The annual meeting of shareholders is about to begin. Please take your seats.
Le président du conseil d'administration de la Banque Nationale.
The Chairman of the Board of the National Bank of Canada, Mr. Jean Houde. Good morning, everyone. My name is Jean Houde, as Chairman of the Board of Directors, I am delighted that you are joining us both in person and remotely for the bank's 2023 annual meeting of shareholders. This, in fact, is our first meeting of shareholders that taking place in person since April 2019, in fact, is the very first time that we're holding a hybrid meeting, we're very proud of this. With me are Laurent Ferreira, President and Chief Executive Officer, and Dominic Paradis, Senior Vice President, Legal Affairs and Corporate Secretary, who will act as secretary of the meeting. The members of the board of directors and the senior leadership team are also here in person. They join me in welcoming you very warmly.
I will have the opportunity to introduce the directors to you when the time comes for their election. I would also like to welcome the representatives from Deloitte who are present with us in the room.
Good morning. My name is Jean Houde. As Chairman of the Board, I'm delighted that you are joining us both in person and remotely for the Bank's 2023 annual meeting of shareholders. We are pleased to announce that this is our first annual meeting of shareholders taking place in hybrid mode and the first in person since April 2019. With me are Laurent Ferreira, President and Chief Executive Officer, and Dominic Paradis, Senior Vice President, Legal Affairs and Corporate Secretary, who will act as Secretary of this assembly. The members of the board of directors and the senior leadership teams are also here in person, joining us to welcome you. I will take the opportunity to introduce you to the directors when the times comes to their election. I would like to welcome the representatives of Deloitte, who are also present with us.
We are pleased to announce that two new candidates are running for election to your board of directors. First, Ms. Annick Guérard, President and Chief Executive Officer of Transat A.T. Ms. Guérard's extensive professional experience and her knowledge of risk management, information technology, and customer experience are major assets for the board. Her biography can be found on page 25 of the circular. Another nominee for election is Mr. Pierre Pomerleau, President and Chief Executive Officer of Pomerleau until August 1st, 2023. Mr. Pomerleau's impressive background in business management, combined with his extensive expertise in the fields of sustainable development and innovation, as well as his entrepreneurial leadership, represent significant assets for the board. You will find his biography on page 30 of the circular.
In addition, we wish to thank Andrée Savoie and Pierre Thabet, who are with us this morning and who are not seeking reelection as Directors after eight and 12 years of loyal service, respectively. We recognize their commitment and their positive impact on the bank. You will find the code of procedure for the meeting at nbc.ca/investors in the annual meeting section. Copies of this document are also available in the meeting room. The proceedings will be conducted primarily in French. Anyone addressing this assembly may use either English or French. The proceedings are being translated simultaneously in both languages on the webcast and on the phone lines. Headsets are also available at the entrance of the room for those who wish to use them and listen to the interpretation.
The code of procedure for the meeting can be found on nbc.ca investors in the annual meeting section, and copies are also available in the meeting room. The proceedings will be conducted in French. However, anyone addressing this assembly may use either English or French. The proceedings are being translated simultaneously in both languages on the webcast and the phone lines. Headsets are also available at the entrance of the room for those who wish to use them.
Shareholders present in the room will be invited to vote at the appropriate time during this meeting. For those shareholders attending virtually, I will now ask Dominic Paradis to take a few minutes to explain how the online voting will unfold. Dominic, over to you.
Thank you, Mr. Chairman. As a reminder.
Shareholders and proxy holders who have registered online via the IHaveAccess option on the Lumi Global platform will be able to submit questions in connection with each proposal. You may submit questions via chat using the Ask a Question dialog box, or verbally by submitting your telephone number and identifying the proposal in question so that Lumi Global can reach you by telephone at the appropriate time. It is also possible to submit questions of general interest that will be reviewed during the question period after the official part of the meeting, after the business part of the meeting is over, and following the same procedure I have just described. In order for your questions to be asked in a timely manner, we ask that you submit your questions or your phone number with a short subject line as soon as possible.
Please be sure to indicate whether you are speaking as a shareholder or proxy holder. Please note that your questions and telephone number will not be visible to other meeting participants.
Thank you, Dominic. The meeting will proceed as follows. First, I will say a few words, Laurent Ferreira will speak. We will proceed with the receipt of the financial statements, the election of directors, the executive compensation proposal, the appointment of the independent auditor, and the shareholder proposal to be voted on. This year, we received five proposals from MÉDAC, of which one is being voted on. The details of the proposal number one, can be found on page 144 of the circular. The Bank and MÉDAC have agreed to also include in the circular, for information purposes only, and without submitting them to a vote, proposals number two through five.
Mr. Willie Gagnon will briefly present all the proposals on behalf of MÉDAC. In addition, a proposal relating to racial equity audits was submitted by SHARE on behalf of the Atkinson Foundation. Following discussions with the bank, the proposer agreed to withdraw this proposal. In closing, a question and answer session is scheduled after the formal portion of this meeting. In the interest of efficiency, I ask all speakers in the room or online to identify themselves, to indicate whether they are speaking as a shareholder or proxy holder, and to be brief and respectful of the time allotted to each topic. Please wait until the question period to ask general questions related to the operations of the bank and its subsidiaries. We ask that you avoid questions of a personal nature, and in the interest of efficiency, we may group together questions touching on similar topics.
Some of the statements that will be made today contain or may contain forward-looking statements. I invite you to consult our financial reports and the management proxy circular for more details regarding forward-looking statements, as well as non-GAAP financial measures and additional financial measures. I appoint Ms. Martine Gauthier of Computershare Trust Company of Canada to act as scrutineer for this meeting. She has informed me that a quorum has been reached. I have been informed that the notice of meeting was sent to shareholders in accordance with applicable legislation. I therefore declare this meeting duly convened and constituted. I would now like to say a few words on my own behalf. Although we navigated an uncertain economic environment during 2022, the bank delivered a strong financial performance and maintained its preferred market position.
We also began 2023 with an enviable performance in our first quarter, a result of the strength and success of all our business lines. This is a testament to the strength and adaptability of our organization and our balanced business mix strategies. In 2022, the board of directors continued to implement its key priorities, these being oversight of the three-year strategic plan, digital transformation and technology investments, culture and talent development, effectiveness of cybersecurity programs, and implementation of our environmental, social, and governance guidelines. Throughout fiscal 2022, and in pursuit of our mission to put people first, the bank continued to advance initiatives with positive impact with regard to all our stakeholders.
As a systemically important bank and a key player in the Canadian financial industry, the bank is committed to understanding and reducing the impact of its operations on the environment and to contributing to the communities in which it operates by implementing practices that support a smooth energy transition, inclusion and diversity, and good governance. Throughout 2023, the board will continue to oversee the implementation of the ESG guiding principles, including the provision of sustainable products and services, inclusion and diversity, and assisting our customers with their energy transition. 2023 will also be marked by the bringing together of our various teams in our brand new building at Place Banque Nationale, National Bank Place, located at 800 Saint-Jacques in Montreal, which is nearing completion.
The bank is very proud to provide a work environment that is on the cutting edge of technology and represents the best environmental standards, that promotes the well-being of its employees and their work-life balance, and that fosters collaboration across the full range of services it offers to its clients. I would like to extend my sincerest thanks to all our employees for their daily efforts and their commitment to the bank's success. The bank delivered a sustained performance in 2022, and much of this success is attributable to the significant contribution of our employees. Finally, I would like to highlight the remarkable commitment that each member of the senior leadership team has demonstrated throughout the past year under the leadership of our new President and Chief Executive Officer, Mr. Laurent Ferreira.
We have skilled and experienced leaders throughout the bank, all of whom have contributed to making a positive impact on each of our stakeholders. In closing, as announced when our circular was published on March second, I will be stepping down as a director and as Chairman of the Board of Directors at the end of this meeting. I would like to thank my colleagues on the board, the two Presidents and Chief Executive Officers, Louis Vachon and Laurent Ferreira, and the management teams with whom I've had the pleasure of working, as well as all the employees for their trust and the opportunity to have participated in the transformation of the bank during my terms. It's been a privilege to serve you for 12 years, and an honor to have chaired the Board of Directors for the past nine years.
I am very proud of what we have achieved together. It gives me great pleasure to introduce Robert Paré, who will take on the role of chairman of the board following his re-election at the end of this meeting. I have had the pleasure since 2018 of working with Mr. Paré in our various board activities while he has served as a director, as well as a member of the Conduct Review and Corporate Governance Committee, the Human Resources Committee, and the Technology and Operations Committee. Mr. Paré's contribution to the board is based on over 40 years of experience in business law, including more than 30 years as a senior partner of a major law firm, and on his extensive knowledge of capital markets, mergers and acquisitions, legal affairs, and corporate governance.
His leadership and extensive skills as a director of large public companies are also great assets to the bank, and I am fully confident that he will be able to fulfill his new responsibilities with flying colors. I would now like to invite Laurent Ferreira, President and Chief Executive Officer, to address you.
Thank you very much, Jean. Good morning. I'm delighted to welcome you this morning to our annual meeting of shareholders. The members of the senior leadership team are also in attendance, Stéphane Achard, Lucie Blanchet, William Bonnell, Étienne Dubuc, Marie-Chantal Gingras, Denis Girouard, Brigitte Hébert, Julie Lévesque, and Ghislain Parent. I would like to begin by acknowledging the retirements of two members of the senior leadership team, Martin Gagnon and Ghislain Parent, who contributed greatly to the bank's performance and success for many years. On behalf of the entire team, I thank them.
I would also like to welcome Michael Denham, who will join the senior leadership team as of June the first as Senior Executive Vice President, Corporate and Private Banking. Finally, I would like to acknowledge the commitment and outstanding contribution of two excellent members of the board, Andrée Savoie and Pierre Thabet, whom I thank very deeply for all their contribution. In particular, I would like to take my hat off to Jean Houde for his outstanding commitment and contribution. He's led the board of directors for the past nine years and has been of great help to me as I took on my new duties as CEO. Thank you so much, Jean. We also would like to thank Robert Paré for accepting the position of Chairman of the Board of National Bank. As of today, taking over very ably from Jean Houde.
In 2022, we continued to operate in an environment of uncertainty, which will persist into 2023. Inflation remains high and geopolitical risks persist. The banking sector is also experiencing turbulent times. As we've seen recently with the troubles experienced by some American and European financial institutions, Canada's banking system is internationally renowned for its rigorous risk management. It is highly regulated, strong, and resilient. National Bank also stands out internationally because of its sterling reputation in Canada and abroad. We've pulled in excellent results in the past financial year, thanks to the performance driven by all business segments. The bank's net income increased by 8% over the previous fiscal year. Once again, this year, we maintained positive operating leverage. Capital and liquidity levels are strong, and credit loss provisioning remains prudent.
Our return on equity continues to lead the industry, and we also continue to generate ongoing profitable growth for our shareholders. Total shareholder returns over three, five, 10, and 20 years is the best among the major Canadian banks. Our sustained performance demonstrates that we're making the right strategic choices and doing so year after year. This success is due to all our employees who embody the bank's values on a daily basis and to the trust placed in us by our clients. We look to the future with confidence, building on solid fundamentals, these being our entrepreneurial culture that recognizes team performance, our strategic choices that are successful and sustainable over the long term, and our disciplined approach to capital allocation, as well as cost and risk management.
Listening to our clients remains a priority. We're continuing to invest in our activities to support our clients in order to provide them with adapted tools and advice. We are a bank built on relationships. Our culture is an asset that allows us to go through rough times in all the services we provide to our clients. The bank is proud of its heritage, which gives it a unique cultural identity. This bank was founded in Quebec City and is now the only systemically important bank headquartered in Montreal.
I would like to say a few words on the topic of energy transition. The bank continues to support the energy transition and the decarbonization of our economy. We believe that being pragmatic and committed to action is the best path forward, and we acknowledge that there is much to be done. We are focusing on two areas within our reach. First, managing the effects of our activities on climate change, and second, supporting our clients in their transition. In doing so, the bank can progress towards its goal of reaching net-zero emissions for its operations and financing activities by 2050. For many years, our loan portfolio in renewable energy has been growing faster than non-renewables.
Since 2019, we have provided more than CAD 10 billion in financing for renewable energy projects in North America as we continue to support the oil and gas industry in their transition and decarbonization efforts. That being said, the energy transition is going to need significant investments. The cost for Canada's 2050 transition to net-zero is estimated at CAD 2 trillion in public and private capital. More than ever, geopolitical risks are highlighting the importance of reducing our dependence on supply chains, especially in the energy sector where Canada's security must be prioritized.
As a Canadian bank, our role is to first provide capital and funding to infrastructure projects in renewable energy, drive investment in clean technologies such as carbon capture, utilization, sequestration, support transition fuels such as natural gas and LNG projects, and finally, support our natural resource industry in developing and growing the supply of critical minerals, metals that are necessary for the transition. To succeed, our government's priority must be to foster an environment that is attractive to investors and where talent and capital are prioritized and incentivized. Energy transition is a generational opportunity for Canada. It is also a wealth creation opportunity that is critical to secure the future of our social programs. As for us, we will keep doing our part.
When it comes to inclusion and diversity, we act with humility and determination. More than 25% of our workforce is made up of talent from cultural communities, representing more than 140 countries and 65 languages spoken. Additionally, the bank has a long-standing relationship with Indigenous Peoples, whether as clients, employees, or community groups. On the financial and entrepreneurial front, our bond program has enabled the First Nations Finance Authority to make CAD 1.9 billion available for economic infrastructure development. In 2022, we established an employee resource group, the Indigenous Network. It has close to 300 members, both Indigenous and allies. On the philanthropic front, the bank also supports several organizations and initiatives. For example, the Right to Play program, the Children's Aid Foundation of Canada, and the Winnipeg Art Gallery for the promotion of Inuit art.
More recently, we have undertaken a certification process to develop progressive relationships with Indigenous peoples through the Canadian Council for Aboriginal Business. This involvement is structured in four pillars, namely the role of management, employee experience, business development, and relations with Indigenous communities. We intend to continue learning to advance our relationships with the different nations. It is in this spirit of respect and recognition that National Bank wishes to highlight the fact that today's meeting is taking place on territories that have been occupied by Indigenous peoples for thousands of years. The Bank is proud to contribute to the development of communities. The construction of our new headquarters, which will be named Place Banque Nationale, is a good example of our actions. We did this because we believe in the importance of developing innovative structures to energize our cities.
National Bank will be playing an essential role in furthering the vitality of downtown Montreal over the next few months. It will gradually welcome its first employees. Ultimately, 12,000 employees will occupy the building. It will also be a gathering place and a hub, which will help to bring traffic to the downtown core and local businesses. With this in mind, I invite the entire business community to commit to bringing downtown Montreal to life. This is a shared responsibility. I urge you to live up to it.
On the economic front, the outlook remains challenging for the foreseeable future. Despite the uncertainty, the bank is well-positioned to keep delivering strong performances and returns. Our priorities are to speed up our growth in Canada and increase our market share in targeted segments.
The members of the senior leadership team join me in recognizing once again the contribution and dedication of our 30,000 colleagues. We also thank the members of the board of directors for their support and commitment throughout the year.
I'd like to thank all employees for their dedication, the board of directors for their support, and our clients and shareholders for your trust.
Lastly, we are grateful to our clients whom we are privileged to serve, and to our shareholders for their renewed confidence. Thank you for joining us today.
Thank you, Laurent. We have now reached the point in our meeting when we receive the financial statements. The bank's consolidated financial statements for fiscal 2022 and the independent auditor's report were sent to shareholders who requested them. These documents are also available online. The financial statements have already been approved by the board of directors in accordance with the Bank Act. To complete this agenda item, I hereby declare that the consolidated financial statements and the independent auditor's report for the year ended October 31st, 2022 have been received. We are now entering the voting period.
I would like to ask Dominic Paradis to give you a brief reminder of the general rules that apply to the conduct of the vote. Dominic.
The preliminary voting results will be released at the end of the meeting, and the final detailed report on the voting results will be filed on the bank's website and on SEDAR later today. We will proceed by secret ballot for each of the proposals. Shareholders who have already voted by proxy do not need to vote again unless they wish to revoke their proxy. Shareholders and proxy holders will be asked to vote on each of the proposals, and their ballots will be collected by the scrutineers at the end of the voting period. Your ballots must be signed to be valid.
If you have any questions about your right to vote or concerning the ballots, please speak to one of the scrutineers who will be going around the room. For shareholders attending online, shareholders who have not yet voted in advance and proxy holders will be able to use the 15-digit control number previously received from Computershare to vote online at the appropriate time. Shareholders who've already voted in advance do not need to vote again unless they wish to change their vote. Shareholders and proxy holders will be asked to vote on each of the proposals, and their votes will be counted and transmitted to the scrutineer in a secure and confidential manner. The voting platform will be open as of now for voting on all proposals and will close when the Chairman of the meeting declares the vote closed after the conclusion of the final proposal.
To vote, simply select your voting choice from the options displayed on your screen. A confirmation message will appear to indicate that your vote has been received. If the voting options do not appear on your screen, please click on the ballot icon at the top of your screen.
Thank you, Dominic. We will now proceed with the consideration of the proposal submitted by the bank's senior leadership team. In order to facilitate this meeting, we have asked an employee ahead of time who is also a shareholder of the bank to present management's proposals. The composition of the board is an essential element of our governance. We have a very capable and diverse board in all its forms, including culture, gender, experience, and geographic representation. Board succession is supported by an ongoing process that identifies potential directors whose profiles match the bank's values and mission.
As chairman of the board, I would like to take this opportunity to sincerely thank my colleagues on the board who bring their experience and knowledge to the bank. To learn more about their respective backgrounds, I invite you to consult their biographies, which are available in the circular on pages 19 to 32, as well as on nbc.ca/investors in the Governance section. In accordance with a resolution adopted by the board of directors, we will be electing 14 directors this year. Their names and photographs will appear on the screen when the proposal is presented. I now call on Linda Taklit to propose the election of the director nominees. Linda.
Mr. Chairman, I move that each of the nominees set forth in the circular be elected as director of National Bank of Canada to hold office until the close of the next annual meeting or until such office is vacated. The nominees are Maryse Bertrand, Pierre Blouin, Pierre Boivin, Yvon Charest, Patricia Curti, Gerardo Grou, Laurent Ferreira, Annick Guérard, Karen Kinsley, Lynn Loewen, Rebecca McKillican, Robert Paré, Pierre Pomerleau, Lino A. Saputo, Macky Tall.
Thank you, Linda. Nobody is asking for the floor in the room. Dominic, are there any questions with regard to this proposal from people attending online?
No, there are no online questions or comments, Mr. Chairman.
I now invite shareholders to elect their directors. We now move on to the advisory vote on the board of directors' approach to executive compensation.
By submitting its approach to executive compensation to an advisory vote, the board is demonstrating its commitment to the Bank shareholders and acknowledges its responsibility for executive compensation decisions. During fiscal 2022, the board and the Human Resources Committee continued to review good governance practices with regards to compensation in an environment where best practices are constantly evolving. I invite Ms. Taklit to present this proposal.
Mr. Chairman, I move that on an advisory basis and without diminishing the role and responsibilities of the board, the holders of common shares accept the approach to executive compensation disclosed in the National Bank of Canada's management proxy circular.
Thank you, Linda. I see that Mr. Gagnon has asked for the floor with a question or comment. You have the floor.
Good morning, Mr. Chairman. I am Willie Gagnon. I act on behalf of the Mouvement d'éducation et de défense des actionnaires , MÉDAC.
I'm sorry to have to intervene every single time. I take the floor at every AGM to discuss executive compensation. Obviously, you understand why I have come to the microphone regardless of the outcome of today's vote. We assume that it will be very high. We see that compensation of the highest-paid individual at the bank is such that the compensation ratio, that is to say, the comparative ratio between that compensation and the median salary of the bank's employees is very high and well exceeds the 20x-30x advocated by Mr. Claude Béland. This ratio is still not disclosed. It is still not published. Desjardins does publish its ratio, and Scotia has also just published a ratio with regard to its employees in Canada. This ratio must be disclosed in the United States. I'd like to know what you're waiting for.
Why do you not publish it? This would allow the bank to adopt criteria to achieve a reasonable ratio. We're very unhappy to see that compensation seems to meet only two criteria, i.e., performance of the position and the size of the bank. When you look at the graph of the size of banks in Canada, and you compare this with the compensation of executives of banks, we see that the largest pay their CEOs more, as though it was more difficult to manage a bank twice the size. I'm sure that your CEO works full-time. Be that as it may, you understand the purpose of my intervention. Once again, I'm sorry to have to keep repeating this message. I go through this same dance every single year.
In conclusion, I would like to say that if it were the general population voting for the approval of this compensation rather than just the shareholders, the results of the vote would probably be different. Thank you.
Thank you, Mr. Gagnon, for that statement. You are very consistent indeed year-over-year. I'd like to point out that all questions concerning compensation are studied very carefully by the board of directors of the bank, including the issue that you just raised. We believe that the information we provide about compensation, as well as the justification for the compensation of our senior executives, is entirely in accordance with best practices, and more particularly, is compliant with the bank's performance. Dominic, any questions?
No, no online questions or comments have been submitted.
Thank you. I now ask shareholders to vote on this proposal.
We will now deal with the appointment of the independent auditor. The bank proposes that the professional chartered accounting firm Deloitte be appointed. I invite Ms. Taklit to present this proposal.
Mr. Chairman, I move that the professional chartered accounting firm Deloitte be approved, be appointed rather, as the independent auditor of the bank for the fiscal year beginning November 1st, 2022, and ending October 31st, 2023.
Dominic, are there any questions or comments?
No, Mr. Chairman, no questions or comments.
I invite shareholders to vote on this proposal. We will now proceed with the vote on the proposal of the Mouvement d'éducation et de défense des actionnaires, MÉDAC. I remind you that the text of the proposal and the bank's response can be found in section seven of the circular, beginning on page 144. I would now invite Mr. Willie Gagnon, representative of MÉDAC, to present the shareholder proposal submitted to a vote and to give a summary of the proposals not submitted to shareholder vote. Mr. Gagnon.
Once again, Willie Gagnon on behalf of MÉDAC. Thank you, Mr. Chairman. I'd like to begin by talking about the proposals that are not submitted to vote, and then I'll conclude with the one that is submitted to a shareholder vote. This will make it easier, I believe, for you to call the vote with your permission. Proposal number two was aimed at having languages mastered by directors be disclosed in the circular. You've done so. I'm happy to see this. All banks have done this. The difference with you is that this disclosure is broken down by director.
You've demonstrated that there's no legal obstacle to disclosing this on a director-by-director basis, and we're going to use your example to ask this from the other banks who have chosen to disclose languages spoken by directors without breaking this down on an individual basis. However, you don't disclose any languages other than the official languages. It would be a nice idea to disclose any indigenous languages as mastered by directors or any foreign languages. Languages, in other words, from parts of the world where the bank has significant activities. We're happy with the result of our discussions on this point. Just give me a second. I dealt with the proposals in the wrong order. We're also asking for increasing efforts towards energy and environmental transition. We see from your answer a lot of information that we were looking for.
We wanted this information to be gathered together in the same place in the circular. We believe that the scorecard that this creates should be disclosed every year. We're happy to be able to find all this information in one same spot. Now, proposal number four deals with artificial intelligence. We were hoping that artificial intelligence be included in the mandate of this committee. We see that the Technology Committee, which used to be a subcommittee, became a fully fledged committee in 2022, and that the Technology Committee will be dealing with issues pertaining to artificial intelligence. Proposal number five, updating the role of the Human Resources and Compensation Committee.
We've been able to see that every year, the report in the circular with regard to the work of that committee dealt only with the part of the committee's work concerning compensation of the executives. This committee has other responsibilities with regard to human resources, for example. The content of this report has been enhanced to take this into account. We're happy with this outcome as well. Which brings us to the proposal that is submitted to shareholder vote. It is the only proposal that we have submitted to shareholder vote with regard to all the Canadian banks. This is a proposal we sent to you last year with substantial results, we believe, because the Canadian Banks Act are at about 20% among them, which is an argument that can be invoked with regard to all our proposals, by the way.
I'm talking about the advisory vote on environmental policy, on environmental policies. It is proposed that the bank adopt an annual advisory voting policy with respect to its environmental and climate action plans and objectives. In your reply, we see that the dialogue mechanism is more effective than an advisory vote. We are in no way suggesting that you should backtrack from your dialogue practices. Quite the reverse. We wish to add to these practices by adding an advisory vote on environmental policies. If this argument were valid, you would simply not be holding any consultative or advisory vote on compensation, for example. You also state that discussions should be focused on things other than climate-related issues. We agree with you on this. This practice has already been implemented in a number of Canadian corporations.
Some voting advisors believe that only corporations with a major environmental impact should hold a vote of that type. Therefore we call on all shareholders, of course, to endorse this proposal, which last year obtained a 22% vote in favor. I don't know what you feel about this, we continue to feel that this is a substantial result. Mr. Chairman, I would very much like to hear from you about this issue before you call the vote, if this were possible. Thank you. I'm going to ask our Chief Executive Officer to reply or to give you some comments about this proposal.
Thank you. Mr. Gagnon. Energy transition is a complicated issue. We're working very hard on this. There's still a great deal of work to do with respect, for example, to data gathering.
As a financial institution, you are right to point out that we have a role to play. One of the things that we've done, I mentioned this in my presentation, is that we have put a great deal of effort into energy transition and into initiatives related to energy transition. I think that with that, with the disclosure of our targets, our interim targets, we've got one relating to oil and natural gas, and we've disclosed two other targets, one with respect to real estate construction and the other one dealing with energy production. I believe that with all of this, we are moving forward, Mr. Gagnon. I think we're doing a very good job. I think that we're disclosing these issues to all our stakeholders. I'd like to add a couple of points with your permission.
I'd like to remind you, and this is public knowledge, that Laurentian Bank agreed to holding this advisory vote. What we're proposing here does not intend to say that the bank is performing badly from an environmental standpoint. We're fully aware of all the commitments you've made and all the things that you've promised and all the things that you're actually doing. That is not the point. That is not the topic. The topic is implementing an advisory vote on your environmental policies since they're good, or put it this way, they're better than those of the other banks. You don't have anything to fear from the outcome of such a vote if you were to allow it to go forward. What we're asking shareholders is to approve the proposal that you adopt an annual advisory voting policy.
This would simply add on to what you already do, and it has nothing to do with your current environmental behavior. It is not a criticism thereof. All right, we will take that under review. Thank you, Mr. Gagnon. Dominic, have any questions come in from the online voting platform related to this proposal?
No. No questions and no comments, Mr. Chairman. Yes? I do apologize, ma'am. Go ahead.
My name is Andrea T. Bobkowicz. I'm a shareholder, and I've also been a proud employee for 21 years with National Bank Financial. I would just like to switch to English because I want to get my words right. About your proposal number five, about your revision of the human HR, and just make a tiny request. Number one, I want to comment on the wellness.
The bank has done an exceptional job during COVID and during the whole transition, so I want to applaud the bank as an employee, as someone who's received incredible feedback from the institution. It's been an incredible transition. If you're gonna continue on that, please continue. It's been very well-received. The second thing is diversity and inclusion. When it comes to the numbers, I feel the numbers are increasing slowly, but please take a look at the whole picture. I've seen the numbers internally at National Bank Financial, is that a lot of women are increasing and growing, but front-facing, not as many. I'd like to see that sort of mixture increase as well. When you look at the diversity of women in the business, consider the front-facing as well, not just the back. I like to just highlight that. Please, when you do the revision.
It's just a comment. Thank you.
Thank you, madam. I see Madame Hébert, being perfectly in line with your comment. That's the goal of the human resources, at the bank. Thanks for your comment. Any further questions?
No, Mr. Chairman. No further questions or comments have come in.
Very well. I invite shareholders to vote on MÉDAC's proposal. This concludes the voting period. For shareholders and proxy holders online, the voting platform will be closed as of now. For shareholders in the room, please raise your hands so that the scrutineer's representatives can collect your ballot if you haven't yet handed it in. The following are the results of the preliminary votes as reported to me by the scrutineer's representatives. Shareholders holding common shares of the bank, representing at least 55% of the issued and outstanding shares, voted by proxy and through voting instruction forms.
All nominees for election as directors were elected and received at least 97% of the votes cast in favor of their election. The advisory resolution to accept the board's approach to executive compensation was passed with over 95% of votes in favor. Deloitte was appointed independent auditor for the fiscal year ending October 31st, 2023, with over 88% of votes in favor. The proposal from MÉDAC was not approved, receiving approximately 18% of votes in favor. The final detailed report on the voting results will be posted on the bank's website and on the SEDAR website later today. The bank will also issue a press release announcing the election of directors. This completes the review of the various items on the agenda for the 2023 annual meeting of shareholders. We will now open the floor to questions.
Questions should be of interest to all shareholders, and only matters relating to the operations of the bank or its subsidiaries may be addressed. If your question is of a personal nature, a representative of the bank may contact you after the meeting. In the event that we do not have time to answer all questions, and if you have identified yourselves, we will undertake to contact you to answer your question. I would like to remind shareholders and proxy holders registered on the Lumi Global virtual platform that they can submit questions online. You may participate in the question period either by chat using the Ask a Question dialog box, where a bank representative will then read the question out loud, or you can do it by submitting your question, your telephone number via the Ask a Question dialog box so that Lumi Global can reach you by telephone.
Please be sure to indicate whether you are a shareholder or a proxy holder, as well as the subject of your question. I would also invite any shareholders or proxy holders in the room who wish to speak to step forward to one of the microphones in the aisles and to identify themselves. I would now like to invite our President and Chief Executive Officer, Mr. Ferreira, to the microphone to lead the question period. Laurent.
Thank you, Jean. Questions.
My name is William Weisenthal. I'm a shareholder and also a client, I just have a question or a comment about the environmental issues. A lot of the proposals and discussion is on an institutional basis. Would the bank consider looking at providing some incentive for individual consumers and either through their branches or establish a foundation or an award to encourage the local population? 10% or 11% of the environmental global warming comes from garbage and consumer garbage. I think that there's a lot of things that the individual consumers can do on a daily basis. Like, everybody can do something. I don't know. That's what the United Nations is saying, the time for action is now. It's only a suggestion. I don't know. Maybe you would say everybody can do something. I don't know.
I know in my case, I've been using the same plastic jars since 2002. I took public transportation here. There's a lot of things that individuals can do, and I think putting the onus only on the institution and the bank is one approach, but there's another approach. That would be my comment.
It's a great suggestion, and we'll definitely take it into consideration. Absolutely.
Yeah, and I
You're right. It's, it's about all members in the society, so.
Yeah, and I think just to try to empower everybody. Everybody has to do something. It's not good enough to download, or outsource the problem and say, "It's the main banks and screw the rest." The other comment I could say is that, it's refreshing to come to a meeting that's not zoomed.
Thank you.
Monsieur. Oui, bonjour. My name is Paul Bennetto. I'm a shareholder and a client of National Bank. I have a rather technical question. In your sources of financing, currently, there's National Bank Financial that is growing in importance. It's through NBF that banks issue deposit certificates. Many clients invest their money there because they perceive it to be a secure option, rightly or wrongly, in the current stock market. This fund is growing enormously. Generally speaking, the rates are higher than those given to individual clients, probably for reasons of administrative expense. It's easier to issue CAD 400 million-CAD 500 million in NBF funds. My question is as follows: Does National Bank issue certificates to these exchange traded funds rather, not National Bank Financial, but ETFs among your fund portfolio?
Third part of my question, on the assumption that the investors' perception is that they now all want to move back massively into the stock market and cash in on their funds, on their ETFs. What will be the impact on, for example, National Bank, if it has issued such a ETFs? Is there any obligation to cancel or to cash in or to redeem? I can't quite find the right word. It's redemption in English, yes? Is there any obligation on your part to redeem such ETFs?
That's an excellent question. Yes, thank you. We are involved in the exchange-traded funds market. What's important to understand is that we're a diversified bank. We have all kinds of clients, institutional, corporate, small business, and individual. Our funding sources, therefore, come from a number of sources and industries. If all of a sudden there were a drop in the amounts of deposits in the form of ETFs, it wouldn't have an impact on National Bank because we're so well-diversified across the board in sources of funding. Yes, we do take part in those products, not simply in cash ETFs, but also participatory ETFs. I can reassure you shouldn't be worried whatsoever.
The bank does issue deposit certificates within these ETFs, is that right?
Yes, it is.
What is the percentage?
I don't have the number readily to hand, but we can give it to you later on.
Thank you very much.
You're welcome. Are there any further questions from the floor?
Um,
Good morning. Matt Price. I'm with an organization for the defense of shareholders, which tracks commitments by Canadian companies. We're founded by BCGEU and BC. I haven't spoken French for the past 20 years. I do apologize.
Your French is excellent.
I will now switch to English. We track closely the net-zero policies of the Canadian banks, and you have a very unique policy in that you've said you're going to grow your renewable loans faster than your non-renewable loans. We're looking forward to you adding also underwriting to that in the future. The commitment doesn't actually say that you're going to, you know, bring down your funding of fossil fuels over time, even though your disclosure suggests you are already doing that. It leaves the door open to actually that going back up again. It also doesn't sort of tackle the ratio issue that we need the ratio to be about four to one in terms of renewables to non-renewables to have a safe climate.
My question is whether National Bank would consider strengthening that commitment to be more in line with climate science.
Thank you for your question, and thank you for pointing out the strategy that we've put in place for several years. This is not perfect, right? We don't have, you know, data on everything, but we know that investing and supporting renewable energies is, you know, on the right track. We're gonna keep that commitment. You know, as we get more refined data, you know, if there is a possibility for us to get a little bit more precise, we will, for sure. In terms of our, you know, exposure in the oil and gas sector, what we have done is we kept supporting the players that are actors in the transition, and that's what we're gonna keep doing because we think it's an important part of the transition as well.
As we get, you know, as we move along, we learn, you know, and I think this is the right path forward. You know, anytime we can be a little bit more precise, you know, we'll go in that direction for sure.
Well, we do look forward to engaging with you on this in the future. Congratulations, I should say, on this commitment, because as we evaluate the other banks, nobody else has made this commitment. It's only National, you're actually leading the way by tying this to a financial target, which we don't see with any of the banks. Congratulations on that.
Well, thank you very much. Monsieur Gagnon.
Monsieur Le President, Willie Gagnon. Mr. Chairman, Mr. President, Willie Gagnon on behalf of MÉDAC. I'd like to put a generic question, which I've put to most of the bank. You are the ones holding the last AGM this year. I think that you always come in that position. Everybody is very well aware of how much inflation is underway. I don't even buy any more cheese nowadays. It's tough, I can tell you. You should do something about your prices. You know, a simple round of OKA is CAD 20. We would like to know what is the bank's exposure to the risks caused by increase in interest rates, particularly with regard to mortgages. What is the weight of the bank's mortgage portfolio? What does this represent for you?
I'm absolutely convinced that you have examined these issues, but this is a very significant question, it seems to me, in the current situation. Can you report on this?
Yes. The bank's balance sheet has about CAD 400 billion. CAD 100 billion is in the form of mortgages. A little bit more than a third of that, of our clients have variable rate mortgages. We've been tracking all these clients ever since we saw the interest rates climb. They've been able to deal with these increases. For the time being.
Now, of course, this is going to have an impact in the longer term. We're also, of course, keeping a close eye on the fixed rate mortgages portfolio. What we do is that we're beginning to contact our clients as soon as the renewal dates come closer. We're doing a lot more reaching out to our clients. We devise impact scenarios, and those who are going to have more of a difficulty throughout these difficult times are people that we're going to be working together with to find solutions. Are you worried about any of this? About what? Well, about the whole mortgage issue. Not in Canada. Not where Canada's concerned, no. I think that obviously it will be a period of adjustment. Interest rates in the past were very low, and then they surged forward quite steeply.
Yes, there is going to be an adjustment period. In Canada, we have full employment. There's going to be a drop in the growth of the economy in 2023, 2024, of course, with rising interest rates. I would say that as a country, and in particular with regard to Quebec, we're in a good position, and we are fairly resilient currently. I'm not really worried about that.
Thank you.
Are there any further questions from the floor?
It's a general question about the changing demographics. There's huge immigrations from Ukraine and from Syria, from other really difficult countries. Is the bank making an effort to try to retain people that can help these people in these circumstances? Some of them are really quite difficult, but I think it would be a worthwhile gesture.
Absolutely. No, we do. We are. We're supporting, for sure, people who are arriving to our country, and, yeah, with financial aid, obviously, and with, you know, account payments, credit cards. We are definitely supporting them. Yes.
Okay, thank you.
Thank you very much for those questions. Thank you, Laurent. I would like to thank all our clients and shareholders for their confidence in the bank. The board is proud to support the bank's business strategy, which remains sound and whose long-term value creation continues to be at the heart of the decisions of the board of directors and the senior leadership team. Once again, it has been an honor for me to serve on the bank's board and to chair it for all these years, and I am very proud of having done so. I thank the current and past directors for their confidence, and I'm convinced that Robert Paré will do a sterling job as chair of this board. I would now like to invite him to say a few words to you. Robert.
Good morning. I would like to greet our shareholders, our clients, I see a number of them in the room, our guests, our employees, officers, as well as my fellow directors. On behalf of you all, I would first like to express my sincere thanks to Jean Houde, who, through his masterly contribution during his years on the board, has guided the Bank with tireless dedication to the highest standards of governance in the broadest sense of the term. Thank you very much for having been so faithful and having contributed so greatly. Twice now. You would deserve many rounds of applause, Jean. For my part, I thank the board of directors for its confidence in me and for its support as I take on my new role.
It will be a privilege, a true privilege for me to continue the efforts all of you undertake to further the priorities of your bank in order to foster its long-term growth. Once again, Jean. Okay, third time. Once again, Jean, thank you very much for everything.
Well, with that, I declare this meeting closed. Once again, my sincere thanks to each and every one of you for having been present, and please continue to support our wonderful organization. Goodbye.