Through the second half of fiscal 2020, the National Bank of Canada (TSX: NA) performed exceedingly well and assets under administration and management returned to pre-crisis levels. National Bank’s financial markets segment delivered strong results in 2020. The bank’s global markets franchise was well-positioned going into the crisis and delivered particularly strong growth.
An established leader in selected niche markets
Further, National Bank’s corporate and investment banking franchise also performed well, driven by solid momentum in mergers and acquisitions (M&A) and government debt underwriting. As an established leader in selected niche markets, National Bank’s financial markets business appears to be an important pillar, providing the bank with a diversified earnings stream.
Looking forward, National Bank looks all set to continue to place client support front and centre while maintaining a prudent risk profile. The bank’s performance and positioning of international activities have been excellent. Subsidiaries of National Bank, Credigy in the United States, and ABA Bank in Cambodia have consistently delivered superior returns.
In 2020, ABA Bank grew at a faster pace than the market and surpassed the one million client threshold. Looking forward, both Credigy and ABA Bank continue to have strong momentum and are well-positioned to deliver attractive earnings growth.
Highest standards in corporate governance
In addition, National Bank is putting the full strength of the organization behind the bank’s environmental, social, and governance guiding principles, with the aim to develop a green economy, enrich the bank’s communities, and uphold the highest standards in corporate governance.
A year to the day after signing the United Nations (UN) Principles for Responsible Banking, National Bank announced an ambitious target to reduce the bank’s own greenhouse gas emissions by 25% by 2025, compared to 2019 levels.
Furthermore, National Bank becomes a signatory of the UN Women’s Empowerment Principles in 2020, further strengthening the bank’s commitment to women’s equality. The bank also committed to the Black North Initiative as well as to partnering with the Government of Canada to launch the country’s first-ever Black entrepreneurship program. These are but a few initiatives National Bank is taking to build a better future for all of the company’s stakeholders.
Transparency regarding the bank’s progress
Also, National Bank’s objective appears to be for the bank to further promote diversity and inclusion to ensure that it reflects the diversity of the bank’s clients and society. National Bank has set measurable targets and appears to be transparent regarding the bank’s progress.
Looking back at fiscal 2020, National Bank demonstrated a proven ability to adapt to evolving circumstances. Although the bank remained in the grip of the pandemic at year-end, economic activity has recovered from the lows and National Bank expects gradual improvement in 2021 in the context of continued public health measures and the use of a vaccine.
In this environment, National Bank’s overall strategic positioning appears to be the right strategy.
Resilience and super-regional model
Further, National Bank’s super-regional model with a leading franchise in Quebec, a pan-Canadian footprint in selected activities, and a focused international strategy has demonstrated the bank’s resilience. This should serve shareholders well.
