Yahoo Finance National Bank profit dips slightly from a year ago
The National Bank of Canada’s net income slipped two per cent year over year to $826 million in its third quarter as the bank set aside more cash for bad loans on a gloomier economic outlook.
National Bank’s adjusted diluted earnings reached $2.35 per share in the three months ending July 31. Analysts on average had been expecting $2.34 per share. Growth across all the bank’s main business lines blunted the impact of higher provisions for credit losses.
“We released strong third quarter results with pre-tax, pre-provision, earnings up nine per cent driven by double-digit growth across all business segments,” Laurent Ferreira, chief executive of National Bank, said during a Wednesday afternoon press conference following the results.
“We continue to operate in an uncertain and complex environment dominated by elevated inflation, rising interest rates, and heightened geopolitical risks.”
Ferreira added that the bank was well-positioned to shoulder these challenges with strong capital levels and larger allowances for credit losses.
National Bank’s personal and commercial segment grew 11 per cent to $335 million in the third quarter from a year earlier, because revenues rose from loan growth and higher net interest margins as a result of rising rates. Wealth management also grew 10 per cent year over year to $181 million in net income as rising revenues were driven by a boost in net interest income. The financial markets segment grew 12 per cent to $280 million on an annual basis on higher revenues globally.
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However, the bank’s net income declined 22 per cent in its finance business in the United States on higher credit-loss provisions. It also reported a $95-million loss in other expenses from lower revenues in its treasury business.
John Aiken, head of research and senior analyst at Barclays, gave a neutral first look on National Bank’s results in his first look report, noting that the results had been impressive but warned of underlying concerns from the bank’s international operations in its Credigy Ltd. and ABA Bank segments.
“National was the first bank to exceed consensus expectations this quarter (two of three missed),” Aiken wrote to clients. “This was driven by impressive growth in its domestic retail lending operations and surprisingly strong results in both capital markets and wealth management. However, (National Bank)’s international operations were disappointing, with Credigy’s results down on lower revenues and higher provisions. While ABA held in, we note that the personal credit quality appears to be weakening, which will bear watching.”
Aiken added that he believed the market would be more focused on the modest earnings beat National Bank managed to pull off.
Shares of National Bank held steady throughout the trading day, resting at $92.17 as of 2:20 p.m.
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