Lower credit loss provisions and the Canadian Western Bank acquisition powered a surge in net income
National Bank of Canada posted second-quarter profit well above analyst expectations on Wednesday, driven by a sharp drop in provisions for credit losses and surging earnings in its personal and commercial banking division.
Net income for the three months ending April 30 reached $1.2 billion, up 38% from $896 million a year earlier.
On an adjusted basis, the bank earned $3.23 per diluted share, topping the $3.13 consensus forecast compiled by LSEG Data & Analytics and rising from $2.85 a year ago.
The bank also raised its quarterly dividend by eight cents, to $1.32 per share.
Credit discipline drives the upside
The standout figure was a dramatic easing in provisions for credit losses (PCLs) — the funds banks set aside to cover potential loan defaults.
PCLs came in at $233 million, less than half of the $545 million recorded in the same quarter a year ago and below the $255 million analysts estimated.
The decline reflected what chief executive Laurent Ferreira described as the bank's "credit discipline," combined with continued synergies from the Canadian Western Bank acquisition completed in February 2025.
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“We delivered strong growth in the second quarter, reflecting the diversification of our business and continued client activity across our franchises. Our performance was further supported by credit discipline, CWB-related synergies and share buybacks,” said Ferreira.
“In the context of heightened macroeconomic uncertainty, we remain well positioned to support our clients, and continue delivering strong earnings growth and return on equity, while maintaining robust capital levels.”
The CWB acquisition was widely seen as a gamechanger for the Western Canadian mortgage market, extending National Bank's reach into British Columbia and Alberta.
Revenue growth anchored by personal banking and wealth
Personal and commercial banking net income climbed nearly 169% to $355 million, bolstered by net interest income and CWB-related contributions.
Wealth management earnings rose 18% to $274 million, driven by fee-based revenue growth.
Capital markets earnings dipped 3% to $488 million, reflecting softer global markets revenue, though corporate and investment banking partially offset the decline.
Read more: Scotiabank Q2 profit jumps on stronger Canadian banking results
National Bank's United States specialty finance and international segment earned $186 million, up 10% year over year.
The results landed on the same day as earnings from Bank of Nova Scotia and Bank of Montreal, with Royal Bank of Canada, Toronto-Dominion Bank, and Canadian Imperial Bank of Commerce scheduled to report Thursday.
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