National Bank of Canada beats earnings estimates due to increased loans and lower provisions

The National Bank of Canada logo is seen outside a branch in Ottawa, Ontario, Canada, February 14, 2019. REUTERS / Chris Wattie

National Bank of Canada (NA.TO) beat analysts’ estimates for second-quarter profit on Friday, amid rising profits from personal and business activities and a sharp drop in funds set aside for cover potential loan losses.

Personal loans were up 7% and commercial loans 5% from the previous year, making Canada’s smallest of six big banks one of the few to see an increase in these at a time when companies relied on cash and refrained from borrowing.

The bank took C $ 5 million ($ 4.13 million) in bad debt provisions, which included the release of C $ 62 million of capital previously set aside to cover performing loans that may have accrued. deteriorate.

“We continue to operate in an improving economic environment more conducive to business growth, with our Q1 momentum carried over to Q2,” CEO Louis Vachon said in a statement.

Excluding the impact of provisions and taxes, profit increased 14% to C $ 1.04 billion from a year ago.

Like its counterparts, National Bank also posted a sharp increase in net income from financial markets of 50%. The bank also recorded a 17% increase in net income from wealth management.

The results come a day after Royal Bank of Canada (RY.TO), Toronto-Dominion Bank (TD.TO) and Canadian Imperial Bank of Commerce (CM.TO) all reported better-than-expected quarterly profits, drawn by the release of provisions for loan losses. Read more

Analysts expected the Big Six Canadian banks to post strong results from their operations in the financial markets, due to the costs of closing deals and strong issuance.

National Bank’s net income excluding exceptional items amounted to C $ 801 million, or C $ 2.25 per share, in the three months prior to April, compared to C $ 379 million, or C $ 1.01 per share, a year earlier.

Analysts were expecting C $ 2 per share, according to IBES data from Refinitiv.

($ 1 = 1.2095 Canadian dollars)

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