National Bank of Canada has announced a rise in profit for the third quarter, although revenue and adjusted earnings fell short of expectations due to increasing provisions for credit losses.
Strong Net Income, but Adjusted Earnings Fall
Net income for the Canadian financial institution reached 839 million Canadian dollars ($619 million), or C$2.36 a share, for the three months ended July 31. This marks an increase from the previous year’s figure of C$826 million, or C$2.35 a share.
However, on an adjusted basis, net income declined to C$2.21 a share compared to C$2.35 a share previously. Analysts had anticipated a slight rise to C$2.37 a share, according to a poll conducted by FactSet.
Revenue Misses Expectations
Total revenue rose to C$2.51 billion from C2.41 billion. Although this represents growth, it fell short of analyst expectations, which predicted a greater increase to C$2.65 billion.
Business Segment Performance and Provisions for Credit Losses
The National Bank of Canada experienced growth across all of its business segments, with the exception of the financial markets segment, which saw a decline of 27% in net income to C$205 million. This growth was partially offset by higher provisions for credit losses, which rose to C$75 million from C$1 million in the previous year.
Strong Tier 1 Common Capital Ratio
The Tier 1 common capital ratio, which measures a bank’s core capital in relation to its riskier assets such as loans and mortgages, rose to 13.5% from 12.7% the previous year.
Conclusion
While National Bank of Canada reported increased net income, the results fell short of expectations due to provisions for credit losses. The bank’s focus remains on managing risk and ensuring capital strength to navigate the current economic landscape.
