Heightened market volatility drove up National Bank of Canada trading revenue and first-quarter profits, its chief executive said Friday.
“When you have heightened levels of volatility, often, it does drive more transactions, so we did see more trading activity with our clients during the first quarter,” Laurent Ferreira said on an earnings call.
National, along with other Big Six banks that have reported so far, surprised analysts to the upside — especially on the amount of trading revenue they brought in during the quarter that ended Jan. 31.
However, Ferreira said the bank has positioned itself defensively so that it doesn’t get caught out by a swing in trading revenue in the other direction.
“Are we immune? No. No one’s immune. But the way we built the business is we want to make sure that through volatile times, we can keep growing our franchise.”
Net income for the wealth management segment totalled $176 million, an 11% increase from $158 million a year earlier and up 8% from the previous quarter.
Wealth management revenue was up 14% year over year to $592 million, with full-service brokerage and mutual fund sales driving fee-based revenues, the bank said. Compared to the previous quarter, revenue was up 6%.
Expenses in the wealth management segment were up 15% year over year mostly due to higher compensation, the bank said.
Assets under administration on Jan. 31 totalled $654.5 billion, up 17% from $559.2 a year earlier and slightly higher than the previous quarter. Net sales accounted for $34 billion of the year-over-year increase, with market gains making up $62 billion.
Assets under management totalled $118.2 billion, a 22% increase from $97.1 billion a year ago and almost 1% higher than in the fourth quarter. Net sales accounted for $11 billion and market gains for $10 billion of the increase from a year ago.
The bank reported trading revenues of $464 million for the quarter, up from $276 million the previous quarter and from $375 million from a year earlier.
Barclays analyst John Aiken said that the trading revenue was a big boost for the bank, but that it reported positive gains across much of its operations.
“National posted strong earnings, supported by growth in each of its segments. NA also benefited from strong trading revenues but saw continued volume growth, improved efficiency and a renewed strong performance from its international operations,” he said in a note.
Overall, the Montreal-based bank reported a first-quarter profit of $932 million, or $2.65 per diluted share, compared with $761 million or $2.14 per share a year earlier.
Revenue totalled $2.47 billion, up from $2.22 billion.
On an adjusted basis, National Bank says it earned $2.65 per diluted share compared with an adjusted profit of $2.15 per diluted share a year earlier.
Analysts on average had expected an adjusted profit of $2.23 per share, according to financial markets data firm Refinitiv.
The quarter included a $2-million reversal of its provisions for credit losses compared with the $81 million it set aside for bad loans in the same quarter last year.
National Bank also announced Friday that it appointed Marie Chantal Gingras as CFO and executive vice-president, replacing Ghislain Parent, who becomes executive vice-president and head of the bank’s international business unit.
The moves, effective April 1, were made as part of National Bank’s “rigorous succession planning and development process,” the bank said in a release.
Gingras, who joins National Bank’s office of the president leadership team, most recently served as senior vice-president, financial accounting. She has been with the bank since 1998, working primarily in finance roles.
In his new position, Parent will be primarily responsible for National Bank subsidiaries Credigy in the United States and ABA Bank in Cambodia. He continues to be part of the bank’s office of the president leadership team. He has served as the bank’s CFO since 2011.