Barclays analyst Brian Morton has increased the price target for National Bank of Canada (NTIOF, Financial) from C$140 to C$141. This adjustment comes as a result of the bank's fiscal Q2 performance surpassing market expectations, largely attributed to stronger than anticipated fee income. Despite the positive quarterly results, Morton maintains an Equal Weight rating on the NTIOF shares.
NTIOF Key Business Developments
Release Date: May 28, 2025
- 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.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- National Bank of Canada (NTIOF, Financial) 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.
Negative Points
- 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.
