders			32		27		105		85
Common shareholders			518		479		2,040		1,855
Bank shareholders			550		506		2,145		1,940
Non-controlling interests			16		19		87		84
			566		525		2,232		2,024
Earnings per share (dollars)
	Basic		1.53		1.40		6.01		5.44
	Diluted		1.52		1.39		5.94		5.38
Dividends per common share (dollars)			0.62		0.58		2.44		2.28

(1)	The Consolidated Statements of Income for the quarter and year ended October 31, 2018 reflect the adoption of IFRS 9 on November 1, 2017. For additional information on IFRS 9 adoption, see Notes 1 and 3 to the audited annual consolidated financial statements for the year ended October 31, 2018. Comparative information has not been restated.
(2)	Net interest income includes dividend income. For additional information, see Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2018.

Consolidated Statements of Comprehensive Income
(unaudited) (millions of Canadian dollars)
					Quarter ended October 31				Year ended October 31
						2018^(1)		2017		2018^(1)		2017
Net income						566		525		2,232		2,024
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			21		61		41		(64)
			Impact of hedging net foreign currency translation gains (losses)			(7)		(18)		(13)		25
						14		43		28		(39)
		Net change in available-for-sale securities
			Net unrealized gains (losses) on available-for-sale securities					37				119
			Net (gains) losses on available-for-sale securities reclassified to net income					(35)				(131)
								2				(12)
		Net change in debt securities at fair value through other comprehensive income
			Net unrealized gains (losses) on debt securities at fair value through other comprehensive income			(9)				(11)
			Net (gains) losses on debt securities at fair value through other comprehensive income reclassified to net income			4				(5)
						(5)				(16)
		Net change in cash flow hedges
			Net gains (losses) on derivative financial instruments designated as cash flow hedges			27		20		51		33
			Net (gains) losses on designated derivative financial instruments reclassified to net income			(14)		(8)		(46)		(26)
						13		12		5		7
		Share in the other comprehensive income of associates and joint ventures				(5)		(9)		1		(10)
	Items that will not be subsequently reclassified to net income
		Remeasurements of pension plans and other post-employment benefit plans				(70)		(43)		103		97
		Net gains (losses) on equity securities designated at fair value through other comprehensive income				(3)				(2)
		Net fair value change attributable to the credit risk on financial liabilities designated at fair value through profit or loss				6		9		21		(21)
						(67)		(34)		122		76
Total other comprehensive income, net of income taxes						(50)		14		140		22
Comprehensive income						516		539		2,372		2,046
Comprehensive income attributable to
	Bank shareholders					499		518		2,284		1,966
	Non-controlling interests					17		21		88		80
						516		539		2,372		2,046

(1)	The Consolidated Statements of Comprehensive Income for the quarter and year ended October 31, 2018 reflect the adoption of IFRS 9 on November 1, 2017. For additional information on IFRS 9 adoption, see Notes 1 and 3 to the audited annual consolidated financial statements for the year ended October 31, 2018. Comparative information has not been restated.

Income Taxes – Other Comprehensive Income
The following table presents the income tax expense or recovery for each component of other comprehensive income.
					Quarter ended October 31				Year ended October 31
					2018^(1)		2017		2018^(1)		2017
Net foreign currency translation adjustments
	Net unrealized foreign currency translation gains (losses) on investments in foreign operations				1		(3)		1		(2)
	Impact of hedging net foreign currency translation gains (losses)				(1)		(6)		−		1
					−		(9)		1		(1)
Net change in available-for-sale securities
	Net unrealized gains (losses) on available-for-sale securities						17				46
	Net (gains) losses on available-for-sale securities reclassified to net income						(13)				(48)
							4				(2)
Net change in debt securities at fair value through other comprehensive income
	Net unrealized gains (losses) on debt securities at fair value through other comprehensive income				(4)				(4)
	Net (gains) losses on debt securities at fair value through other comprehensive income reclassified to net income				2				(1)
					(2)				(5)
Net change in cash flow hedges
	Net gains (losses) on derivative financial instruments designated as cash flow hedges				10		7		19		12
	Net (gains) losses on designated derivative financial instruments reclassified to net income				(5)		(2)		(17)		(9)
					5		5		2		3
Share in the other comprehensive income of associates and joint ventures					(1)		(3)		−		(3)
Remeasurements of pension plans and other post-employment benefit plans					(26)		(15)		37		36
Net gains (losses) on equity securities designated at fair value through other comprehensive income					(2)				(1)
Net fair value change attributable to the credit risk on financial liabilities designated at fair value through profit or loss					2		3		7		(8)
					(24)		(15)		41		25

(1)	The Consolidated Statements of Comprehensive Income for the quarter and year ended October 31, 2018 reflect the adoption of IFRS 9 on November 1, 2017. For additional information on IFRS 9 adoption, see Notes 1 and 3 to the audited annual consolidated financial statements for the year ended October 31, 2018. Comparative information has not been restated.

Consolidated Statements of Changes in Equity
(unaudited) (millions of Canadian dollars)
		Year ended October 31
		2018^(1)		2017
Preferred shares at beginning		2,050		1,650
Issuances of Series 38, 40 and 42 preferred shares		600		400
Redemption of Series 28 preferred shares for cancellation		(200)		−
Preferred shares at end		2,450		2,050
Common shares at beginning		2,768		2,645
Issuances of common shares pursuant to the Stock Option Plan		128		179
Repurchases of common shares for cancellation		(64)		(16)
Impact of shares purchased or sold for trading		(10)		(37)
Other		−		(3)
Common shares at end		2,822		2,768
Contributed surplus at beginning		58		73
Stock option expense		12		11
Stock options exercised		(15)		(26)
Other		2		−
Contributed surplus at end		57		58
Retained earnings at beginning		7,706		6,706
Impact of adopting IFRS 9 on November 1, 2017		(139)
Net income attributable to the Bank's shareholders		2,145		1,940
Dividends on preferred shares		(105)		(85)
Dividends on common shares		(829)		(778)
Premium paid on common shares repurchased for cancellation		(403)		(99)
Share issuance expenses, net of income taxes		(12)		(8)
Remeasurements of pension plans and other post-employment benefit plans		103		97
Net gains (losses) on equity securities designated at fair value through other comprehensive income		(2)
Net fair value change attributable to the credit risk on financial liabilities designated at fair value through profit or loss		21		(21)
Impact of a financial liability resulting from put options written to non-controlling interests		−		(34)
Other		(13)		(12)
Retained earnings at end		8,472		7,706
Accumulated other comprehensive income at beginning		168		218
Impact of adopting IFRS 9 on November 1, 2017		(10)
Net foreign currency translation adjustments		27		(39)
Net change in unrealized gains (losses) on available-for-sale securities				(12)
Net change in unrealized gains (losses) on debt securities at fair value through other comprehensive income		(16)
Net change in gains (losses) on cash flow hedges		5		11
Share in the other comprehensive income of associates and joint ventures		1		(10)
Accumulated other comprehensive income at end		175		168
Equity attributable to the Bank's shareholders		13,976		12,750
Non-controlling interests at beginning		808		810
Impact of adopting IFRS 9 on November 1, 2017		(16)
Redemption of trust units issued by NBC Asset Trust		(400)		−
Net income attributable to non-controlling interests		87		84
Other comprehensive income attributable to non-controlling interests		1		(4)
Distributions to non-controlling interests		(101)		(82)
Non-controlling interests at end		379		808
Equity		14,355		13,558
Accumulated Other Comprehensive Income
		As at October 31, 2018		As at October 31, 2017
Accumulated other comprehensive income
Net foreign currency translation adjustments		14		(13)
Net unrealized gains (losses) on available-for-sale securities				39
Net unrealized gains (losses) on debt securities at fair value through other comprehensive income		13
Net gains (losses) on instruments designated as cash flow hedges		151		146
Share in the other comprehensive income of associates and joint ventures		(3)		(4)
		175		168

(1)	The Consolidated Statement of Changes in Equity for year ended October 31, 2018 reflects the adoption of IFRS 9 on November 1, 2017. For additional information on IFRS 9 adoption, see Notes 1 and 3 to the audited annual consolidated financial statements for the year ended October 31, 2018. Comparative information has not been restated.

Segment Disclosures
(unaudited) (millions of Canadian dollars)

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 corporate banking and investment banking services and financial solutions for large and mid-size corporations, public sector organizations, and institutional investors. The segment is also active in proprietary trading and investment activities for the Bank.

U.S. Specialty Finance and International (USSF&I)
The USSF&I segment encompasses the specialty finance expertise provided by subsidiary Credigy; the activities of the ABA Bank subsidiary, which offers financial products and services to individuals and businesses in Cambodia; and the activities of targeted investments in certain emerging markets.

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

Results by Business Segment
											Quarter ended October 31^(1)
		Personal and Commercial				Wealth Management				Financial Markets					USSF&I			Other						Total
		2018		2017		2018		2017		2018		2017		2018		2017		2018		2017		2018		2017
Net interest income^(2)		572		537		131		118		71		165		147		139		(95)		(78)		826		881
Non-interest income^(2)		259		249		314		294		365		248		11		15		39		17		988		823
Total revenues		831		786		445		412		436		413		158		154		(56)		(61)		1,814		1,704
Non-interest expenses		431		417		276		263		174		163		65		56		90		77		1,036		976
Contribution		400		369		169		149		262		250		93		98		(146)		(138)		778		728
Provisions for credit losses^(3)		50		50		2		1		−		−		22		19		(1)		−		73		70
Income before income taxes (recovery)		350		319		167		148		262		250		71		79		(145)		(138)		705		658
Income taxes (recovery)^(2)		93		85		43		39		70		67		16		24		(83)		(82)		139		133
Net income		257		234		124		109		192		183		55		55		(62)		(56)		566		525
Non-controlling interests		−		−		−		−		−		−		8		6		8		13		16		19
Net income attributable to the Bank's shareholders		257		234		124		109		192		183		47		49		(70)		(69)		550		506
Average assets		103,102		97,805		13,134		12,115		97,976		93,030		9,957		8,658		43,513		39,694		267,682		251,302
											Year ended October 31^(1)
		Personal and Commercial				Wealth Management				Financial Markets						USSF&I		Other						Total
		2018		2017		2018		2017		2018		2017		2018		2017		2018		2017		2018		2017
Net interest income^(4)		2,212		2,069		510		431		409		772		584		466		(333)		(302)		3,382		3,436
Non-interest income^(4)		1,027		988		1,249		1,173		1,334		846		55		75		119		91		3,784		3,173
Total revenues		3,239		3,057		1,759		1,604		1,743		1,618		639		541		(214)		(211)		7,166		6,609
Non-interest expenses		1,720		1,672		1,092		1,046		697		665		251		225		303		249		4,063		3,857
Contribution		1,519		1,385		667		558		1,046		953		388		316		(517)		(460)		3,103		2,752
Provisions for credit losses^(3)		226		153		3		3		4		−		94		48		−		40		327		244
Income before income taxes (recovery)		1,293		1,232		664		555		1,042		953		294		268		(517)		(500)		2,776		2,508
Income taxes (recovery)^(4)		345		329		175		147		278		255		72		84		(326)		(331)		544		484
Net income		948		903		489		408		764		698		222		184		(191)		(169)		2,232		2,024
Non-controlling interests		−		−		−		−		−		−		38		29		49		55		87		84
Net income attributable to the Bank's shareholders		948		903		489		408		764		698		184		155		(240)		(224)		2,145		1,940
Average assets		100,619		96,433		12,551		11,652		100,721		94,991		9,270		7,519		42,601		37,756		265,762		248,351

(1)	For the quarter and year ended October 31, 2017, certain amounts have been reclassified, particularly in the USSF&I segment, where an amount of $40 million reported in Non-interest income was reclassified to Net interest income for the quarter ended October 31, 2017 ($204 million for the year ended October 31, 2017).
(2)	The Net interest income, Non-interest income and Income taxes (recovery) items of the business segments are presented on a taxable equivalent basis. Taxable equivalent basis is a calculation method that consists of grossing up certain tax-exempt income by the amount of income tax that would have been otherwise payable. For the business segments as a whole, Net interest income was grossed up by $35 million ($40 million in 2017), Non-interest income was grossed up by $25 million ($14 million in 2017), and an equivalent amount was recognized in Income taxes (recovery). The effect of these adjustments is reversed under the Other heading.
(3)	Given the adoption of IFRS 9 on November 1, 2017, the Bank accounts for all provisions for credit losses within the business segments. For the quarter and the year ended October 31, 2017, only provisions for credit losses on impaired loans had been recognized in the business segments, whereas provisions for credit losses on non-impaired loans had been recognized in the Other heading. During the year ended October 31, 2017, the Bank had reversed, by $40 million, the sectoral provision on non-impaired loans recorded for the oil and gas producer and service company loan portfolio presented in the Personal and Commercial segment, and the $40 million in provisions for credit losses in the Other heading had reflected an increase in the collective allowance for credit risk on non-impaired loans.
(4)	For the year ended October 31, 2018, Net interest income was grossed up by $144 million ($209 million in 2017), Non-interest income was grossed up by $101 million ($35 million in 2017), and an equivalent amount was recognized in Income taxes (recovery). The effect of the adjustments is reversed under the Other heading.

Caution Regarding Forward-Looking Statements

From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Major Economic Trends section of the 2018 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 2019 and the objectives it hopes to achieve for that period. These forward-looking statements are made in accordance with current securities legislation in Canada and the United States. 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 2019 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 credit risk, market risk, liquidity and funding risk, operational risk, regulatory compliance risk, reputation risk, strategic risk and environmental risk, all of which are described in more detail in the Risk Management section beginning on page 52 of the 2018 Annual Report, general economic environment and financial market conditions in Canada, the United States and certain other countries in which the Bank conducts business, including regulatory changes affecting the Bank's business, capital and liquidity; 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 (including the U.S. Foreign Account Tax Compliance Act (FATCA)); changes to capital and liquidity guidelines and to the manner in which they are to be presented and interpreted; changes to the credit ratings assigned to the Bank; and potential disruptions to the Bank's information technology systems, including evolving cyber attack risk.

The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management section of the 2018 Annual Report. Investors and others who rely 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. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.

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 2018 Results

Conference Call

• A conference call for analysts and institutional investors will be held on Wednesday, December 5, 2018 at 1:00 p.m. EST.
• Access by telephone in listen-only mode: 1-800-898-3989 or 416-406-0743. The access code is 1995846#.
• A recording of the conference call can be heard until January 3, 2019 by dialing 1-800-408-3053 or 905-694-9451. The access code is 1381684#.

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 Press Release (which includes the quarterly consolidated financial statements) is available at all times on National Bank's website at nbc.ca/investorrelations.
• The Press Release, the Supplementary Financial Information, the Supplementary Regulatory Capital and Pillar 3 Disclosure, 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 2018 Annual Report (which includes the audited annual consolidated financial statements and management's discussion and analysis) will also be available on National Bank's website.
• The Report to Shareholders for the first quarter ended January 31, 2019 will be available on February 27, 2019 (subject to approval by the Bank's Board of Directors).

SOURCE National Bank of Canada

Ghislain Parent, Chief Financial Officer and Executive Vice-President, Finance, 514-394-6807; Jean Dagenais, Senior Vice-President, Finance, 514-394-6233; Linda Boulanger, Vice-President, Investor Relations, 514-394-0296; Claude Breton, Vice-President, Public Affairs and Corporate Social Responsibility, 514-394-8644

Related Links

https://www.nbc.ca