National Bank shares rise to all-time high on strong Q2 profits

MONTREAL -- Shares in National Bank hit an all-time high Wednesday after the country's sixth-largest lender reported a 10 per cent rise in profits helped by growth in its wealth management and financial markets services.

The stock rose to a record price of $50.86 in early morning trading. By midday, it was up 2.75 per cent, or $1.36, to $50.76.

The Montreal-based bank said it had a third-quarter net income of $441 million, up from $402 million in the same period a year earlier. The earnings amounted to $1.24 per diluted share versus $1.16 year-over-year.

Excluding specific items, National Bank had an adjusted net income of $427 million, up 14 per cent from $374 million in the third quarter of 2013.

Adjusted diluted earnings per share were $1.20 for the quarter, easily beating expectations. Analysts had expected adjusted diluted earnings per share of $1.11, according to estimates provided by Thomson Reuters.

Total revenues were $1.42 billion, up from $1.29 billion in the same period last year for National Bank (TSX:NA).

The bank's wealth management segment had net income totalling $64 million in the quarter, a 31 per cent increase from $49 million in the same quarter of 2013.

Net income for the bank's financial markets segment was $187 million in the quarter, up 21 per cent from $155 million year-over-year.

Barclays analyst John Aiken called the results a "stand out quarter" for National Bank, which saw trading up 25 per cent and advisory fees climb by 36 per cent compared with a year ago.

"While the market typically does not give the bank any credit for its trading prowess, we believe the performance in its retail banking division alone could strengthen the shares relative to peers," he wrote. "We would expect NA to outperform today, even after a strong performance post Q2-14," Aiken said in a research note.

Return on equity for the quarter was 19.4 per cent compared with 20.1 per cent year-over-year.

"National Bank's third-quarter results have shown steady year-over-year growth across all business segments, particularly in the wealth management and financial markets segments," president and CEO Louis Vachon said in a news release.

"Furthermore, the personal and commercial segment achieved sustained growth in loan volume, and our credit portfolio continues to be of excellent quality," Vachon said.