Louis Vachon, president and CEO of National Bank of CanadaChristinne Muschi
National Bank of Canada shares hit a new 52-week high Thursday after reporting record third-quarter profit as it reaped the benefits of strong financial markets and greatly reduced charges related to asset-backed commercial paper.
The Montreal-based bank earned $303-million or $1.78 per share for the quarter ended July 31, up from a profit of $286-million or $1.73 the year before.
Shares of Canada's sixth-largest bank reached $60.82 before falling slightly to $60.47 in afternoon trading on the Toronto Stock Exchange, a gain of $1.96 or 3.35 per cent.
Excluding one-time items, including a $1-million charge related to asset-backed commercial paper, earnings totalled $1.79 per share.
The bank said results were bolstered by its personal and commercial segment, which booked a quarterly profit of $134-million. Profit in the financial markets segment rose to $167-million, while earnings slid to $25-million in wealth management.
Total revenue rose to $1.13-billion from $1.08-billion a year ago.
The bank's Tier 1 capital ratio, a measure of the amount of money in reserve, stood at 10.5 per cent.
"Over all, the quality of our credit portfolio and the solid contribution from financial market explained in large part the strong quarterly performance," chief executive officer Louis Vachon said during a conference call.
Despite the recession, the bank said it hasn't experienced any significant deterioration of its credit portfolios.
The bank maintained its 62-cent quarterly dividend. Mr. Vachon said the bank won't entertain increasing the payout until it receives statistical evidence that the recession is in fact over.
Analyst John Aiken of Dundee Securities said National Bank's results were impressive and materially above expectations.
"National has not gotten much respect recently, with the focus of the rally being on the Big 5 over the past six months," he wrote in a report.
He has National as his only pick among the top banks because "it is in the best position to weather and benefit from our more negative outlook for U.S. vis-à-vis Canada."
During the quarter, financial markets enjoyed another strong quarter and generated more earnings than personal and commercial banking as National took advantage of trading opportunities.
National enjoyed very strong revenue growth, particularly within its non-interest revenue lines.