National Bank Profit Rises 8.6% on Wealth, Financial Markets

Feb 24, 2014 5:56 pm ET

(Updates with trading, underwriting in seventh paragraph.)

Feb. 24 (Bloomberg) -- National Bank of Canada, the country’s sixth-biggest lender, said first-quarter profit rose 8.6 percent as gains in wealth management and investment banking helped lift earnings.

Net income for the period ended Jan. 31 climbed to C$405 million ($366 million), or C$1.15 a share, from C$373 million, or C$1.05, a year earlier, the Montreal-based lender said today in a statement. Profit excluding some items was C$1.09 a share, the firm said, beating the C$1.05 average estimate of 10 analysts surveyed by Bloomberg.

“Results are showing strong momentum for National Bank,” Chief Executive Officer Louis Vachon, 51, said in the statement. “Wealth management benefited from good organic growth and the contribution from the newly acquired TD Waterhouse Institutional Services.”

National benefited from a 43 percent increase in wealth- management earnings, as acquisitions including the purchase of Toronto-Dominion Bank’s institutional-services business in November helped the business. The lender also benefited from higher fees from investment banking.

Revenue increased 11 percent to C$1.41 billion. The bank set aside C$51 million for bad loans, up from C$32 million a year ago.

Wealth Takeovers

Wealth-management profit climbed to C$76 million from C$53 million a year ago, the bank said. The lender has expanded in wealth management in the past three years through takeovers of the Canadian investment-advisory businesses of HSBC Holdings Plc and Toronto-based Wellington West Holdings Inc.

The financial markets unit rose 27 percent to C$144 million, on improved trading and a 22 percent jump in underwriting and advisory fees. Personal and commercial banking profit rose 3 percent to C$168 million from a year ago, according to the statement.

National gained 0.3 percent to C$43.61 at 4 p.m. in Toronto. The shares have climbed 12 percent in the past 12 months, matching the advance of the six-company Standard & Poor’s/TSX Commercial Banks Index.

National is the first Canadian lender to post results for the quarter. The country’s banks will probably report a 5 percent rise in profit excluding some items from a year earlier, John Reucassel, a BMO Capital Markets analyst, said in a Feb. 17 note.

Bank of Montreal, the fourth-largest lender, reports results tomorrow, followed by No. 2 Royal Bank of Canada on Feb. 26. Toronto-Dominion, Canada’s largest lender, and Canadian Imperial Bank of Commerce, the fifth biggest, report results on Feb. 27. Bank of Nova Scotia, the third-largest, reports March 4.

--Editors: Steven Crabill, Dan Kraut