National Bank of Canada is benefiting from economic strength in its home market of Quebec, helping loan growth accelerate faster than at some peers.

Average loans and acceptances for personal loans rose 9.6% from a year earlier to $86.5 billion (US$68.6 billion), while commercial loans increased 14 per cent to $42.5 billion. Overall profit topped analysts’ estimates.

Key Insights

• The bank’s capital-markets division held up even amid a trading slowdown from last year’s boom. Net income from the bank’s financial-markets unit rose 21 per cent in the fiscal third quarter to $227 million, helped by mergers-and-acquisitions advisory fees and underwriting revenue.
• National Bank continued to withdraw from the cautious stance it took early in the pandemic regarding the potential for loan defaults. The bank reversed $43 million in provisions for credit losses last quarter. That compares with $5 million in set-asides in the second quarter.
• The lender continued to see pressure on the spread between what it earns on loans versus what it pays for deposits. National Bank’s net interest margin in its personal and commercial unit was 2.11 per cent last quarter, compared with 2.15 per cent a year earlier and 2.16 per cent in the second quarter.

Market Reaction

The shares have risen 39 per cent this year, compared with a 26 per cent gain for the S&P/TSX Commercial Banks Index.

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Net income for the three months through July rose 39 per cent to $839 million, or $2.36 a share. Analysts estimated $2.13, on average.