加拿大国民银行2025年第二季度收益回顾：交易业务提振季度业绩，CWB成为下一个杠杆

2023A10,546.05.1x4.8x 2024A2025E2026E11,243.013,880.915,110.34.8x3.9x3.5x4.5x3.6x3.4x John Aiken, CFA * | Equity Analyst(416) 847-7376 | jaiken@jefferies.comJoe Ng, CFA * | Equity Analyst(416) 847-7396 | jng4@jefferies.comAria Samarzadeh, CFA * | Equity Analyst(416) 847-7398 | asamarzadeh@jefferies.com The Long View: National Bank of CanadaInvestment Thesis / Where We DifferNational's relative growth profile continues to generate some outperformanceon the domestic front, with little relative impact on credit. With NA's acquisitionof CWB closed, we believe the deal will be transformational for National,supporting additional growth and its peer leading ROE.Base Case,C$139, +7%Our base-case price target of $139 for NA is basedon an 11.5x forward P/E against FY26E EPS of$12.11.Sustainability MattersTop Material Issues1)Data Security:Commitment to protecting against data breaches and identifying and addressingsecurity risks.2)Business Ethics:Focusing on the highest professional and ethical standards in the industry andmanaging risks and opportunities surrounding ethical conduct of business.Company Targets1) Reduce greenhouse gas emissions from activities by 25% by the end of 2025.2) Reduce portfolio intensity for the Oil and Gas Producers sub-sector by 31% by 2030.3) Achieve net-zero emissions of its operations and financing activities by 2050.Questions to Management1) What steps have NA taken or plan to take to promote financial inclusion for underbanked/underservedcommunities?2) What actions are the company taking to achieve its diversity & inclusion goals?Please see important disclosure information on pages 8 - 13 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Risk/Reward - 12 Month View1601501401301201101009080Upside Scenario,C$153, +18%Drivenbystronger-than-expectedeconomic growth, our upside scenario of $153 forNA is based on a 10% increase to FY26E EPSagainst a forward P/E of 11.5x. Downside Scenario,C$114, -12%Weighed by weaker and more prolonged economicslowdown, our downside scenario of $114 for NAis based on a 10% decline to FY26E EPS against aforward P/E of 10.5xCatalystsWith the other Big 6 banks less focused in itshome Quebec market, National could continueto take meaningful share from its main nonbankcompetitor, while a relatively robust level of capitaloffers some optionality for potential acquisitionsto support growth. domestic 2 CWB Lifts Earnings Against ExpectationsSecond Quarter Results:PositiveOutlook:NeutralEarnings quality:While NA earned through higher provisions, it was largely on the back ofexceptionally strong trading revenues, which lowered the quality of earnings in our opinion.Operating leverage/performance:On the back of the strong core sequential revenue growth drivenby trading revenues, National was able to generate positive operating leverage in the quarter.Risk:NA's strong capital ratio provides for an offset to higher capital markets concentration andits emerging markets exposure in Cambodia. While integration risk remains with the integration ofCWB, we believe that it is more than manageable as evidenced with its early successes.Figure 1 - NA - EPS Summary.Q2-25 EARNINGS PER SHARE OVERVIEW(in C$ millions)ReportedAdjustments:Adjusting items, netAdjusted Core Earningsvs. JEF - Above/(Below)vs. Consensus - Above/(Below)Source: Company reports, JefferiesNA reported adjusted earnings per share of $2.85, well above consensus expectations of $2.39 andour estimate of $2.45. We note that stronger performances in capital markets and domestic retailresulted in the better than forecast results.On the credit front, total provisions climbed 24% sequentially, coming in at $315MM, essentiallyin-line with consensus' expectations and up over $60MM from the previous quarter. While grossimpaired loans were up in the quarter, this was a direct result of the inclusion of CWB's portfolio. Wenote that, even with a greater skew to commercial post the acquisition, CWB's provisions againstimpaired loans was stable against the first quarter.Juxtaposed against the higher credit losses, NA's regulatory capital ratio declined by 20bps butremains quite strong at 13.4%. In conjunction with the quarter, NA increased its quarterly dividendby 4 cents (or ~3.5%) to $1.18 per share, reflecting a pro forma dividend yield of approximately 3.5%.By segment, Personal and Commercial net interest margin increased by 2bps while average loanswere helped by the CWB acquisition (up 24% sequentially and 31% from a year ago). Adjustedearnings were up strongly on the acquisition, with higher revenues offsetting an increase inprovisions and a pull back in efficiency. In Wealth Management, revenues were up in the quarter,as CWB helped grow AUA and AUM (up 0.7% and 3.0%, respectively against the first quarter)despite the headwinds in the quarter. Expense growth outpaced that of revenues, resulting in aweakened efficiency ratio. On the Capital Markets side, desp