National Bank Gains as Capital Markets Drive Profit

National Bank of Canada (NA) climbed the most in three years after reporting a third-quarter profit that beat analysts’ estimates on gains in its capital markets and consumer-lending businesses.

National Bank advanced 3.1 percent to a record C$50.91 in Toronto, the most since August 2011 and the best performance in the eight-company Standard & Poor’s/TSX Commercial Banks Index. Profit excluding some items was C$1.20 a share in the period ended July 31, the Montreal-based bank said today in a statement, surpassing the C$1.11 average estimate of 11 analysts surveyed by Bloomberg.

“Financial Markets had a stand-out quarter,” John Aiken, a Barclays Plc analyst, said in a note to investors. “Personal and commercial banking’s performance was also very solid.”

Canada’s sixth-largest lender by assets benefited from rising profit at its capital-markets business, fueled by higher investment-banking fees and surging revenue at its Credigy consumer-finance unit. Earnings from personal and commercial banking, mostly centered in Quebec, rose 6.1 percent and outperformed the domestic lending units of larger rivals Royal Bank of Canada and Bank of Nova Scotia.

Quebec Economy

“The outlook for the Quebec economy is good; it shows more positive signs and that’s very good for us,” Chief Financial Officer Ghislain Parent said in a phone interview. “It means that this is a performance we’ll be able to repeat in the next quarters.”

Net income in the quarter climbed to C$441 million ($405 million), or C$1.24 a share, from C$402 million, or C$1.16, a year earlier, the bank said. Revenue rose 13 percent to C$1.52 billion. The lender set aside C$49 million for bad loans, compared with C$48 million a year earlier.

Personal and commercial banking earnings excluding some items was C$190 million, up from C$179 million a year earlier, led by growth in consumer loans and mortgage lending, the bank said.

The financial-markets unit, which includes investment banking and Credigy, posted adjusted profit of C$187 million, a 21 percent advance from a year earlier. Fees for advising on takeovers and arranging stock sales rose 43 percent to C$116 million, while trading revenue climbed 3.2 percent to C$192 million.

Wealth-management profit increased 36 percent to C$75 million, helped by higher revenue and contributions from its November purchase of Toronto-Dominion Bank’s institutional-services business, the lender said.

To contact the reporter on this story: Steven Crabill in New York at scrabill@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Steven Crabill, Steve Dickson

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