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The profitability of the National Bank exceeds expectations

The profitability of the National Bank exceeds expectations

The National Bank’s profitability for February, March and April declined, but nevertheless turned out to be better than expected despite the deteriorating macroeconomic outlook.

The quarterly profit of Quebec’s largest bank fell 5% to 847 million from 889 million a year earlier.

This brings the earnings per share for the second quarter of fiscal year 2023 to $2.38 per share. Analysts expected $2.36 per share.

The bank’s quarterly dividend was also raised by 5% to $1.02 per share. This decision raises the dividend yield to more than 4%.

The bank’s management noted that “good performance across all business segments driven by revenue growth was offset by higher provisions for credit losses, which resulted in part from a worsening macroeconomic outlook, as well as the impact on the Government of Canada’s tax expenditures 2022 tax measures.”

Provisions for credit losses for the quarter were 85 million, well below analyst expectations. The latter gave $110 million.

“It’s abnormally low,” says analyst Mike Rezvanovich of Keefe, Bruyette & Woods.

For this reason, this expert considers the Bank’s results to be “lower quality”. Therefore, it is expected that the performance of the National Bank stock will be lower than that of its peers on Wednesday, because it benefited from the positive evaluation for some time now in the markets.

The National Bank is the last of the six major Canadian banks to report financial results this spring.