Shares of National Bank of Canada pushed to an all-time high Wednesday as the bank delivered positive results that surprised to the upside.
The bank’s shares closed up $2.40, or 2.32%, at $106.07 on the Toronto Stock Exchange after trading as high as $108.17 in the day. The bank’s previous intraday high was $105.57 in November 2021.
Canada’s other big banks all hit trading highs in early 2022 but have more recently been under pressure on concerns about slowing loan growth and rising provisions for bad loans.
National Bank reported a first-quarter profit of $922 million on Wednesday, up from $876 million a year earlier, as its revenue rose across its business.
“Our results reflect effective capital deployment to generate profitable long-term growth, active cost management and simplification efforts,” said chief executive Laurent Ferreira on an earnings call.
“The earnings power of our diversified business mix and defensive posture provide us with resiliency and flexibility, as demonstrated by the performance of our business segments.”
The bank reported provisions for credit losses totalling $120 million, up from $86 million a year earlier.
It was the only bank of the four so far to have its loan loss provisions come in line with analyst expectations, said Scotiabank analyst Meny Grauman.
“Overall we believe that (National Bank) delivered the strongest result of the quarter, with two of the Big Six still to go,” he said in a note.
There remains upside potential in the stock, despite its strong outperformance heading into reporting, said Grauman.
Revenue for the quarter totalled $2.71 billion, up from $2.56 billion in the same quarter last year.
On an adjusted basis, the bank says it earned $2.59 per diluted share for its most recent quarter, up from an adjusted profit of $2.54 per diluted share in its first quarter last year.
The average analyst estimate had been for a profit of $2.36 per share, according to estimates compiled by financial markets data firm Refinitiv.
The bank’s earnings have been helped by a steadier economy and consumer finances in its focus market of Quebec, said chief risk officer William Bonnell on the call.
“In our portfolio, we do see Quebec consumers appearing to have more resilience and performing better on a delinquency basis.”
But the bank does still see more strain ahead.
National Bank forecasts the unemployment rate rising to 7% by early 2025, and for delinquencies and impaired provisions to continue their upward path.
In first-quarter financial results, the bank said its personal and commercial banking business earned $339 million in its first quarter, up from $326 million a year earlier, helped by higher revenues, partly offset by higher non-interest expenses and higher provisions for credit losses.
The bank’s wealth management business earned $196 million in its latest quarter, down from $198 million a year earlier, while its financial markets operations earned $308 million, up from $298 million in the first quarter of 2023.
National Bank’s U.S. specialty finance and international business earned $150 million for the quarter, up from $147 million a year earlier.
The bank’s “other” category recorded a loss of $71 million in the first quarter compared with a loss of $93 million in the same quarter last year.