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Press release from CNW Group

National Bank releases its results for the Fourth Quarter of 2012 and raises its quarterly dividend by 5% to 83 cents per share

Thursday, December 06, 2012

National Bank releases its results for the Fourth Quarter of 2012 and raises its quarterly dividend by 5% to 83 cents per share07:21 EST Thursday, December 06, 2012Highlights: $351 million in net income for the fourth quarter of 2012, up 20% from $292 million in the same quarter of 2011;Diluted earnings per share of $1.97 for the fourth quarter of 2012, up 22% from $1.62 in the same quarter of 2011;$1,634 million in net income for 2012, up 26% from $1,296 million last year;Diluted earnings per share of $9.32 for 2012, up 35% from $6.92 last year;Pro forma Common Equity Tier 1 ratio under Basel III of 7.3% as at October 31, 2012.Highlights Excluding Specified Items(1):$343 million in net income for the fourth quarter of 2012, up 13% from $303 million in the same quarter of 2011;Diluted earnings per share of $1.93 for the fourth quarter of 2012, up 15% from $1.68 in the same quarter of 2011;$1,396 million in net income for 2012, up 7% from $1,305 million last year;At $7.86 for 2012, diluted earnings per share was up 9% from $7.18 last year.(1)  The financial reporting method is explained in detail on page 2.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). It should be read in conjunction with the Bank's 2012 Annual Report (which includes the audited annual consolidated financial statements and the 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. 6, 2012 /CNW Telbec/ - National Bank reports $351 million in net income for the fourth quarter of 2012, a 20% increase from $292 million in the same quarter of 2011. Diluted earnings per share for the quarter ended October 31, 2012 stood at $1.97, up 22% from $1.62 in the same quarter of 2011. Excluding the specified items described on page 2, fourth-quarter net income totalled $343 million, up 13% from $303 million in the fourth quarter of 2011, and fourth-quarter diluted earnings per share stood at $1.93, up 15% from $1.68 in the same quarter of 2011.For 2012, the Bank's net income totalled $1,634 million, up 26% from $1,296 million in 2011. Diluted earnings per share stood at $9.32 for 2012, up $2.40 or 35% from $6.92 in 2011. Excluding the specified items described on page 2, the 2012 net income totalled $1,396 million, up 7% from $1,305 million in 2011, and diluted earnings per share stood at $7.86, up 9% from $7.18 in 2011."For the fourth quarter of 2012 and the year as a whole, the Bank performed well on the strength of personal loan growth, financial market trading, and contributions from the Wealth Management acquisitions. Our loan portfolio maintained its excellent quality, placing the Bank among the industry's best. In the quarters ahead, we will continue to invest in a prudent, targeted manner while ensuring sound management of costs and capital," said Louis Vachon, President and Chief Executive Officer.              Financial IndicatorsResultsQ4 2012  Resultsexcludingspecifieditems (1) Results2012      Resultsexcludingspecifieditems (1)            Growth in diluted earnings per common share22 % 15 % 35 % 9 %Return on common shareholders' equity19.8 % 19.2 % 24.5 % 20.7 %Dividend payout ratio33 % 39 % 33 % 39 %Tier 1 capital ratio under Basel II12.0 %    12.0 %   Pro forma Common Equity Tier 1 ratio under Basel III7.3 %    7.3 %               (1)  See the Financial Reporting Method section on page 2.FINANCIAL REPORTING METHOD(unaudited) (millions of Canadian dollars)The Bank uses certain measures that do not comply with International Financial Reporting Standards (IFRS) to assess results. 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 31,2012  October 31,2011  %Change  October 31, 2012  October 31,2011  %ChangeExcluding specified items                   Personal and Commercial 168  157  7  693  627  11 Wealth Management 45  50  (10)  166  187  (11) Financial Markets 124  79  57  501  420  19 Other 6  17     36  71   Net income excluding specified items 343  303  13  1,396  1,305  7 Plus: Items related to the Natcan transaction(1) 1  −     198  −    Plus: Items related to holding restructured notes(2) 81  −     113  −    Plus: Reversal of provisions for income tax contingencies(3) −  −     29  21    Plus: Reversal of allowances for credit losses(4) −  −      −  11    Less: Acquisition-related items(5) (10)  (6)     (27)  (14)    Less: Severance pay and lease terminations(6) (51)  (5)     (62)  (19)    Less: Write-offs of intangible assets(7) (13)  −     (13)  −    Less: Litigation provisions(8) −  −     −  (8)   Net income  351  292  20  1,634  1,296  26Diluted earnings per share excluding specified items$1.93 $1.68  15 $7.86 $7.18  9 Plus: Items related to the Natcan transaction(1) 0.01  −     1.22  −    Plus: Items related to holding restructured notes(2) 0.50  −     0.70  −    Plus: Reversal of provisions for income tax contingencies(3) −  −     0.18  0.13    Plus: Reversal of allowances for credit losses(4) −  −     −  0.06    Less: Acquisition-related items(5) (0.07)  (0.03)     (0.17)  (0.08)    Less: Severance pay and lease terminations(6) (0.31)  (0.03)     (0.38)  (0.11)    Less: Write-offs of intangible assets(7) (0.09)  −     (0.09)  −    Less: Litigation provisions(8) −  −     −  (0.05)    Less: Premium paid on preferred shares repurchased for cancellation(9) −  −     −  (0.21)   Diluted earnings per share$1.97 $1.62  22 $9.32 $6.92  35Return on common shareholders' equity                  Including specified items 19.8% 18.3%    24.5% 20.2%   Excluding specified items 19.2% 19.0%    20.7% 20.9%  (1)On April 2, 2012, the Bank sold the operations of Natcan Investment Management Inc. (Natcan) and acquired a 35% interest in Fiera Capital Corporation (Fiera). During the quarter ended October 31, 2012, the Bank recorded $1 million ($1 million net of income taxes) for its share of the integration costs incurred by Fiera and $2 million ($2 million net of income taxes) in recoveries of costs related to this transaction. During the year ended October 31, 2012, the Bank recorded the following: a gain of $246 million ($212 million net of income taxes), which consisted of a $275 million sale price less $29 million in goodwill, intangible assets and direct charges; $16 million ($11 million net of income taxes) in other charges related to this transaction; and $3 million ($3 million net of income taxes) for its share of the integration costs incurred by Fiera.(2)During the quarter ended October 31, 2012, $111 million ($81 million net of income taxes) in revenue was recorded given a change in the fair value of restructured notes. During the year ended October 31, 2012, $155 million in revenues ($113 million net of income taxes) was recorded, of which $111 million came from a change in the fair value of restructured notes, $34 million from a change in the fair value of commercial paper not included in the Pan-Canadian restructuring plan, and $10 million from gains following capital repayments on restructured notes classified as Available-for-sale securities.(3)During the year ended October 31, 2012, income tax provisions totalling $29 million ($21 million for the year ended October 31, 2011) were reversed as a result of a revaluation of income tax contingencies.(4)During the year ended October 31, 2011, the Bank had recorded a reversal of $15 million ($11 million net of income taxes) in allowances for credit losses taken for loans and credit facilities secured by restructured notes of the MAV conduits.(5)During the quarter ended October 31, 2012, $14 million ($10 million net of income taxes) in charges was recorded relative to the acquisitions of Wellington West Holdings Inc. (Wellington West) and the full-service investment advisory business of HSBC Securities (Canada) Inc. The charges consisted mainly of retention bonuses. During the quarter ended October 31, 2011, $8 million ($7 million net of income taxes) in charges had been recorded following the acquisition of Wellington West, as was a $1 million gain on the revaluation of the initial investment in Wellington West. During the year ended October 31, 2012, $38 million ($27 million net of income taxes) in charges was recorded and consisted mainly of retention bonuses. During the year ended October 31, 2011, the Bank had recorded $29 million in charges ($23 million net of income taxes) as well as a $9 million gain on the revaluation of the initial interest in Wellington West.(6)During the quarter ended October 31, 2012, the Bank recorded $65 million ($48 million net of income taxes) in severance pay  as well as $4 million ($3 million net of income taxes) in lease terminations in order to optimize certain organizational structures. During the quarter ended October 31, 2011, $8 million ($5 million net of income taxes) in severance pay had been recorded. During the year ended October 31, 2012, the Bank recorded $80 million ($59 million net of income taxes) in severance pay and $4 million ($3 million net of income taxes) in lease terminations (2011: $27 million and $19 million net of income taxes).(7)During the quarter ended October 31, 2012, $18 million ($13 million net of income taxes) in intangible assets were written off for internal technology developments considered obsolete.(8)During the year ended October 31, 2011, the Bank had recorded $11 million ($8 million net of income taxes) in litigation provisions.(9)During the year ended October 31, 2011, a $34 million premium had been paid on the Series 21, 24 and 26 First Preferred Shares repurchased for cancellation.HIGHLIGHTS (unaudited) (millions of Canadian dollars)  Quarter ended Year ended  October 31,2012  October 31,2011  % Change  October 31,2012  October 31,2011  % Change                    Operating results                 Total revenues$1,350 $1,169  15 $5,313 $4,666  14Net income 351  292  20  1,634  1,296  26Net income attributable to the Bank's shareholders 333  274  22  1,561  1,224  28Return on common shareholders' equity 19.8% 18.3%    24.5% 20.2%  Per common share (dollars)                 Earnings - Basic$1.99 $1.63  22 $9.40 $7.00  34Earnings - Diluted 1.97  1.62  22  9.32  6.92  35                  EXCLUDING SPECIFIED ITEMS(1)                 Operating results                  Total revenues$1,240 $1,168  6 $4,915 $4,657  6Net income 343  303  13  1,396  1,305  7Net income attributable to the Bank's shareholders 325  285  14  1,323  1,233  7Return on common shareholders' equity 19.2% 19.0%    20.7% 20.9%  Per common share (dollars)                 Earnings - Basic$1.94 $1.70  14 $7.93 $7.26  9Earnings - Diluted 1.93  1.68  15  7.86  7.18  9                  Per common share (dollars)                 Dividends declared$0.79 $0.71    $3.08 $2.74   Book value          40.04  35.65   Stock trading range                  High 77.51  73.51     81.27  81.44    Low 73.89  66.65     63.27  64.86    Close  77.18  71.14     77.18  71.14                                                         As at October 31,2012  As atOctober 31,2011  % Change         Financial position        Total assets$177,903 $166,854  7Loans and acceptances 90,922  80,758  13Deposits 93,249  85,562  9Subordinated debt and equity 10,710  9,505  13Pro forma Common Equity Tier 1 ratio under Basel III(2) 7.3% 7.6%  Capital ratios under Basel II(2)         Tier 1 12.0% 13.6%   Total 15.9% 16.9%  Capital ratios under Basel I(2)         Tier 1 11.0% 11.1%   Total 14.6% 14.1%  Impaired loans, net of individual and collective allowances (190)  (201)    as a % of loans and acceptances (0.2)% (0.2)%  Assets under administration and under management 232,953  242,995   Total personal savings 149,755  138,536   Interest coverage 12.23  10.60   Asset coverage 3.45  3.83            Other information        Number of employees 19,920  19,431  3Number of branches in Canada 451  448  1Number of banking machines 923  893  3(1)See the Financial Reporting Method section on page 2.(2)The 2011 figures have not been restated to reflect the changeover to IFRS.Analysis of ResultsTotal Revenues For the fourth quarter of 2012, the Bank's revenues amounted to $1,350 million, up $181 million or 15% from the same quarter in 2011. Net interest income from the Personal and Commercial segment rose $12 million in the fourth quarter of 2012, as growth in personal loan volume helped offset narrower net interest margins.Also contributing to the total revenue growth were trading activity revenues, both net interest income and other income, mainly due to a $111 million change in the fair value of restructured notes and to revenues from fixed-income securities. Gains on available-for-sale securities increased $20 million, mainly because of a disposal gain on the investments sold during the TMX transaction.Underwriting and advisory fees and revenues from trust services and mutual funds increased by $27 million owing to the integration of Wellington West Holdings Inc. (Wellington West) and the full-service investment advisory business of HSBC Securities (Canada) Inc., and an $11 million increase in revenues from acceptances, letters of credit and letters of guarantee came from volume growth.For 2012, total revenues amounted to $5,313 million, a year-over-year increase of 14% that was attributable to a gain on the sale of the operations of Natcan Investment Management Inc. (Natcan), to revenues related to holding restructured notes, to growth in personal loan volume, revenues from acceptances, the acquisitions in the Wealth Management segment, trading activity revenues, and the share in the net income of associate Maple Financial Group Inc.Operating Expenses For the fourth quarter of 2012, operating expenses stood at $869 million, a $105 million year-over-year increase that was primarily attributable to $65 million in severance pay and $4 million in lease terminations incurred to optimize certain organizational structures in addition to $18 million in intangible asset write-offs for internal technology developments considered obsolete. Salaries and staff benefits also increased, as new branches were opened and variable compensation was incurred as part of the acquisitions of Wellington West and the full-service investment advisory business of HSBC Securities (Canada) Inc.For 2012, operating expenses stood at $3,173 million, a $262 million or 9% year-over-year increase that is explained mostly by the above-described reasons for the quarter and by charges incurred as part of the two Wealth Management acquisitions and certain charges related to the sale of Natcan's operations.Provisions for Credit Losses For the fourth quarter of 2012, the Bank recorded $46 million in provisions for credit losses, $4 million less than in the same quarter of 2011 as fewer provisions were taken for losses on credit card receivables and business loans.For 2012, the Bank recorded $180 million in provisions for credit losses, slightly less than in 2011. A $28 million reduction in the provisions for credit losses in the Personal and Commercial segment was offset by higher provisions in the Financial Markets segment and by the reversal of allowances for credit losses that had been recorded in 2011.As at October 31, 2012, gross impaired loans stood at $387 million, a $20 million decrease from October 31, 2011 that was attributable mainly to business loans offset by an increase in corporate loans. Impaired loans represent 7.5% of the tangible capital adjusted for the allowances as at October 31, 2012 compared to 8.6% as at October 31, 2011. As at October 31, 2012, the allowances for credit losses exceeded gross impaired loans by $190 million compared to $201 million as at October 31, 2011.Income TaxesIncome taxes for the fourth quarter of 2012 rose $21 million year over year. The tax rate stood at 19% for this fourth quarter compared to 18% in the same quarter of 2011. For 2012 and 2011, the effective income tax rates were 17% and 18%, respectively. Excluding the reversals of provisions for tax contingencies, the effective tax rate would have been 18% and 19%, respectively, for 2012 and 2011.Results by SegmentPersonal and Commercial In the Personal and Commercial segment, fourth-quarter net income totalled $157 million, unchanged from the same quarter in 2011. Excluding $14 million ($11 million net of income taxes) in severance pay incurred to optimize the segment's structure, net income was $168 million, rising 7% attributable to sustained business growth and stringent control of operating expenses. Fourth-quarter total revenues increased by $7 million owing to higher net interest income, which rose $12 million, tempered by a $5 million decrease in other 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 2.12% in the fourth quarter of 2012 compared to 2.26% in the same quarter of 2011, mainly due to a decline in the spreads on loans. The decrease in other income was mainly attributable to the higher cost of loyalty programs for certain types of credit cards and a decrease in foreign exchange transaction volume.Personal Banking's total revenues rose $8 million, mainly due to higher loan volumes, especially consumer and mortgage loans and home equity lines of credit, partly offset by a narrowing of net interest margins. Commercial Banking's total revenues were down $1 million, mainly due to a decrease in foreign exchange revenues.The Personal and Commercial segment's fourth-quarter operating expenses increased $13 million year over year, resulting mainly from the severance pay recorded during the quarter. Excluding this item, operating expenses were stable and, at 58%, the fourth-quarter efficiency ratio improved by 1% when compared to the same quarter last year. The segment recorded $4 million less in provisions for credit losses, as lower provisions for losses on business loans and credit card receivables offset higher provisions for personal credit losses.For 2012, the segment's net income rose $55 million or 9% from 2011. Excluding the severance pay charge, net income totalled $693 million and was up 11%. Total revenues increased 3%, essentially for the same reasons as those provided for the quarter. Personal Banking's total revenues were up $73 million or 4%, mainly due to higher volumes for consumer loans, mortgage loans and home equity lines of credit. Commercial Banking's total revenues were up $7 million or 1%. The segment took lower provisions for credit losses than in 2011, with the reduction being attributable to the same reasons provided for the quarter. At 57%, the efficiency ratio for 2012 was unchanged from 2011.Wealth Management In the Wealth Management segment, net income totalled $30 million in the fourth quarter of 2012, down from $44 million in the same quarter last year. Fourth-quarter total revenues amounted to $252 million compared to $243 million in the fourth quarter of 2011, an increase that stems mainly from the acquisitions of Wellington West Holdings Inc. and the full-service investment advisory business of HSBC Securities (Canada) Inc.For the fourth quarter of 2012, the segment's operating expenses stood at $211 million, a $27 million increase that came from the operating expenses of acquired companies, including the charges classified as specified items that consisted mainly of retention bonuses and severance pay.For 2012, the Wealth Management segment generated net income of $331 million compared to $173 million in 2011. Its total revenues amounted to $1,229 million compared to $911 million in 2011, and its operating expenses were $818 million compared to $679 million in 2011. These revenue and expense increases were driven by the same factors provided for the quarter as well as by the gain on the sale of Natcan's operations.Financial Markets In the Financial Markets segment, net income totalled $107 million in the fourth quarter of 2012, up $33 million from $74 million in the same quarter of 2011. Excluding the severance pay incurred to optimize the organizational structure, the segment's net income totalled $124 million, up 57%. On a taxable equivalent basis, fourth-quarter total revenues amounted to $337 million compared to $280 million in the fourth quarter of 2011. The increase came mainly from fourth-quarter trading activity revenues, which rose $44 million year over year on the strength of greater fixed-income securities revenues. Revenues from financial market fees and banking services increased by 8% after greater capital issuance and credit financing activity. Other income increased by $4 million owing to a higher contribution from associate Maple Financial Group Inc.The segment's fourth-quarter operating expenses increased $17 million year over year, as severance pay was incurred in the fourth quarter of 2012 to optimize the segment's structure. This segment's provisions for credit losses balance were nil for the fourth quarters of 2012 and 2011.For 2012, the segment's net income totalled $473 million, up $58 million from 2011. Excluding specified items, the segment's net income was up $81 million or 19% from 2011. On a taxable equivalent basis, total revenues amounted to $1,365 million versus $1,257 million, a $108 million year-over-year increase that was mainly due to higher trading activity revenues from fixed-income securities, mitigated by lower revenues from commodities and foreign exchange transactions. Other income was up, mainly because of a higher contribution from associate Maple Financial Group Inc. and increased business activity at Credigy Ltd. Twelve-month operating expenses stood at $712 million, a $40 million year-over-year increase that stems from severance pay recorded during 2012. For 2012, the segment recorded $4 million in provisions for credit losses, $9 million more than in 2011 when $5 million had been recovered.Financial Market Revenues (taxable equivalent basis)(1)(millions of Canadian dollars)  Q4 Fiscal Year  2012 2011 2012 2011          Trading activity revenues         Equity 61 51 249 241 Fixed income 68 19 212 130 Commodity and foreign exchange 16 31 73 92   145 101 534 463Financial market fees 71 66 278 271Gains on available-for-sale securities, net (3) (2) 49 62Banking services 67 62 252 241Other 57 53 252 220Total 337 280 1,365 1,257(1)     See the Financial Reporting Method section on page 2.Other For the Other heading of segment results, fourth-quarter net income totalled $57 million compared to $17 million in the same quarter of 2011. Specified items, net of income taxes, in the fourth quarter of 2012, included $81 million in revenues related to a change in the fair value of restructured notes, $17 million in charges incurred to optimize some of the Bank's organizational structures, and $13 million in intangible asset write-offs. During the fourth quarter of 2011, no specified item had been recorded. Excluding specified items, net income was down $11 million due to a higher contribution from Treasury in the fourth quarter of 2011.For 2012, net income was up $67 million, mainly reflecting the specified items recorded in 2012 and 2011. The 2012 specified items, net of income taxes, include $113 million in revenues related to holding restructured notes, $17 million in severance pay and lease terminations incurred to optimize certain organizational structures, and $13 million in intangible asset write-offs. In 2011, the specified items, net of income taxes, had included $8 million in litigation provisions, $14 million in severance pay and an $11 million reversal of allowances for credit losses taken for loans and credit facilities secured by restructured notes of the MAV conduits. Reversals of provisions for income tax contingencies amounting to $29 million and $21 million were recorded in 2012 and 2011, respectively.Balance Sheet As at October 31, 2012, the Bank had total assets of $177.9 billion compared to $166.9 billion as at October 31, 2011. Cash and deposits with financial institutions, securities, and securities purchased under reverse repurchase agreements and securities borrowed rose $1.7 billion since October 31, 2011, mainly due to an increase in securities purchased under reverse repurchase agreements and securities borrowed. Loans and acceptances rose $10.2 billion due to sustained growth in residential mortgages and personal loans. As at October 31, 2012, goodwill rose $80 million since October 31, 2011 due to the first-quarter acquisition of the full-service investment advisory business of HSBC Securities (Canada) Inc. offset mainly by a write-off from the sale of the operations of the Natcan Investment Management Inc. subsidiary during the second quarter of 2012.Since October 31, 2011, deposits rose $7.6 billion, reflecting both personal and business deposits. The growth in other financing activities came mainly from liabilities related to transferred receivables, which were up $2.5 billion, following new securitizations in 2012.As at October 31, 2012, the Bank's equity was $8.2 billion, up from $7.5 billion as at October 31, 2011 due mainly to an increase in retained earnings.Shares and Stock Options as at October 31, 2012   Numberof shares $ million     First Preferred Shares    Series 158,000,000 200 Series 168,000,000 200 Series 206,900,000 173 Series 213,410,861 85 Series 242,425,880 61 Series 261,724,835 43  30,461,576 762Common shares161,308,273(1)2,054Stock options7,794,218(1) (1) As at November 30, 2012, there were 161,133,246 common shares and 7,786,925 stock options outstanding.The table below presents the main portfolios:Average Monthly Volumes (millions of Canadian dollars)   October2012 October2011Loans and acceptances    Consumer loans 9,710  9,503 Residential mortgages 46,614  40,817 Credit card receivables 1,902  1,904 SME loans 20,558  19,586 Corporate loans 8,903  6,860   87,687  78,670      Personal savings (balance)     Deposits 43,905  40,433      Full-service brokerage 87,272  79,490 Mutual funds 15,027  13,659 Other 3,551  4,954   105,850  98,103 Business deposits  18,797  16,906 As at October 31, 2012, loan and acceptance volumes totalled $87.7 billion, up $9.0 billion or 11% since October 31, 2011. Year over year, consumer loans rose 2%, especially as a result of indirect consumer loans. Residential mortgage volumes continued to experience sustained growth, rising 14% since last year, with the strongest increase coming from home equity line of credit products. Credit card receivables remained relatively stable over the past year. SME loans advanced 5% since October 31, 2011 mainly due to higher acceptances. Corporate loans grew by a significant 30% after a rebound in activity, particularly in the energy industry.At $43.9 billion as at October 31, 2012, personal deposits were up $3.5 billion or 9% since October 31, 2011, owing essentially to transactional deposits and to the CashPerformer account. Personal savings included in assets under administration and under management were up 8% since the beginning of the fiscal year. This increase was attributable to the acquisition of the full-service investment advisory business of HSBC Securities (Canada) Inc. and growth in private wealth management activities. Business deposits were also up 11% since October 31, 2011.CapitalThe Bank considers credit risk, operational risk and market risk in its approach to managing capital. In accordance with Basel II, the Bank uses the Advanced Internal Rating-Based (AIRB) Approach to manage credit risk and the Standardized Approach for operational risk. For market risk, the Bank mainly uses an approach based on internal models but also uses the Standardized Approach for certain exposures. Detailed information is provided in the Capital Management section of the 2012 Annual Report. The new Basel III capital standards will gradually come into force from January 1, 2013 to January 1, 2019. The Bank expects to achieve compliance with these new standards without resorting to the regulatory event redemption clause included in the capital instruments in question. As at October 31, 2012, the pro forma Common Equity Tier 1 ratio under Basel III was 7.3%, slightly less than the 7.6% ratio as at October 31, 2011.According to the rules of Basel II, the Tier 1 and total capital ratios stood at 12.0% and 15.9%, respectively, as at October 31, 2012, compared to 13.6% and 16.9% as at October 31, 2011. The lower Tier 1 capital ratio was attributable to the application of IFRS, to the acquisition of a 35% interest in Fiera, to a repurchase of one million common shares and to an increase in credit-risk weighted assets due mainly to organic growth. These factors were partly mitigated by net income, net of dividends, the sale of Natcan's operations and the common share issuance related primarily to stock options exercised. The total capital ratio remained steady given the $1 billion issuance of subordinated debt.The risk-weighted assets calculated under the rules of Basel II increased and amounted to $55.9 billion as at October 31, 2012 compared to $50.4 billion as at October 31, 2011.Transaction - TMX Group LimitedOn July 31, 2012, Maple Group Acquisition Corporation (Maple), now TMX Group Limited, a corporation whose investors comprise the Bank and 11 other leading Canadian financial institutions and pension funds, announced that all of the conditions to Maple's offer to acquire up to 80% of TMX Group Inc. (TMX) shares for $50 per share were satisfied.On August 1, 2012, Maple completed the acquisitions of Alpha Trading Systems Inc., Alpha Trading Systems Limited Partnership and The Canadian Depository for Securities Limited. The Bank recognized a gain of $25 million ($18 million after taxes) on the sale of its interests in these three companies.On August 1, 2012, as part of its commitments as an equity participant in Maple, the Bank, through a subsidiary, subscribed $190 million in Maple securities. In addition, the Bank acted as co-underwriter, joint bookrunner and administrative agent on the acquisition financing. As a lender, the Bank granted a $210 million unsecured loan to Maple. Concurrent to the financing, the Bank also arranged and entered into interest rate swaps, retaining a total notional amount of $300 million as at October 31, 2012.On September 13, 2012, the court approved the plan of arrangement under which TMX shares not acquired by Maple at that date would be exchanged for common shares of Maple on a one-for-one basis. On September 14, 2012, Maple held all of the shares in TMX.The Bank, mainly because of its equity interest, debt financing, and presence on Maple's board of directors, has concluded that it exercises significant influence over Maple. The interest in Maple (now TMX Group  Limited) has been accounted for using the equity method since August 1, 2012.Events After the Consolidated Balance Sheet Date Issuance of Preferred sharesOn October 30, 2012, the Bank announced the issuance of 7 million non-cumulative 5-year rate reset Series 28 First Preferred Shares at a price equal to $25.00 per share, for gross proceeds of $175 million. The Bank also granted the underwriters an option to purchase up to an additional one million Series 28 preferred shares. Before the offering closed, the underwriters agreed to purchase an additional one million shares under the terms of this option, bringing the total issuance to 8 million shares and $200 million in gross proceeds. On November 7, 2012, the Bank completed this issuance.Repurchase of Preferred sharesOn December 5, 2012, the Bank's Board of Directors approved the repurchase of all of the issued and outstanding non-cumulative fixed-rate Series 15 First Preferred Shares. This repurchase is subject to the approval of the Office of the Superintendent of Financial Institutions.DividendsThe Board of Directors declared regular dividends on the various series  of  first preferred shares and a dividend of 83 cents per common share,  payable on February 1, 2013 to shareholders of record on December 27, 2012.CONSOLIDATED BALANCE SHEETS(unaudited) (millions of Canadian dollars)  As at October 31,2012 As at October 31,2011ASSETS   Cash and deposits with financial institutions3,249 2,851    Securities    At fair value through profit or loss44,524 47,450Available-for-sale10,374 9,142 54,898 56,592    Securities purchased under reverse repurchase agreements and securities borrowed15,529 12,507    Loans   Residential mortgage33,538 28,921Personal and credit card26,529 24,274Business and government23,182 20,777   83,249 73,972Allowances for credit losses(577) (608)   82,672 73,364      Other assets   Customers' liability under acceptances8,250 7,394Fair value of derivative financial instruments6,696 8,224Due from clients, dealers and brokers1,661 1,779Investments in associates and joint ventures625 201Premises and equipment440 418Goodwill1,063 983Intangible assets778 607Other2,042 1,934   21,555 21,540   177,903 166,854    LIABILITIES AND EQUITY   Deposits   Personal43,905 40,433Business and government46,223 40,524Deposit-taking institutions3,121 4,605   93,249 85,562      Other liabilities    Acceptances8,250 7,394Obligations related to securities sold short18,124 18,146Obligations related to securities sold under repurchase agreementsand securities loaned19,539 20,268Fair value of derivative financial instruments5,600 7,470Due to clients, dealers and brokers1,959 1,351Liabilities related to transferred receivables15,398 12,905Other5,074 4,253   73,944 71,787Subordinated debt2,470 2,000    EQUITY    Equity attributable to the Bank's shareholders   Preferred shares762 762Common shares2,054 1,970Contributed surplus58 46Retained earnings4,091 3,366Accumulated other comprehensive income255 337   7,220 6,481Non-controlling interests 1,020 1,024   8,240 7,505   177,903 166,854CONSOLIDATED INCOME STATEMENTS (unaudited) (millions of Canadian dollars) Quarter ended Year ended October 31,2012 October 31,2011 October 31,2012 October 31,2011Interest income       Loans775 749 3,037 2,917Securities at fair value through profit or loss217 213 926 880Available-for-sale securities43 38 147 157Deposits with financial institutions 4 4 17 15 1,039 1,004 4,127 3,969Interest expense       Deposits195 159 805 627Liabilities related to transferred receivables123 110 427 431Subordinated debt25 23 87 92Other103 126 470 489 446 418 1,789 1,639Net interest income 593 586 2,338 2,330        Other income       Underwriting and advisory fees85 71 318 308Securities brokerage commissions82 89 343 327Deposit and payment service charges58 58 229 228Trading revenues (losses)135 (9) 233 (25)Gains on available-for-sale securities, net 27 7 123 105Card revenues26 33 113 116Credit fees40 42 166 169Insurance revenues27 27 111 111Revenues from acceptances, letters of credit and guarantee56 45 203 166Foreign exchange revenues, other than trading23 27 94 105Revenues from trust services and mutual funds125 112 480 426Share in the net income of associates and joint ventures 4 (3) 29 2Other69 84 533 298 757 583 2,975 2,336Total revenues1,350 1,169 5,313 4,666Provisions for credit losses46 50 180 184 1,304 1,119 5,133 4,482Operating expenses       Salaries and staff benefits543 449 1,953 1,729Occupancy55 49 205 190Technology111 101 414 405Communications17 19 70 74Professional fees52 56 195 185Other91 90 336 328 869 764 3,173 2,911Income before income taxes  435 355 1,960 1,571Income taxes84 63 326 275Net income351 292 1,634 1,296Non-controlling interests18 18 73 72Net income attributable to the Bank's shareholders333 274 1,561 1,224 Dividends on preferred shares11 11 43 53 Premium paid on preferred shares repurchased for cancellation− − − 34 Net income attributable to common shareholders322 263 1,518 1,137Number of common shares outstanding (thousands)        Average - Basic161,763 161,112 161,387 162,425 Average - Diluted163,190 162,771 162,873 164,255Earnings per common share (dollars)        Basic1.99 1.63 9.40 7.00 Diluted1.97 1.62 9.32 6.92Dividends per common share (dollars)0.79 0.71 3.08 2.74CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (millions of Canadian dollars)      Quarter ended Year ended  October 31,2012 October 31,2011 October 31,2012 October 31,2011           Net income 351 292 1,634 1,296           Other comprehensive income, net of income taxes                    Items that will be reclassified subsequently to net income                     Net unrealized foreign currency gains (losses) on translating financial statements of foreign operations 5  54  (20) (34)  Impact of hedging net foreign currency translation gains (losses) (4) (45) 5 37 Net change in unrealized foreign currency translation gains (losses), net of hedging activities 1 9 (15) 3             Net unrealized gains (losses) on available-for-sale securities 2 3 63 118  Reclassification to net income of net (gains) losses on available-for-sale securities (20) (23) (79) (125) Net change in unrealized gains (losses) on available-for-sale securities,net of fair value hedge transactions (18) (20) (16) (7)             Net gains (losses) on derivative financial instruments designated as cash flow hedges (3) 34 (2) 32    Reclassification to net income of net (gains) losses on designated derivative financial instruments (11) (22) (54) (87) Net change in gains (losses) on derivative financial instruments designated as cash flow hedges (14) 12 (56) (55)            Items that will not be reclassified subsequently to net income                   Actuarial gains and losses on employee benefit plans (69) (9) (233) (65)           Share in the other comprehensive income of associates and joint ventures (1) 2 1 1           Total other comprehensive income, net of income taxes (101) (6) (319) (123)           Total comprehensive income 250 286 1,315 1,173           Total comprehensive income attributable to:         Shareholders of the Bank  232 268 1,246 1,101 Non-controlling interests 18 18 69 72INCOME TAXES - OTHER COMPREHENSIVE INCOMEThe income tax expense or recovery for each component of other comprehensive income is presented in the following table:    Quarter ended Year ended  October 31,2012 October 31,2011 October 31,2012 October 31,2011           Net unrealized foreign currency gains (losses) on translating financial statements of foreign operations −  9  (1) (5)Impact of hedging net foreign currency translation gains (losses) 2  (15) 6  11 Net unrealized gains (losses) on available-for-sale securities 6  (8) 26  42 Reclassification to net income of net (gains) losses on available-for-sale securities (12) (3) (34) (43)Net gains (losses) on derivative financial instruments designated as cash flow hedges (2) 7  (1) 4 Reclassification to net income of net (gains) losses on designated derivative financial instruments (4) (5) (20) (32)Actuarial gains and losses on employee benefit plans (26) (4) (86) (24)Total income taxes (recovery) (36) (19) (110) (47)CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY(unaudited) (millions of Canadian dollars)   Year ended October 31 2012 2011     Preferred shares at beginning 762 1,089Repurchase of Series 21, 24 and 26 preferred shares for cancellation − (327)Preferred shares at end 762 762     Common shares at beginning  1,970 1,777Issuances of common shares     Stock Option Plan 93 100 Acquisition of Wellington West Holdings Inc. 2 169 Other 2 (2)Repurchase of common shares for cancellation (13) (74)Common shares at end  2,054 1,970     Contributed surplus at beginning  46 39Stock option expense 15 17Stock options exercised (10) (1)Other 7 (9)Contributed surplus at end 58 46     Retained earnings at beginning  3,366 3,139Net income attributable to the Bank's shareholders 1,561 1,224Dividends     Preferred shares (43) (53) Common shares (498) (445)Premium paid on common shares repurchased for cancellation (62) (399)Premium paid on preferred shares repurchased for cancellation − (34)Share issuance and other expenses, net of income taxes − (2)Actuarial gains and losses on employee benefit plans (233) (65)Other − 1Retained earnings at end  4,091 3,366     Accumulated other comprehensive income at beginning 337 395Net change in unrealized foreign currency translation gains (losses), net of hedging activities (15) 3Net change in unrealized gains (losses) on available-for-sale securities, net of fair value hedge transactions (16) (7)Net change in gains (losses) on derivative financial instruments designated as cash flow hedges (52) (55)Share in the other comprehensive income of associates and joint ventures 1 1Accumulated other comprehensive income at end 255 337     Equity attributable to the Bank's shareholders 7,220 6,481     Non-controlling interests at beginning 1,024 1,022Net income attributable to non-controlling interests 73 72Other comprehensive income attributable to non-controlling interests (4) −Change in non-controlling interests (73) (70)Non-controlling interests at end 1,020 1,024     Equity 8,240 7,505ACCUMULATED OTHER COMPREHENSIVE INCOME As at October 31 2012 2011     Accumulated other comprehensive income    Unrealized foreign currency gains (losses), net of hedging activities (12) 3Unrealized gains (losses) on available-for-sale securities, net of fair value hedge transactions 164 180Gains (losses) on derivative financial instruments designated as cash flow hedges 101 153Share in the other comprehensive income of associates and joint ventures 2 1    255 337SEGMENT DISCLOSURES(unaudited) (millions of Canadian dollars)The presentation of segment disclosures is consistent with the presentation adopted by the Bank for the year beginning November 1, 2011. It reflects the fact that treasury operations, including the Bank's asset and liability management activities, which had previously been presented in the Financial Markets segment, are now presented in the Other heading. The Bank made this change to align the monitoring of its activities with its management structure. Prior period results have been restated to reflect this change.                     Personal and Wealth Financial         Commercial Management Markets Other   TotalQuarter ended October 312012 2011 2012 2011 2012 2011 2012 2011 2012 2011                    Net interest income(1)412 400 49 40 164 135 (32) 11 593 586Other income237 242 203 203 173 145 144 (7) 757 583Total revenues649 642 252 243 337 280 112 4 1,350 1,169Operating expenses389 376 211 184 191 174 78 30 869 764Contribution260 266 41 59 146 106 34 (26) 481 405Provisions for credit losses46 50 − − − − − − 46 50Income before income taxes (recovery)214 216 41 59 146 106 34 (26) 435 355Income taxes (recovery)(1)57 59 11 15 39 32 (23) (43) 84 63Net income157 157 30 44 107 74 57 17 351 292Non-controlling interests− − − 1 1 − 17 17 18 18Net income attributable to the Bank's shareholders157 157 30 43 106 74 40 − 333 274                    Average assets77,448 70,115 1,238 1,029 77,696 78,432 29,312 20,178 185,694 169,754                     Personal and Wealth Financial         Commercial Management Markets Other   TotalYear ended October 312012 2011 2012 2011 2012 2011 2012 2011 2012 2011                    Net interest income(2)1,629 1,572 179 145 613 608 (83) 5 2,338 2,330Other income962 939 1,050 766 752 649 211 (18) 2,975 2,336Total revenues2,591 2,511 1,229 911 1,365 1,257 128 (13) 5,313 4,666Operating expenses1,484 1,437 818 679 712 672 159 123 3,173 2,911Contribution1,107 1,074 411 232 653 585 (31) (136) 2,140 1,755Provisions for credit losses176 204 − − 4 (5) − (15) 180 184Income before income taxes (recovery)931 870 411 232 649 590 (31) (121) 1,960 1,571Income taxes (recovery)(2)249 243 80 59 176 175 (179) (202) 326 275Net income682 627 331 173 473 415 148 81 1,634 1,296Non-controlling interests− − 1 4 3 (1) 69 69 73 72Net income attributable to the Bank's shareholders682 627 330 169 470 416 79 12 1,561 1,224                    Average assets74,792 67,025 1,157 1,026 78,385 73,998 27,010 23,893 181,344 165,942  (1)Net interest income and income taxes (recoveries) 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 ($38 million in 2011). An equivalent amount was added to Income taxes (recovery). The impact of these adjustments is reversed in the Other heading.(2)For the year ended October 31, 2012, Net interest income was grossed up by $172 million ($176 million in 2011). An equivalent amount was added to Income taxes (recovery). The impact of these adjustments is reversed in the Other heading.Personal and CommercialThe Personal and Commercial segment comprises the branch network, payment solutions, insurance, business banking services, and real estate.Wealth ManagementThe Wealth Management segment comprises full-service retail brokerage, direct brokerage, mutual funds, intermediary services, trust services, and third-party financial services.Financial MarketsThe Financial Markets segment encompasses corporate financing and lending, trading activities, corporate brokerage and investing activities.OtherThis heading comprises treasury operations, including the Bank's asset and liability management activities, certain non-recurring items and the unallocated portion of corporate services.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 Outlook for National Bank sections of the 2012 Annual Report, and 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 2013 and the objectives it has set for itself for that period. These forward-looking statements are made pursuant to applicable 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 terms and expressions of similar import.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 2013 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 the allowance 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. Tax laws in the countries in which the Bank operates, primarily Canada and the United States, are major factors it considers when establishing its effective tax rate.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 materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include 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 57 of the 2012 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 the debt crisis in certain European countries; the lowering of the U.S. long-term sovereign debt rating by Standard & Poor's; the lowering of the sovereign debt rating of certain European countries and the impact of changes that affect the Bank's credit ratings; 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 and methods the Bank uses to report its financial condition, including uncertainties associated with critical accounting assumptions and estimates; changes to capital and liquidity guidelines and to the manner in which these items 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 2012 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 2012 Results Conference CallA conference call for analysts and institutional investors will be held on December 6, 2012 at 1:30 p.m. ET.Access by telephone in listen-only mode: 1-866-226-1792 or 416-340-2216.A recording of the conference call can be heard until December 15, 2012 by dialing 1-800-408-3053 or 905-694-9451.The access code is 7648660#.WebcastThe 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.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 2012 Annual Report (which includes the audited annual consolidated financial statements and the accompanying management's discussion and analysis) is also available on National Bank's website.      SOURCE: National Bank of CanadaFor further information: 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 Senior Director Public Affairs 514-394-8644 Hélène Baril Senior Director Investor Relations 514-394-0296