National Bank Q4 Profit Misses Estimates, Dividend Raised

National Bank of Canada (NA), Canada’s sixth-largest bank, posted lower profits than anticipated in the fourth quarter as Financial Markets earnings cooled off.

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Earnings & Revenue

Profit came in at C$776 million (C$2.19 per diluted share) in Q4 2021, up 58% from a profit of C$492 million (C$1.36 per share) in Q4 2020.

On an adjusted basis, National Bank earned C$2.21 per diluted share in the quarter ended October 31, missing analyst estimates of C$2.24 per share. This compares to an adjusted profit of C$1.69 per diluted share in the same quarter last year.

Revenue was C$2.21 billion, up 11% from C$2 billion in the prior-year quarter, and slightly lower than estimates of C$2.3 billion. (See Analysts’ Top Stocks on TipRanks)

Profit in National Bank’s Personal and Commercial banking division, which is heavily focused on Quebec, rose to C$353 million compared with C$249 million a year ago.

Its Wealth Management business profits grew 23.1% to C$165 million in the quarter. Finally, the bank’s Financial Markets’ business net income was C$208 million in the latest quarter, the same as a year earlier.

National Bank recovered C$41 million of its provisions in credit losses in the fourth quarter of 2021, compared to the C$110 million it set aside in the same quarter last year.

CEO Commentary

National Bank president and CEO Laurent Ferreira said, ”The Bank delivered outstanding results in fiscal 2021. We generated superior organic growth and an industry-leading return on equity while maintaining strong capital levels and prudent allowances for credit losses. The Bank’s sustained performance reinforces our commitment to continue pursuing fitting strategies in terms of business mix, capital allocation, and risk management.

“We enter the new year on strong footing, well-positioned to generate solid growth across our business segments and deliver superior returns to our shareholders.”

Dividend Hike

The Montreal-based bank said it would now pay a dividend of C$0.87 per share, up 22.5% from C$0.71 per share.

National Bank has also announced its intention to buy back up to seven million of its shares.

Wall Street’s Take

Following the results, Canaccord Genuity analyst Scott Chan maintained a Hold rating on NA and set a C$109.50 price target. This implies 12.7% upside potential.

The rest of the Street is neutral on NA with a Hold consensus rating based on one Buy, four Holds, and one Sell. The average National Bank of Canada price target of C$106.42 implies 9.6% upside potential to current levels.