National Bank of Canada, the country's sixth-largest bank, made $553-million in the second quarter, up substantially from last year as it booked a large one-time gain from the recent sale of an investment management business.
National Bank's profit was equal to $3.22 a share and compared to net income of $327-million, or $1.57 a share last year. Revenue rose 27 per cent to $1.5-billion.
The bank sold its Natcan Investment Management business during the quarter, and acquired a 35-per-cent stake in Fiera Capital Corp, recording a gain of $246-million from those transactions.
With that large gain factored out, along with other one-time items, National Bank reported an operating profit of $347-million, or $1.95 a share, up 6 per cent from last year.
The earnings exceeded analysts estimates for the quarter. On average, analysts were expecting National to report an operating profit of about $1.84 a share.
The bank boosted its quarterly dividend to 79 cents, an increase of 2 cents.
"In the second quarter of 2012, National Bank continued to experience excellent operating results while facing increased competition and less favourable market conditions," Louis Vachon, National Bank's chief executive officer of National Bank said in a statement. "Given the current environment, the Bank continues to prudently manage risk and costs."
Provisions for credit losses, or the amount of money banks set aside to cover bad loans, were $49-million for the quarter, down slightly from a year ago.
The bank's core personal and commercial banking business in Canada made $166-million in the quarter, up 16 per cent from last year. The increased profit was driven by higher loan volumes, however the bank saw pressure on its margins as competition for mortgages heated up in the quarter.
Net interest margins, which are the difference between what banks lend money at and their cost of funds, shrunk to 2.19 per cent in the quarter, compared to 2.36 per cent a year ago.
National Bank's wealth management business reported a profit of $233-million, up from $49-million a year, driven by the one-time gain recorded from the Natcan sale, as well as several acquisitions, including its purchase of the Canadian investment advisory business of HSBC.
The bank's financial markets business earned $115-million, down $12-million from last year due to lower trading activity amid turmoil in Europe. National Bank also reported $39-million of net income from its corporate operations, compared to $5-million last year. The gain was due to an increase in the value of commercial paper on the books and lower operating costs, National Bank said.
Grant Robertson