Montreal lender's adjusted earnings surge past estimates
National Bank of Canada reported a stronger-than-expected second quarter on Wednesday, buoyed by a surge in trading activity that helped offset a murky economic backdrop.
Profit from its financial markets division jumped dramatically, capitalizing on heightened volatility linked to shifting US trade policy and persistent global economic uncertainty.
The Montreal-based lender posted adjusted earnings of $2.85 per share — well above analysts’ projection of $2.40, according to data compiled by LSEG — and a sharp climb from $2.54 in the same period last year. Total adjusted profit reached $1.17 billion, compared with $906 million a year ago.
Driving that growth was a 56% spike in revenue from its financial markets segment, which brought in $501 million amid active trading conditions. Increased client demand and stronger revenue generation from equity and fixed-income operations were credited with the robust performance.
Big Six earnings season well underway in Canada
National Bank’s results land in the middle of a cascade of second-quarter earnings updates from Canada’s largest financial institutions — a period marked by resilience, caution, and divergence across banking strategies.
Earlier this week, Bank of Nova Scotia (Scotiabank) disappointed investors after missing analyst expectations, dragged down by higher-than-anticipated provisions for credit losses. The lender added nearly $1 billion to its reserves for potentially troubled loans, contributing to a dip in profitability.
Meanwhile, Bank of Montreal (BMO) exceeded earnings forecasts this morning, powered by higher net interest income. But the bank also revealed a significant increase in credit-loss provisions — $1.05 billion — signalling its own growing unease about credit risk.
Credit fears linger despite robust results
National Bank’s performance this quarter underscores the growing importance of capital markets activity as a counterweight to concerns in other parts of the banking business. As interest rates remain elevated and economic sentiment weakens, trading divisions are emerging as reliable revenue drivers — at least for now.
Still, the broader industry context is hard to ignore. A common thread in this earnings season has been the ramping up of reserves to guard against potential credit deterioration. Even as economic growth slows, Canada’s largest lenders are signalling a preference for prudence over optimism — bolstering performing loan provisions even in the absence of a surge in actual defaults.
National’s earnings announcement came with an added incentive for investors: a 4-cent increase in its quarterly dividend, now set at $1.18 per share.
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