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National Bank Profit Declines on Acquisition Costs

National Bank of Canada, the country’s sixth-largest lender, said quarterly profit fell 4 percent on costs tied to acquisitions and severance. The firm raised its dividend 5.7 percent to 92 cents a share and announced a two-for-one stock split.

Net income for the fiscal fourth quarter ended Oct. 31 slid to C$337 million ($316 million), or C$1.89 a share, from C$351 million, or C$1.97, a year earlier, the Montreal-based bank said today in a statement. Adjusted profit, which excludes some items, was C$2.09 a share, matching the average estimate of 11 analysts surveyed by Bloomberg.

National Bank’s profit was reduced C$33 million on costs including C$12 million from ending leases and C$9 million of severance payouts from closing a Geneva office and job cuts. The lender also took charges for bonus retention and expenses from its acquisitions of Canadian investment-advisory businesses owned by HSBC Holdings Plc and Wellington West Holdings Inc., according to the statement.

“When you look at the one-offs, there’s a whole slew of them, but nothing there is concerning to me,” said Kash Pashootan, a portfolio manager with First Avenue Advisory of Raymond James Ltd. in Ottawa. “There isn’t anything in the way of bad loans or any other material items.”

National Bank fell 1.5 percent to C$89.53 at 4 p.m. in Toronto. The shares have gained 16 percent this year, outpacing the 14 percent advance of the eight-company Standard & Poor’s/TSX Composite Commercial Banks Index.

Revenue Declines

“We posted a solid performance in all three business lines,” Chief Financial Officer Ghislain Parent said in an interview. “With a better economy in Quebec and in Canada we think that we will have good results, we will improve our results” from 2013.

National Bank said revenue fell 7.1 percent to C$1.25 billion from a year earlier. The lender set aside C$48 million for bad loans, up from C$46 million.

Consumer-banking profit excluding items rose 7.3 percent to C$177 million, while earnings from the lender’s financial-markets unit was up 11 percent to C$125 million from a year earlier, according to the statement. Profit from wealth management climbed 31 percent to C$64 million.

National Bank is keeping “open eyes” on wealth-management takeovers outside Quebec even as its focus next year will be on integrating a C$250 million acquisition of a custodial business purchased last month from Toronto-Dominion Bank, Parent said.

Annual Profit

National Bank reported profit of C$1.55 billion, or C$8.80 a share, for the fiscal year, down from C$1.63 billion, or C$9.32, a year earlier.

National Bank is the second Canadian bank to report quarterly results. Yesterday, Bank of Montreal raised its dividend 2.7 percent to 76 cents a share after posting fiscal fourth-quarter profit of C$1.09 billion, little changed from a year earlier.

Royal Bank of Canada, the country’s largest lender, reports results tomorrow along with No. 2 Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, the fifth-largest lender. Bank of Nova Scotia reports on Dec. 6.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Peter Eichenbaum at peichenbaum@bloomberg.net

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