business contributed to record adjusted profits in the quarter.
A new analysis by Scotia Capital has found that Canadian bank stocks are
notably cheap compared to their Australian peers and Canadian life insurance
companies. Keep reading.
The bank reported Wednesday that it earned $419 million or $2.39 per diluted
share in net income in the latest period, up from $379 million or $2.14 in the
same period last year.
Revenue rose 5% to $1.29 billion from $1.22 billion.
Excluding one-items, the bank earned a record $391 million or $2.22 per
diluted share, up 11% from $353 million or $1.98 per share in the same 2012
National Bank (TSX:NA) was expected to earn $2.06 per share in adjusted
profits on $1.3 billion in revenues in the third quarter, according to analysts
polled by Thomson Reuters.
“Our credit quality and financial strength remain excellent, and our
Pan-Canadian growth strategy has paid off with strong performance in the wealth
management and financial markets segments,” president and CEO Louis Vachon said
in releasing the bank’s earnings report
“Furthermore, the bank continues to seek out opportunities, as was the case
for the acquisition of TD Waterhouse Institutional Services announced on Aug.
1,” he added.
Analyst John Aiken of Barclays called the results “very impressive” and
enough to get the country’s six-largest bank some respect.
“We would characterize National’s results as a very strong quarter,” he wrote
in a report.
The bank benefited from strong trading revenues, but the results were
“arguably better” than what Bank of Montreal (TSX:BMO) and Scotiabank (TSX:BNS)
posted on Monday, Aiken said.
“Even if one does not give National Bank a full credit for trading, which the
market rarely does, the results still came in well ahead of expectations. We
note that National is trading at the lowest multiple of the group and should
finally get some respect with these earnings.”
Quebec’s largest bank maintained its dividend at 87 cents per share, but
Aiken said a hike is likely next quarter based on the strength of the bank’s
National Bank’s personal and commercial segment’s adjusted income rose 2% to
$192 million due in part to an $8 million increase in net interest income caused
by a growth in personal loans.
The bank’s wealth management business earned $52 million, up from $39 million
a year earlier. Revenues grew 8% due to higher deposit volumes and increased
fee-based revenues resulting from a growth in assets under administration and
The financial markets segment earned $158 million, up from $111 million in
the same quarter of 2012. Revenues, on a taxable equivalent basis, grew to $382
million from $322 million due to increases in all types of trading activities
National Bank said its Tier 1 capital ratio was 8.6%, up from 7.3% as of Oct.
31, 2012. Return on equity was 21.9%, or 20.3% excluding one-time items.
Earlier this month, it signed a deal to pay $250 million for TD Waterhouse
Institutional Services, which provides back-office and support solutions for
portfolio managers and brokers across the country.
The agreement, which is expected to close later this year, is subject to
regulatory approvals and other conditions.
The bank said the acquisition will help it increase its payout of recurring
earnings per share by 12 cents in 2014, and 14 cents the year after.
National Bank is the third large Canadian bank to report this week.
Scotiabank (TSX:BNS) and Bank of Montreal (TSX:BMO) both reported Tuesday. Royal
Bank (TSX:RY), Toronto-Dominion (TSX:TD) and CIBC (TSX:CM) report on
Source: www.FinancialPost.com written by Canadian press.