Source: The Canadian Press

National Bank became the first big Canadian bank to boost its dividend since 2007 on Tuesday after it beat expectations and reported its fourth-quarter profits grew 19% from a year earlier.

The country’s sixth-largest bank raised its quarterly dividend by four cents to 66 cents per share.

Other Canadian banks are expected to follow suit with their own quarterly dividend hikes when they begin reporting later this week after authorities clarified their capital requirements.

Smaller Quebec rival Laurentian Bank (TSX:LB) was the only Canadian chartered bank to increase its dividend last December.

National Bank earned $287 million, or $1.66 per share, for the period ended Oct. 31, compared with $241 million or $1.39 a year earlier.

Revenue for what was the bank’s fourth quarter held steady at $1.1 billion.

Adjusting for one-time items, the bank earned $1.63 per share, six cents more than the average analyst estimate polled by Thomson Reuters.

For its full financial year, the bank earned $1.03 billion, or $5.94 per diluted share, on $4.28 billion in revenue. That compared with $854 million, or $4.94 per share, on $4.13 billion in revenue in 2009.

The adjusted profit of $6.25 per share was higher than the $6.19 expected on $4.45 billion of revenues.

Despite the strong results, the Montreal-based bank said it will no longer provide loans for large corporate customers outside Quebec as it focuses on small- and medium-sized companies.

Its offering remains unchanged in Quebec, where it operates the largest commercial bank, but is the second-largest financial institution after the Desjardins Group.

As a result of the change, it has laid off 35 workers in its National Bank Financial group and taken a $15-million, after-tax restructuring charge. Most of the layoffs were in Toronto, but some were in Montreal and Calgary.

Chief executive Louis Vachon said the strong results reflected the continued implementation of its one client, one bank strategy.

“The personal and commercial segment has enjoyed solid growth in loan volumes, and wealth management and financial markets have both posted quarter-over-quarter increases in earnings,” Vachon said in a statement after markets closed.

“Such solid results, combined with our strong capital position and the quality of our credit portfolio, have allowed us to raise shareholder dividends.”

The bank’s Tier 1 Basel II capital ratio remained unchanged at 14%.

Two of the bank’s three operating segments contributed to the increased profitability.

Excluding specific items, personal and commercial grew 34% to $145 million and wealth management was up 27% to $33 million.

Financial markets decreased 19% to $119 million as revenues from fixed-income securities decreased from the favourable market conditions in the fourth quarter of 2009.

National Bank recorded a $37-million provision for credit losses in the quarter, $17 million less than in the year-ago period, primarily due to more favourable economic conditions. For the year, credit loss provisions decreased to $144 million from $161 million in 2009.

Gross impaired loans decreased by $38 million to $369 million.

National Bank Financial Group is Canada’s sixth-largest bank with $145.3 billion of assets.

Founded in 1859, National Bank is based in Montreal and has more than 18,000 employees.

Shares in the company, which reported its results after the close of markets, were down 89 cents at $67.84 Tuesday on the Toronto Stock Exchange.