Noah Zivitz

Managing Editor, BNN Bloomberg

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National Bank of Canada joined its peers on Wednesday in announcing a dividend hike and plans to launch a share buyback program, as it too takes advantage of freedom from a pandemic-era ban on such moves.

In a release, National said its board of directors decided to boost the quarterly payout to shareholders 23 per cent to $0.87 per share. In addition, the bank will seek approval from the Office of the Superintendent of Financial Institutions (OSFI) and the Toronto Stock Exchange to repurchase up to 7 million of its common shares. 

The Montreal-based lender is able to do so after OSFI lifted its prohibition on dividend hikes and share buybacks that was implemented in early 2020 as the regulator sought to shield the financial system from the potentially devastating impact of COVID-19. Back then, there was a fear that the pandemic's economic fallout could cause a tidal wave of loan defaults. But that crush of sour loans never materialized, in part because of government aid programs for Canadians who were thrown out of work.

Separately on Wednesday, National Bank said its full-year profit rose to $3.18 billion from $2.08 billion a year earlier. For the fiscal fourth quarter, which ended Oct. 31, its net income surged almost 58 per cent to $776 million. The bank's profit got a lift in the quarter from the release of $41 million that was previously set aside for loans that could go bad. 

On an adjusted basis, National earned $2.21 per share. Analysts, on average, were expecting $2.19 in per-share profit. 

"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,'' said Laurent Ferreira, National Bank's president and chief executive, in a release.