Higher provisions for credit losses helped account for a year-over-year decline
National Bank of Canada saw its net income drop in 2023’s first quarter on a yearly basis, falling by 5% to $881 million compared with $930 million the same time last year.
The bank’s diluted earnings per share came in at $2.49, slipping from $2.64 in Q1 2022, with higher provisions for credit losses and non-interest expenses two of the main reasons behind the decline.
Before provisions for credit losses and income taxes, adjusted income was up 5% due to revenue growth across all business segments. The bank also cited the effect of a tax expense caused by the federal government’s 2022 tax measures as a key reason for its lower overall net income.
It set aside $66 million more for credit losses than it had in the first quarter of last year, when a “more favourable macroeconomic outlook” had allowed reversals of allowances for credit losses on its non-impaired loans.
Personal lending was up 5% on a yearly basis while commercial lending also grew, by 12%. Net income on the wealth management side increased by 16%, to $198 million, compared with Q1 2022.
National Bank’s president and CEO Laurent Ferreira said the company was “maintaining a defensive positioning” amidst an uncertain national economic outlook.