National Bank beats loan growth estimates as Canada recovers

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The National Bank of Canada is benefiting from the economic strength of its home market, Quebec, which allows loan growth to accelerate more quickly than among certain competitors.

Average loans and personal loan acceptances increased 9.6% from a year ago to $ 86.5 billion ($ 68.6 billion), while commercial loans increased 14% to reach $ 42.5 billion. Overall profit exceeded analysts’ estimates.

Key ideas

  • The bank’s capital markets division has held up even amid a slowdown in trade from last year’s boom. The bank’s capital markets unit net income rose 21% in the fiscal third quarter to $ 227 million, helped by M&A advisory fees and underwriting income.
  • The SNB continued to withdraw from the cautious stance it took at the start of the pandemic regarding the potential for loan defaults. The bank reversed $ 43 million in bad debt provisions in the last quarter. This compares to $ 5 million in set-aside in the second quarter.
  • The lender continued to be pressured on the spread between what he earns on loans and what he pays for deposits. National Bank’s net interest margin in its personal and business unit stood at 2.11% in the last quarter, compared to 2.15% a year earlier and 2.16% in the second quarter.

Market reaction

Shares are up 39 percent this year, compared to a 26 percent gain for the S & P / TSX Commercial Bank Index.

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Net income for the three months through July rose 39% to $ 839 million, or $ 2.36 per share. Analysts put it at $ 2.13 on average.


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