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 helped by trading gains.

Profit excluding one-time items rose 7 percent to 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 as much as 2 percent of outstanding stock, or 3.2 million shares.

“Capital markets growth is essentially due to very good trading activity across all the business lines,” Chief Financial Officer Ghislain Parent said in a phone interview. “It’s based on client services growing overall.”

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.

National Bank rose 1.9 percent to close at C$77.02 in Toronto, the most since July 2012. Shares have declined 0.3 percent this year, trailing the 2.8 percent return of the eight-company Standard & Poor’s/TSX Commercial Banks Industry Index.

Profit from capital markets increased 23 percent to C$143 from a year earlier, the bank said. Consumer lending earnings rose 1.8 percent to C$166 million on increased personal loans and home-equity lines of credit. Wealth-management profit 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.

Acquisition Hunting

The company is looking for potential wealth-management and retail acquisitions beyond Quebec that would “be accretive rapidly,” Parent said.

“There’s not a lot of targets in Canada to acquire, especially in the personal and commercial business,” he said. “There are a lot less than five years ago, but there are still some potentials in wealth management.”

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 reports results on May 28, followed by Bank of Montreal 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.

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