National Bank Shares Rise Most in Four Years on Profit Beat
Third-quarter adjusted earnings were C$2.68 a share, according to a statement Wednesday, surpassing estimates of C$2.47. The results marked National Bank’s fourth-straight quarterly earnings beat.
National Bank of Canada shares surged to a record high, marking their largest gain in over four years, after all of the bank's business segments exceeded analysts' profit expectations.
The stock rose as much as 5.8%, the biggest intraday increase since May 2020. This gain further extended National Bank's strong performance this year, with its shares up 25%, compared to a 5.7% rise for the S&P/TSX Composite bank index. In comparison, National Bank's largest competitor, Royal Bank of Canada, has seen a 20% increase.
For the third quarter, National Bank reported adjusted earnings of C$2.68 per share, surpassing the estimated C$2.47. This marks the fourth consecutive quarter that the bank has beaten earnings expectations.
The capital-markets division saw profits jump 55% from the same period last year, reaching C$318 million, driven by growth in global markets and investment banking revenues. Personal and commercial banking profits rose 15% to C$366 million for the three months ending July 31. The wealth management and U.S. specialty finance divisions also reported double-digit gains.
Provisions for credit losses totaled C$149 million, aligning with expectations. In contrast, the Bank of Montreal reported lower-than-expected provisions on Tuesday, resulting in several analyst downgrades.
By 12:13 p.m. in Toronto, National Bank shares were up 5.6% to C$126.61.
In June, National Bank announced its plan to acquire Canadian Western Bank, an Edmonton-based competitor. While other major Canadian banks are exploring growth opportunities in the U.S., National Bank is focusing on this domestic merger.
The regulatory approval process for the merger is currently underway, with the two banks working together on the integration strategy, according to Chief Executive Officer Laurent Ferreira during a conference call with analysts.
“Recent rate cuts are a step in the right direction in providing relief for consumers and supporting business investment,” Ferreira noted.
