NA CN
National Bank of Canada
Finance/Real Estate
04/11/2017
Presented
| Date | 04/06/2017 |
| Price | CA$56.26 |
| Market Cap | $15.44B |
| Ent Value | $46.90B |
| P/E Ratio | 14.14x |
| Book Value | CA$29.51 |
| Div Yield | 0.04% |
| Shares O/S | 343.27M |
| Ave Daily Vol | 1,165,517 |
| Short Int | N/A |
Current
| Price | CA$131.49 |
| Market Cap | $35.78B |
| National Bank of Canada engages in the provision of integrated financial services to retail, commercial, corporate, and institutional clients. It operates through the following segments: Personal & Commercial, Wealth Management, Financial Markets and Others. The Personal and Commercial segment encompasses the banking, financing and investing services offered to individuals and businesses as well as insurance operations. 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. The Financial Markets segment encompasses banking services, investment banking services and financial solutions for institutional clients. Its other business includes 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. The Others segment reports on treasury operations, including the Bank's asset and liability management, liquidity management and funding operations; certain non-recurring items; and the unallocated portion of corporate units. The company was founded on May 4, 1859 and is headquartered in Montreal, Canada. |
Publicly traded companies mentioned herein: Bank of Nova Scotia (BNS; BNS CN), Equitable Group Inc (EQB), Genworth MI Canada Inc (MIC CN), Home Capital Group Inc (HCG CN), JPMorgan Chase & Co (JPM), National Bank of Canada (NA CN)
Highlights
The Canadian housing market has been in a near-constant state of appreciation since the early 2000s, and the Toronto market appreciated +33% year-over-year in March (2017), after +28% y-o-y in February. The presenter thinks the timing and risk/ reward setup are right for a short position in National Bank of Canada, among others, as affordability has become “a major problem” for Canada’s citizens. Vancouver instituted a 15% foreign-buyer tax in August 2015 due to the rapid appreciation of home prices in the area (due to Chinese and Russian money flooding the local real estate market), and while it appears to have started to work, prices are only down slightly since its implementation. However, transaction volume did dry up and foreign money rotated to Toronto, which has helped propel the market to new highs in early 2017. Today, Ontario’s finance minister is reportedly considering a foreign-buyer’s tax as well, something that had been previously dismissed. National Bank of Canada has 50% of its loan book tied to housing in some way, and the presenter thinks downside risk is limited for bears given it is trading at 2.8x book value (at ~56 CAD/ share). The group discussed a number of additional Canadian financial industry companies exposed to the risk of the bubble finally popping, including: Bank of Nova Scotia, Equitable Group, Genworth, and Home Capital Group. However, liquidity and the cost to borrow should be taken into consideration with the smaller companies.
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