National Bank of Canada hikes dividend on strong 4th quarter profits

National Bank of Canada hiked its dividend as it reported fourth-quarter net income of $566 million, up eight per cent from the previous year, as each of its three main business units improved earnings. Laurentian Bank of Canada did not fare as well.

Income up 8% from the previous year, says Montreal-based bank

The head office of the National Bank is seen in Montreal on April 21, 2017. The Montreal-based bank reported strong 4th-quarter earnings and hiked its dividend 3 cents per common share. (Ryan Remiorz/Canadian Press)

National Bank of Canada hiked its dividend as it reported fourth-quarter net income of $566 million, up eight per cent from the previous year, as each of its three main business units improved earnings.

The Montreal-based bank's profit during the three months ended Oct. 31 amounted to $1.52 per share on a diluted basis and $1.53 per share after adjustments.

Analysts had estimated $1.52 per share of net income and $1.52 per share of adjusted earnings, according to Thomson Reuters Eikon.

Revenue for the three months ended Oct. 31 was $1.87 billion, slightly above analyst estimates.

During the same period of fiscal 2017, National Bank had $525 million of net income or $1.39 per share and $1.76 billion of revenue.

The bank also said its quarterly dividend will rise three cents to 65 cents per common share, payable Feb. 1.

Boosts from personal and commercial divisions

National Bank's fourth-quarter results were fuelled by a 10 per cent year-over-year increase in net income from its personal and commercial banking division, totalling $257 million.

The bank's wealth management division posted net income of $124 million during the fourth quarter, up 14 per cent from the same period a year earlier. Its financial markets segment reported net income of $192 million during the quarter, up from $183 million in 2017.

For the full financial 2018 year, the Montreal-based bank reported net income of $2.23 billion, up 10 per cent from the same 12-month period ended Oct. 31 in 2017.

The company's president and chief executive officer said in a statement "2018 ended with record net income of over $2.2 billion driven by strong performance across all business lines and an improved efficiency ratio."

National Bank's latest quarter was in line with expectations as strength in capital markets offset seasonally-elevated expenses, said Robert Sedran, an analyst with CIBC Capital Markets.

"A good result with each of the operating segments showing consistent trends," he said in a note to clients.

Laurentian income down

Laurentian Bank of Canada did not fare as well. Fourth-quarter net income dropped by 13 per cent from the previous year to $50.8 million, on lower revenues and loan volumes, and missed analyst estimates.

The Montreal-based company's net income amounted to $1.13 per diluted share during the three months ended Oct. 31, down from $1.42 during the same period a year ago.

Analysts had expected earnings of $1.26 per share, according to Thomson Reuters Eikon.

Laurentian Bank president and CEO Francois Desjardins is seen prior to the shareholders meeting April 10, 2018, in Montreal. While the company reported lower 4th-quarter income Wednesday, Desjardins said that in part reflects changes over the past year that position the bank well, including the sale last year of Verico Financial Group. (Paul Chiasson/Canadian Press)

On an adjusted basis, the Montreal-based bank reported net income of $54.3 million, down 18 per cent from $66.5 million.

Other factors weighing on Laurentian's results include a $5.9 million gain on the sale of its investment in Verico Financial Group during the same quarter one year ago, as well as an increase in provisions for credit losses or money set aside for bad loans.

For the full 2018 financial year, Laurentian reported net income of $224.6 million, up nine per cent from $206.5 million during 2017.

"Our 2018 results reflect our actions to strengthen the Group's financial foundation, including maintaining healthy liquidity levels and our investments in people, processes and technology," said Laurentian's president and chief executive officer Francois Desjardins in a statement. "This positions us well to deliver our strategic objectives."