National Bank Net Income Climbs on Capital Markets, Wealth

Aug 27, 2014 8:03 am ET

(Updates with revenue, unit performance from fifth paragraph.)

Aug. 27 (Bloomberg) -- National Bank of Canada said third- quarter profit rose 9.7 percent on gains in its capital markets and wealth-management businesses.

Net income in the period ended July 31 climbed to C$441 million ($405 million), or C$1.24 a share, from C$402 million, or C$1.16, a year earlier, the Montreal-based bank said today in a statement. Adjusted profit, which excludes some items, was C$1.20 a share, the bank said, beating the C$1.11 average estimate of 11 analysts surveyed by Bloomberg.

Canada’s sixth-largest lender by assets benefited from rising profit at its capital markets business, fueled by higher investment-banking fees and trading, and gains in wealth management. The lender has bolstered its wealth-management business through takeovers including Winnipeg-based Wellington West Holdings Inc. and the Canadian investment-advisory business of HSBC Holdings Plc.

“Results have shown steady year-over-year growth across all business segments,” Chief Executive Officer Louis Vachon, 52, said in the statement.

Revenue rose 13 percent to C$1.52 billion, the bank said. The lender set aside C$49 million for bad loans, compared with C$48 million a year earlier.

Personal and commercial banking earnings excluding some items climbed 6.1 percent to C$190 million from a year earlier, led by growth in consumer loans and mortgage lending, the bank said.

Wealth Management

Wealth-management profit increased 36 percent to C$75 million, helped by higher revenue and contributions from its November purchase of Toronto-Dominion Bank’s institutional- services business, the lender said. National Bank seeks to get a quarter of its revenue from wealth management by 2017, Vachon said in June.

The financial-markets unit, which includes investment banking, posted adjusted profit of C$187 million, a 21 percent advance from a year earlier. Fees for advising on takeovers and arranging stock sales rose 43 percent to C$116 million, while trading revenue climbed 3.2 percent to C$192 million.

National Bank gained 12 percent this year in Toronto trading through yesterday, trailing the 13 percent advance of the eight-company Standard & Poor’s/TSX Commercial Banks Index.