Noah Zivitz

Managing Editor, BNN Bloomberg

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National Bank of Canada closed out its fiscal year with a double-digit drop in profit as a number of one-time items weighed on the company's bottom line.

Net income for the three months ending Oct. 31 totalled $492 million, down 19 per cent from a year earlier, the bank said Wednesday.

Excluding one-time items, such as a $52-million impairment, severance costs, and a loss on the currency conversion from asset sales in Brazil, National said it earned $615 million, or $1.69 per share. Analysts, on average, were expecting $1.52 in profit per share.

Similar to its peers that have reported this week, National set aside far less cash for loans that could go bad. Indeed, provisions for credit losses were narrowed to $110 million in the fiscal fourth quarter from $143 million in the bank's third quarter.

“In this exceptional context (of COVID-19), the performance of the bank was very satisfactory," said CEO Louis Vachon in a release. 

"Our overall performance during the pandemic has confirmed that we have made the right strategic choices in terms of risk management, capital allocation and business mix. With four strong pillars, we are well-positioned to pursue growth across our businesses in 2021."

Net income from National's personal and commercial banking operations slipped three per cent year-over-year to $258 million in the fiscal fourth quarter. While revenue in the division was stable, the bank attributed the modest profit erosion to higher expenses and credit loss provisions.

National's wealth management and financial markets operations posted single-digit profit growth in the quarter. The bank's specialty finance and international unit's net income surged 36 per cent to $106 million.