Boosted by revenue growth in all business segments, National Bank of Canada on Wednesday reported a higher fourth-quarter profit than last year, narrowly beating analyst expectations, and said its acquisition of Edmonton-based Canadian Western Bank is expected to fuel future growth.
Chief executive Laurent Ferreira said the pending acquisition, which is expected to close early next year, would be the bank’s “key pillar” for its growth in Canada in 2025 and the years to come. The deal is currently being reviewed by the Office of the Superintendent of Financial Institutions (OSFI), the country’s top banking regulator.
“(OSFI) are right now conducting their review process and when they are done, they will submit to the minister of finance their recommendation. So, we are right now waiting for OSFI to finalize their work,” Ferreira said on a conference call about the quarterly results. “Things are progressing as we expected. We’re still optimistic.”
The $5-billion, all-stock deal for CWB will expand Quebec-focused National Bank’s reach to Alberta and British Columbia and was announced a few months after Royal Bank of Canada completed its acquisition of HSBC Holdings PLC’s Canadian division.
National Bank’s net income for the three-month period ending Oct. 31 was $955 million, up from $751 million during the same period last year, resulting in net earnings per share of $2.69.
Adjusting for certain conditions, the bank earned $928 million, up from $850 million a year ago, resulting in earnings per share of $2.61. Analysts had expected the bank to earn $2.57 per share.
National Bank said the increase in profit was due to “good performance in all of the business segments owing to revenue growth.”
The results were, however, affected by increases in non-interest expenses, provisions for credit losses (PCL) — the amount of money banks keep aside to tackle potential bad loans — and income taxes.
The bank’s total PCL increased to $162 million, from $115 million during the same period last year.
The Montreal-based bank increased its quarterly dividend by four cents to $1.14.
“While we view National Bank’s results positively, we note that the market could take exception to the deterioration in credit quality as well as the lower tax rate,” Jefferies Inc. analyst John Aiken said in a note on Wednesday.
Looking ahead, Ferreira expects the Canadian economy to experience slow growth in the first half of 2025 due to restrictive interest rates and “softness” in the labour market, consumer spending and business investment.
