National Bank of Canada
reported higher second-quarter profit that beat analysts’ estimates on a boost from its capital markets division, even as the lender set aside more money for loans that could default.
National Bank earned $906-million, or $2.54 per share, in the three months that ended April 30. That compared with $832-million, or $2.34 per share, in the same quarter last year.
On an adjusted basis, the bank said it earned $2.54 per share. That topped the $2.42 per share analysts expected, according to S&P Capital IQ.
“National Bank generated strong financial results for the second quarter of 2024, reflecting the disciplined execution of our strategy across business segments and the diversified earnings power of the bank,” chief executive officer Laurent Ferreira said in a statement. “In what remains an uncertain macroeconomic environment, we are committed to maintaining our prudent approach to capital, credit, and costs and to generating long-term value for our shareholders.”
The bank raised its quarterly dividend by 4 cents to $1.10 per share.
National Bank is the fourth major Canadian bank to report earnings for the second quarter. Bank of Montreal also reported earnings Wednesday, posting profit that fell below analysts’ expectations. Toronto-Dominion Bank and Bank of Nova Scotia posted second-quarter results that beat analysts’ estimates. Royal Bank of Canada and Canadian Imperial Bank of Commerce report on Thursday.
In the quarter, National Bank set aside $138-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $114-million against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.
In the same quarter last year, National Bank had set aside $85-million in provisions.
Total revenue rose 12 per cent in the quarter, to $2.75-billion. But expenses increased 8 per cent to $2.84-million, which the bank said was driven by higher salary and benefits costs.
Profit from Canadian personal and small business banking was $311-million, down 3 per cent from a year earlier, as higher non-interest expenses and provisions offset an increase in revenue.
The wealth management division generated $205-million in profit, up 15 per cent as a boost in net interest income was driven by higher interest rates.
Profit from the bank’s U.S. specialty finance and international arm was up 27 per cent to $163-million. And capital markets profit rose 20 per cent to $322-million on higher revenues from equities and interest rate and credit activities.