National Bank Posts Record Adjusted Profit

National Bank of Canada, the country’s sixth-largest lender, raised its dividend by 4.8 percent as it posted record second-quarter adjusted profit on consumer-lending growth.

Profit excluding one-time items rose 7 percent to a record C$2.08 a share, the Montreal-based bank said today in a statement, beating the C$1.97 average estimate of 13 analysts surveyed by Bloomberg. The lender increased its quarterly dividend to 87 cents and said its board has authorized the repurchase of 3.2 million common shares, or 2 percent of outstanding stock.

“The bank delivered record results thanks to excellent performance in our three business segments,” Chief Executive Officer Louis Vachon said in the news release.

Net income declined 22 percent to C$434 million ($420 million), or C$2.49 a share, from a year earlier, when the company had a C$198 million one-time gain from the April 2012 sale of its Natcan Investment unit, according to the statement.

The results could hurt investors who bet on the shares to fall, said John Aiken, an analyst at Barclays Plc.

“The results and the dividend increase are likely enough to potentially generate another short squeeze on NA’s shares today,” Aiken said in a note to clients, referring to National Bank’s stock symbol. “We would be surprised if they did not outperform for at least another session.”

Shares Rise

National Bank rose 1.3 percent to C$76.56 at 9:48 a.m. in Toronto trading. Shares have declined 0.9 percent this year, the worst performer among the eight-company Standard & Poor’s/TSX Commercial Banks Industry Index, which has advanced 2.6 percent since Dec. 31.

Profit from commercial lending rose 1.8 percent to C$166 million as personal loans and home-equity lines of credit increased, the bank said. Wealth-management earnings dropped 78 percent to C$52 million from a year earlier. Excluding the effect of the Natcan sale, the unit gained 23 percent in the three months ending April 30 to C$58 million. Capital markets earnings increased 23 percent to C$143 million.

Toronto-Dominion Bank said yesterday that second-quarter profit rose 1.8 percent to C$1.72 billion, led by record earnings from U.S. consumer lending and trading. Earnings excluding some items were C$1.90, missing by one cent the average estimate of 13 surveyed analysts.

Bank of Nova Scotia (BNS) reports results on May 28, followed by Bank of Montreal (BMO) on May 29. Royal Bank of Canada, the country’s largest lender, and Canadian Imperial Bank of Commerce, the fifth-biggest, report on May 30.

(National Bank will host a conference call at 11 a.m. Toronto time. To listen, dial +1-416-340-2217 or +1-866-696-5910.)

To contact the reporters on this story: Katia Dmitrieva in Toronto at edmitrieva1@bloomberg.net; Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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