National Bank Tops Estimates on Trading, Wealth

National Bank of Canada, the country’s sixth-largest lender, climbed the most in almost 14 months after reporting quarterly profit that beat analysts’ estimates on gains in trading and wealth-management earnings.

Net income for the period ended July 31 advanced 11 percent to C$419 million ($399 million), or C$2.39 a share, from C$379 million, or C$2.14, a year earlier, the Montreal-based lender said today in a statement. Profit excluding some items was a record C$2.22 a share, the firm said, topping the C$2.06 average estimate of 12 analysts surveyed by Bloomberg.

National Bank gained 2.4 percent to C$81.14 at 4 p.m. in Toronto, the most since July 3, 2012, making it today’s best performer on the 45-company Standard & Poor’s/TSX Financials Index. The lender’s shares have increased 5.1 percent this year, compared with a 5.7 percent rise in the index.

“The market has really undervalued our performance,” Chief Financial Officer Ghislain Parent said a phone interview. “We hope that what we see today is a correction based on our year-to-date results and that it’s going to remain for the rest of the year.”

Profit from trading climbed 42 percent to C$158 million in the third quarter from a year earlier, while wealth-management income rose 26 percent to C$52 million as fees on deposits and assets under administration increased, according to the statement. Earnings from consumer and commercial lending gained 1.6 percent to C$192 million.

NIM Narrows

Revenue advanced 5.5 percent to C$1.29 billion from a year earlier, the lender said. Net interest margin, the difference between what a bank pays for deposits and charges for loans, narrowed to 2.26 percent from 2.39 percent a year earlier.

While not actively seeking acquisitions, National Bank would be interested in buying a mid-sized wealth-management and brokerage firm with between 40 and 80 advisers, Parent said. “We’re looking at different opportunities and we know that the other banks are looking also,” he said.

National Bank is the third of the country’s six largest lenders to report results this week following Bank of Nova Scotia and Bank of Montreal, which both posted profit that beat analysts’ estimates. Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce are scheduled to release results tomorrow.

Before it's here, it's on the Bloomberg Terminal.