Latest news with #NationalBank
Globe and Mail
19 hours ago
- Business
- Globe and Mail
What is Bay Street signalling about the economy?
Canada's Big Six banks have all released their second-quarter earnings, and the results point to mounting concern about a potential economic downturn. The combined provisions for credit losses (PCL) – as a percentage of total loans – have reached their highest level since the first quarter of 2010, excluding the temporary spikes seen during the height of the pandemic in the second and third quarters of 2020. It's worth noting that the presented data prior to 2014 included only the Big Five banks, not National Bank NA-T. Now, with all six major lenders accounted for, the data paint a clear picture: Canadian banks are preparing for a deteriorating credit environment, as economic headwinds threaten borrowers' ability to meet their loan obligations. While most earnings metrics reflect past performance – specifically the quarter ended April 30, 2025 – the provision for credit losses is forward-looking. It represents the funds banks set aside during the quarter to guard against potential defaults in the near future. Banks manage credit risk through a reserve called the allowance for credit losses (ACL), a buffer designed to absorb losses from unpaid loans. This reserve decreases when loans are written off and increases when new provisions are added or previously written-off loans are recovered. In the second quarter of 2025, net write-offs – or realized credit losses – climbed 8.3 per cent year-over-year, to $3.7-billion. The total ACL rose to $36.6-billion, up 16.7 per cent from the same period last year. Most strikingly, total PCL jumped to $6.4-billion, a 46.2-per-cent annual increase and up 21 per cent from the previous quarter. The ACL has now reached 0.86 per cent of total loans, surpassing the 17.5-year average of 0.74 per cent and marking its highest level in the past 14 years, excluding the period from the second quarter of 2020 to the second quarter of 2021. However, the sharp rise in PCL is the clearest indication yet of banks' growing concern about Canadians' ability to repay their debts. As shown in the chart, PCL at 0.15 per cent of total loans is at its highest level in the past 15 years, excluding the two quarters during the peak of the pandemic in 2020. Even accounting for the more forward-looking and conservative IFRS 9 standards, which replaced IAS 39 in 2018, the second-quarter results would still likely represent the highest levels in at least 14 years – even under the previous accounting framework. PCL also stands well above its 17.5-year average of 0.09 per cent. This uptick may be an early indicator of growing financial stress among Canadian households and businesses. In short, Bay Street is bracing for economic turbulence. The outlook is clouded by persistent trade tensions with the United States, stagnant productivity and sluggish GDP growth, factors that are prompting cautious forecasts for the Canadian job market. However, the current trajectory does not yet mirror the severity of the global financial crisis, when, from the fourth quarter of 2008 through the first quarter of 2010, the total PCL of the big banks remained higher than current levels. Hanif Bayat, PhD, is the CEO and founder of a Canadian personal finance platform.
Business Insider
6 days ago
- Business
- Business Insider
CIBC downgraded to Sector Perform from Outperform at National Bank
National Bank downgraded CIBC (CM) to Sector Perform from Outperform with a C$98 price target Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>>
Yahoo
6 days ago
- Business
- Yahoo
National Bank of Canada (NTIOF) Q2 2025 Earnings Call Highlights: Strong EPS Growth and ...
Earnings Per Share (EPS): $2.85, up 12% year-over-year. Return on Equity (ROE): 15.6%. CET1 Ratio: 13.4%. Quarterly Dividend Increase: Raised by $0.04. P&C Banking Net Income: $316 million, including $45 million from CWB. Wealth Management Net Income Growth: 15% year-over-year. Financial Markets Net Income: Over $500 million. Credigy Net Income: $40 million. ABA Bank Client and Deposit Growth: 33% and 21% respectively. Revenue Growth (All-Bank): 33% year-over-year. PTPP Growth (All-Bank): 45% year-over-year. Expenses Increase (Excluding CWB): 12% year-over-year. Non-Trading Net Interest Income (NII) Increase: 11% sequentially. Total Loans: $286 billion, up 22% year-over-year. Deposits (Excluding Wholesale Funding): $294 billion, up 23% year-over-year. Total PCLs: $545 million or 79 basis points. Adjusted Total PCLs: $315 million or 45 basis points. Gross Impaired Loan Ratio: 98 basis points. Warning! GuruFocus has detected 4 Warning Signs with NTIOF. Release Date: May 28, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. National Bank of Canada (NTIOF) reported a 12% year-over-year increase in earnings per share, reaching $2.85. The bank's return on equity was strong at 15.6%, reflecting robust financial performance. The acquisition of CWB is progressing well, with early momentum in cost and funding synergies. Wealth management saw a 15% increase in net income year-over-year, driven by strong organic growth. The bank's CET1 ratio stands at a solid 13.4%, supporting business growth and allowing for a dividend increase. Macroeconomic uncertainty, including global trade tensions and geopolitical instability, poses challenges to forecasting growth and inflation. Operating leverage was negative in the wealth management segment due to the integration of CWB's wealth business. The bank faces competitive pressures in deposit pricing, impacting net interest margins. The integration of CWB is expected to temporarily slow growth in certain segments, such as commercial loans. The bank's gross impaired loan ratio increased, driven by the CWB transaction, indicating potential credit quality concerns. Q: Why didn't National Bank of Canada update its earnings guidance despite strong Q2 results? A: Marie Gingras, CFO, explained that while they are confident in delivering mid-single-digit EPS growth for fiscal 2025, they see potential upside depending on market conditions. The strong first half provides a solid foundation, but they face a tough comparison in Q3. The successful integration of CWB is expected to create growth opportunities across Canada. Q: Can you provide more details on the AIRB transition and its impact on risk-weighted assets? A: Marie Gingras noted that while a small portfolio was migrated this quarter, the majority of the benefits from the AIRB transition are expected in 2026. A full capital plan update will be provided later in the year, likely in Q4. Q: Why isn't National Bank of Canada considering share buybacks given its strong CET1 ratio? A: Laurent Ferreira, CEO, stated that the focus is on organic growth and integrating CWB. The bank is cautious due to market uncertainty and plans to provide a capital plan update in Q4, which will include discussions on buybacks. Q: What needs to happen for revenue synergies from the CWB acquisition to materialize? A: Michael Denham, EVP, explained that revenue synergies will begin once client migrations to National Bank's systems are complete. This will allow CWB clients to access the full range of National Bank products and services, with migrations starting in the summer. Q: How did National Bank of Canada achieve such strong trading results in Q2? A: Etienne Dubuc, EVP, Financial Markets, attributed the success to an ideal trading environment with short volatility events, strong client activity, and robust issuance. The bank's defensive positioning and advanced trading technology allowed it to capitalize on market conditions. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Globe and Mail
7 days ago
- Business
- Globe and Mail
BMO, National Bank profits top expectations as tariff tension looms
Bank of Montreal BMO-T and National Bank of Canada NA-T reported second-quarter earnings that topped analysts' expectations even as the lenders set aside more money for loans that could default as risks mount over tariff tensions. As uncertainty over U.S. trade and fiscal policy raises the risk levels of certain borrowers, two of Canada's largest banks are provisioning for potential loan losses across the country's consumers and businesses. 'The uncertainty related to global trade tensions and ongoing negotiations continues to be an overhang on the economy. Increasing geopolitical and geoeconomic instability, and projected fiscal deficits in major economies are making the path of growth and inflation difficult to forecast,' National Bank chief executive officer Laurent Ferreira said during a conference call with analysts. 'That being said, the latest developments regarding global trade negotiations seem to be progressing in the right direction.' A breakdown of the big banks' second-quarter earnings so far BMO chief risk officer Piyush Agrawal said that while provisions for loans on the verge of defaulting were lower this quarter, the weakening economic outlook prompted the bank to bolster reserves for loans that are still being repaid. 'We remain cautious given the ongoing uncertainty and volatility in the economic environment related to trade policies,' Mr. Agrawal said during a conference call. 'The outlook for the Canadian economy has weakened with rising unemployment and declining GDP growth. The U.S. market has shown resilience, but momentum has softened.' In the quarter, BMO set aside $1.05-billion in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and was driven by a higher reserves for debt that is still in being repaid. BMO set aside $289-million for these types of loans, up from $152-million last quarter. Rising risk in Canadian commercial banking and Canadian unsecured consumer lending drove the increase. In the quarter, National Bank set aside $545-million in provisions and included $315-million against loans that are still being repaid. Last quarter, National reserved $254-million in provisions. While the increase was in part due to rising risk in loans, National also set aside $230-million in provisions stemming from its takeover of Edmonton-based Canadian Western Bank. Excluding provisions from CWB, National's reserves were slightly above analysts' estimates. With Canadian banks reporting their first full quarter of financial results since U.S. President Donald Trump launched a trade war, analysts expected Canada's banks to continue grappling with higher loan loss reserves. Over the past week, Toronto-Dominion Bank posted results that beat analyst estimates and Bank of Nova Scotia missed expectations. TD and Scotiabank also increased their provisions, citing concerns over a deteriorating economy stemming from heightened uncertainty in U.S. trade and fiscal policy. Analysts have said that the increase in reserves represents the banks' conservative approach in preparing for potential loan losses, and is not an indication that loans are defaulting. Royal Bank of Canada and Canadian Imperial Bank of Commerce release results on Thursday. BMO earned $1.96-billion in the three months that ended April 30, a 5-per-cent increase from the same quarter last year. Adjusted to exclude certain items, the bank said it earned $2.62 per share, beating the $2.55 per share analysts expected, according to S&P Capital IQ. National Bank's net income decreased by 1 per cent to $896-million, or $2.17 per share. Adjusted to exclude certain items, including acquisition and integration costs related to the acquisition of Canadian Western Bank, the bank said profit climbed 29 per cent, earning $2.85 per share. That edged out the $2.40 per share analysts expected. In the beginning of the quarter, National closed its takeover of Edmonton-based CWB, significantly expanding its footprint in Alberta and British Columbia. National is in the process of integrating Canada's ninth-largest lender, a process that is currently driving up costs. Total revenue rose 33 per cent in the quarter to $3.65-billion, while expenses jumped 32 per cent to $1.94-billion BMO and National both raised their quarterly dividends by 4 cents to $1.63 per share and $1.18 per share respectively.
CTV News
28-05-2025
- Business
- CTV News
National Bank of Canada reports profit of $896 million in second quarter
The head office of the National Bank is seen Friday, April 21, 2017 in Montreal. THE CANADIAN PRESS/Ryan Remiorz MONTREAL — National Bank of Canada reported a second-quarter profit of $896 million, down slightly from $906 million a year earlier. The Montreal-based bank says the profit amounted to $2.17 per diluted share for the quarter ended April 30, compared with $2.54 per diluted share a year ago. Revenue for the quarter totalled $3.65 billion, compared with $2.75 billion in the same quarter last year. National Bank's provisions for credit losses in the quarter amounted to $545 million, up from $138 million. The bank says its adjusted profit, which excludes items related to its recent acquisition of Canadian Western Bank, amounted to $2.85 per diluted share, up from an adjusted profit of $2.54 per diluted share a year ago. Analysts on average had expected an adjusted profit of $2.40 per share, according to LSEG Data & Analytics. This report by The Canadian Press was first published May 28, 2025. The Canadian Press
