National Bank profit tops forecasts on capital markets surge, lower loan-loss provisions

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National Bank of Canada NA-T reported higher fourth-quarter profit that beat analysts’ estimates as capital markets revenue surged and the lender posted lower-than-expected loan loss provisions.

National Bank earned $768-million, or $2.14 per share, in the three months that ended Oct. 31. That compared with $738-billion, or $2.08 per share, in the same quarter last year.

Adjusted to exclude certain items, the bank said it earned $2.44 per share. That edged out the $2.25 per share analysts expected, according to Refinitiv.

“Through strong execution, organic growth, and tight expense management, we delivered solid financial results, generated an excellent return on equity, and maintained robust capital levels in 2023,” National chief executive officer Laurent Ferreira said in a statement.

The bank raised its quarterly dividend to $1.06 per share.

Bank of Montreal misses profit forecasts as higher costs, rising bad-loan provisions weigh

National is the sixth major Canadian bank to report earnings for the fiscal fourth quarter. Bank of Montreal BMO-T also reported earnings on Friday, posting lower profit that missed analyst expectations. Earlier this week, Bank of Nova Scotia BNS-T and Toronto-Dominion Bank TD-T missed estimates, while Royal Bank of Canada RY-T and Canadian Imperial Bank of Commerce CM-T beat expectations.

In the quarter, National Bank set aside $115-million in provisions for credit losses - the funds banks set aside to cover loans that may default. That was lower than analysts anticipated, and included $52-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, National Bank had a set aside of $29-million in provisions.

Total revenue rose 11 per cent in the quarter, to $2.6-billion. But expenses increased 19 per cent to $1.6-billion, which the bank said was driven higher salary and technology costs.

Profit from Canadian personal and small business banking was $288-million, up 14 per cent from a year earlier, driven by higher expenses and provisions for credit losses.

The wealth management division generated $155-million of profit, down 20 per cent as costs climbed. And capital markets profit surged 40 per cent to $284-million as higher revenue in global markets and corporate and investment banking offset a decline in mergers and acquisition activity.