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National Bank reports strong Q2 results as it prepares for uncertain economy

MONTREAL — National Bank of Canada beat expectations in its latest quarter as it prepares to navigate through a more uncertain economic environment.
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The head office of the National Bank is seen Friday, April 21, 2017 in Montreal. National Bank of Canada is reporting a second-quarter net income of $893 million and raising its quarterly dividend. THE CANADIAN PRESS/Ryan Remiorz

MONTREAL — National Bank of Canada beat expectations in its latest quarter as it prepares to navigate through a more uncertain economic environment.

Already muddied by the war in Ukraine and supply chain disruptions, the economic backdrop looks even more uncertain as economists expect the Bank of Canada to raise interest rates faster than expected. Some experts fear that the tightening of monetary policy will lead to a recession.

"This is not the scenario that we foresee, but this risk exists and we take it into account in our decisions," CEO Laurent Ferreira said Friday during a conference call about its latest quarterly results.

In this difficult economic context, he said the resilience of the Canadian economy is an asset. Ferreira noted that the Canadian economy is supported by the natural resources sector and that the unemployment rate remained relatively low.

The Montreal-based bank raised its quarterly dividend six per cent after reporting that its second-quarter net income grew to $893 million.

National said it will pay a quarterly dividend of 92 cents per share, up five cents from 87 cents per share.

The increased payment to shareholders came as the bank says it earned $2.55 per diluted share for the quarter ended April 30 compared with a profit of $801 million or $2.25 per diluted share a year earlier.

Revenue totalled $2.44 billion, up from $2.24 billion.

National Bank said its total provisions for credit losses for the quarter amounted to $3 million compared with $5 million in the same quarter last year.

On an adjusted basis, National Bank said it earned $2.55 per diluted share, up from an adjusted profit of $2.25 per diluted share in the same quarter last year.

Analysts on average had expected an adjusted profit of $2.25 per share for the quarter, according to estimates compiled by financial markets data firm Refinitiv.

"This outperformance was driven by much stronger brokerage revenue," said analyst Mario Mendonca of TD Securities.

National Bank said its personal and commercial banking operations earned $313 million in the second quarter compared with $305 million in the same quarter last year, helped by growth in total revenue, tempered by higher provisions for credit losses.

Meanwhile, the bank's wealth management arm earned $169 million in the quarter, up from $164 million in the second quarter of 2021.

National Bank's financial markets business recorded $289 million in the quarter, up from $248 million in the same quarter last year, as it benefited from higher total revenues and lower provisions for credit losses.

The bank's U.S. specialty finance and international arm earned $152 million in the quarter, up from $129 million a year ago.

This report by The Canadian Press was first published May 27, 2022.

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The Canadian Press