National Bank posts record profit, beats analyst estimates
Helped by higher trading revenues and consumer loan growth, National Bank of Canada reported its highest ever first quarter profit.
Canada’s sixth biggest bank had net income of $332-million, up 3% from the same period last year as higher net interest income from rising mortgage origination offset declines in wealth management.
Earnings per share were $1.99, compared to $1.86 in the same period last year.
On an adjusted basis, it earned $2 a share, compared to analysts’ consensus estimate of around $1.86.
John Aiken, an analyst at Barclays Capital, said in a note to clients that the strong results were driven primarily by lofty revenues from securities trading along with gains from securities valuations.
“While we believe that this lowers the quality of National’s earnings, we do note that the market appears to be shrugging off this drastic volatility and rewarding National’s peers with higher valuations on their beats. With very little to complain about in the rest of National’s operations, we are forced to conclude that the market will view these results positively.”
National is the fourth Canadian bank to report results for the quarter, and the third to exceed expectations with only Bank of Montreal so far falling behind.
With most of its operations focused on Quebec and central Canada, National differs from its larger rivals in its very limited exposure to the Vancouver housing market, the country’s most expensive.
The retail bank had a profit of $170-million, up 9% for the three months ended Jan 31.
Wealth management earned $33-million, down from $48-million as higher operating expenses associated with recent acquisitions offset higher net interest income.
The capital markets business, which also pushed up overall results, had a profit of $29-million on higher trading revenue and gains on securities valuations.