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1. Company Snapshot

1.a. Company Description

National Bank of Canada provides various financial products and services to retail, commercial, corporate, and institutional clients in Canada and internationally.It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International.The Personal and Commercial segment offers personal banking services, including transaction solutions, mortgage loans and home equity lines of credit, consumer loans, payment solutions, and savings and investment solutions; various insurance products; and commercial banking services comprise credit, and deposit and investment solutions, as well as international trade, foreign exchange transactions, payroll, cash management, insurance, electronic transactions, and complimentary services.


The Wealth Management segment comprises investment solutions, trust services, banking services, lending services, and other wealth management solutions.The Financial Markets segment offers corporate banking, advisory, and capital markets services; and project financing, debt, and equity underwriting; advisory services in the areas of mergers and acquisitions, and financing.The U.S. Specialty Finance and International segment provides specialty finance products; financial products and services to individuals and businesses in Cambodia; and investment solutions, guaranteed investment certificates, mutual funds, notes, structured products, and monetization.


It provides its services through a network of 384 branches and 927 banking machines.National Bank of Canada was founded in 1859 and is based in Montreal, Canada.

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1.b. Last Insights on NA

National Bank of Canada's recent performance has been driven by a combination of factors. The company's Q4 earnings beat, with adjusted earnings surpassing expectations, and a 6.84% earnings surprise, has contributed to its positive momentum. Additionally, the bank's expansion into new markets and efforts to diversify revenue streams have likely boosted investor confidence. A share buyback program, which aims to reduce the number of outstanding shares by 2%, has also been implemented, providing a relative boost to shareholders. Furthermore, the bank's balance sheet optimization efforts, including the redemption of capital notes and preferred shares, have demonstrated its proactive approach to regulatory capital management.

1.c. Company Highlights

2. National Bank of Canada Delivers Robust Q3 2025 Earnings

National Bank of Canada reported earnings per share (EPS) of $2.66, slightly below estimates of $2.7, and a return on equity (ROE) of 14% for the third quarter of 2025. The bank's revenue fundamentals remained strong, driven by cost and funding synergies from the CWB integration, and a robust credit performance. The CET1 ratio stood at 13.9%, providing ample flexibility and optionality. As noted by Jean-Sebastien Grise, impaired PCLs are expected to remain lumpy but are trending towards the middle of the 25-35 basis point range, indicating a stable credit environment.

Publication Date: Aug -29

📋 Highlights
  • Earnings & ROE:: EPS of $2.68 and 14% ROE driven by CWB integration synergies and strong credit performance.
  • CET1 Ratio:: Maintained at 13.9%, ensuring capital flexibility and supporting $135M synergy target by Q4 2025.
  • Segment Growth:: Wealth Management net income up 13% YoY; Financial Markets net income increased 5% YoY.
  • Credit Performance:: PCLs at 28 bps (down 17 bps sequentially), with impaired PCLs expected to stay in 25-35 bps range.
  • Share Buyback:: Announced repurchase of up to 8 million shares, complementing organic growth and capital prudence.

Segmental Performance

The bank's business segments performed well, with Personal and Commercial Banking generating net income of $386 million, including $74 million from the CWB transaction. Wealth Management grew net income by 13% year-over-year, while Financial Markets delivered strong quarterly results, with net income increasing by 5% over the past year. The CWB integration is progressing well, with funding and cost synergies continuing to progress at a rapid pace, and the bank expects to achieve its year 1 target of $135 million in December 2025.

Credit Performance and Capital Management

Total PCLs were $203 million, or 28 basis points, down 17 basis points sequentially, reflecting the bank's strong credit performance. The bank's capital management has been prudent, and it expects to continue generating strong organic growth. The announced buyback of up to 8 million shares is seen as a complement to the bank's growth strategy, and the bank is not changing its risk appetite or intensity.

Valuation and Outlook

With a Price-to-Tangible Book Value (P/TBV) of 1.71 and a Dividend Yield of 3.16%, National Bank of Canada appears to be reasonably valued. Analysts estimate revenue growth at 4.6% for next year, indicating a stable outlook. The bank's strong credit performance, coupled with its prudent capital management, positions it well for future growth.

Integration and Synergies

The CWB integration is on track, with client retention successful and no significant client losses during the integration process, as reported by Michael Denham. The bank is focused on realizing revenue synergies as the integration progresses, and the majority of the commercial portfolio is expected to be converted to the Advanced Internal Ratings-Based (AIRB) approach by the end of 2026, which will benefit the bank.

3. NewsRoom

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National Bank of Canada's (TSE:NA) Dividend Will Be Increased To CA$1.24

Dec -06

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Big Six bank bonuses climb on dealmaking profits despite uncertain economy

Dec -05

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National Bank of Canada (NTIOF) Q4 2025 Earnings Call Highlights: Strong Financial Performance ...

Dec -04

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TSX Closer: Sets Fresh Record Close On Improved Commodity Prices and Optimism Around Economy

Dec -04

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National Bank of Canada (TSX:NA) Valuation After Profit Jump, Dividend Hike and Major Acquisition Moves

Dec -04

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How Stronger Core Earnings And New Dividends At National Bank (TSX:NA) Have Changed Its Investment Story

Dec -04

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The Haute-Chaudière Wind Project in Quebec Reaches Financial Close, Paving the Way for Construction Start

Dec -04

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Correction To TSX Closer: Up For the First Time This Week, Back To Near Last Friday's Record Close

Dec -04

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.60%)

6. Segments

Personal and Commercial

Expected Growth: 6.0%

The segment is expected to grow faster than the overall bank due to its strong presence in the Canadian market and the increasing demand for digital banking services. The bank's efforts to expand its digital capabilities are likely to drive growth.

Financial Markets (Excluding USSF&I)

Expected Growth: 5.8%

The segment is expected to grow in line with the overall bank, driven by the increasing demand for risk management services and the bank's diversified revenue streams. The segment's exposure to market volatility is a risk, but the bank's strong market position is likely to mitigate this.

Wealth Management

Expected Growth: 7.0%

The segment is expected to grow faster than the overall bank, driven by the increasing demand for wealth management services and the bank's strong market position. The aging population and increasing wealth are likely to drive growth in this segment.

U.S. Specialty Finance and International (USSF&I)

Expected Growth: 5.0%

The segment is expected to grow at a slower rate than the overall bank, due to the challenging market conditions in the US and international markets. However, the bank's diversified revenue streams and strong market position are likely to mitigate this risk.

Other

Expected Growth: 5.6%

The segment is expected to grow in line with the overall bank, driven by the bank's efforts to optimize its operations and improve efficiency. The segment's growth is likely to be driven by the bank's internal initiatives.

7. Detailed Products

Personal Banking

National Bank of Canada offers a range of personal banking services, including chequing and savings accounts, credit cards, loans, and investment products.

Credit Cards

National Bank of Canada offers a variety of credit cards with different features and benefits, such as cashback rewards, travel insurance, and purchase protection.

Mortgages

National Bank of Canada offers a range of mortgage products, including fixed-rate and variable-rate mortgages, to help individuals purchase or refinance a home.

Investments

National Bank of Canada offers a range of investment products, including mutual funds, exchange-traded funds (ETFs), and portfolio management services.

Business Banking

National Bank of Canada offers a range of business banking services, including business accounts, credit cards, loans, and cash management solutions.

Commercial Banking

National Bank of Canada offers a range of commercial banking services, including commercial loans, lines of credit, and cash management solutions.

Wealth Management

National Bank of Canada offers a range of wealth management services, including investment advice, portfolio management, and estate planning.

Insurance

National Bank of Canada offers a range of insurance products, including life insurance, disability insurance, and home and auto insurance.

8. National Bank of Canada's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for National Bank of Canada is medium due to the presence of alternative financial institutions and digital payment methods.

Bargaining Power Of Customers

The bargaining power of customers is low for National Bank of Canada due to the lack of negotiating power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for National Bank of Canada due to the bank's large size and negotiating power.

Threat Of New Entrants

The threat of new entrants is low for National Bank of Canada due to the high barriers to entry in the banking industry.

Intensity Of Rivalry

The intensity of rivalry is high for National Bank of Canada due to the presence of several major banks in Canada, leading to intense competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 69.33%
Debt Cost 9.53%
Equity Weight 30.67%
Equity Cost 9.53%
WACC 9.53%
Leverage 226.02%

11. Quality Control: National Bank of Canada passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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TD Bank

A-Score: 7.3/10

Value: 5.6

Growth: 6.3

Quality: 4.8

Yield: 8.0

Momentum: 9.0

Volatility: 10.0

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JPMorgan Chase

A-Score: 6.7/10

Value: 5.3

Growth: 5.2

Quality: 6.5

Yield: 5.0

Momentum: 8.5

Volatility: 9.7

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BMO

A-Score: 6.7/10

Value: 3.8

Growth: 6.1

Quality: 3.6

Yield: 8.0

Momentum: 8.5

Volatility: 10.0

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Citigroup

A-Score: 6.2/10

Value: 6.7

Growth: 4.7

Quality: 4.4

Yield: 5.0

Momentum: 8.5

Volatility: 8.0

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Bank of America

A-Score: 6.2/10

Value: 5.6

Growth: 5.3

Quality: 5.0

Yield: 5.0

Momentum: 7.5

Volatility: 8.7

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NatBank

A-Score: 6.1/10

Value: 4.0

Growth: 4.7

Quality: 4.9

Yield: 6.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

170.76$

Current Price

170.76$

Potential

-0.00%

Expected Cash-Flows