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Update: National Bank Reports Q2 Adjusted Earnings Beat, Revenue Growth; Raises Dividend
(with updates on performance of different units and National Bank's outlook on global and Canadian economy from paragraph 10)National Bank of Canada (NA.TO) on Wednesday lodged a beat in adjusted earnings and revenues for the second quarter, citing "good performance across the business segments and lower provisions for credit losses", while the lender also announced an increased dividend.For the second quarter, National Bank reported adjusted net income of $1,303 million, up 12% from $1,166 million in the same period of 2025. It excluded specified items recorded in the second quarters of 2026 and 2025 mainly related to the acquisition of Canadian Western Bank, the bank said.Adjusted diluted earnings per share stood at $3.23 compared with $2.85 a year earlier. FactSet estimated $3.13.The bank also reported a net income of $1,234 million, up 38% from $896 million in the second quarter of 2025, the increase being attributable to "good performance across the business segments and lower provisions for credit losses, particularly due to the initial provisions for credit losses recorded in the second quarter of 2025 on acquired non-impaired Canadian Western Bank (CWB) loans". Diluted earnings per share stood at $3.06, up 41% from $2.17 in the second quarter of 2025.Total revenue climbed 7% to $3,907 million in three-month period ended on April 30, ahead of the FactSet estimate of $3,813.5 million.In Personal and Commercial, provisions for credit losses were down $257 million, mainly due to initial provisions for credit losses of $230 million on acquired non-impaired CWB loans recorded in 2025.The bank's board also declared dividend of $1.32 per common share, up $0.08 or 6%, payable on August 1, 2026, to shareholders of record on June 29, 2026."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 Laurent Ferreira, CEO of National Bank of Canada."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," concluded added Ferreira.In operations, National Bank said its Personal and Commercial unit's net income totaled $355 million, a $223 million lift. Adjusted net income totaled $373 million, up $57 million or 18%.At $1,488 million, second-quarter total revenues rose $72 million or 5% mainly due to net interest income, in line with the growth in loan and deposit volumes, partly offset by a lower net interest margin. Compared to a year ago, personal lending grew 11% and commercial lending grew 5%, due to the good organic growth, the bank said.Wealth Management's net income reached $274 million, an 18% increase. Total revenues amounted to $905 million compared to $791 million last year, a $114 million or 14% increase driven by "growth in all types of revenues, mainly fee-based revenues", the bank said.Its Capital Markets' net income decreased 3% to $488 million while total revenues amounted to $1,074 million, down 2% mainly due to a decrease in global markets revenues, partly offset by an increase in corporate and investment banking revenues.The U.S. Specialty Finance and International (USSF&I) unit's net income totaled $186 million, up 10%. Total revenues amounted to $410 million, a 5% increase attributable to revenue growth at the ABA Bank subsidiaries.'Other' operations reported a net loss of $69 million compared to a net loss of $138 million, owing mainly to a higher contribution from treasury activities, as well as the decrease in non-interest expenses.In its global economic outlook, National Bank said the most significant event of the past quarter has been the conflict in the Middle East, which led to paralysis in the Strait of Hormuz, a transit route for approximately 20% of global oil supply as well as several other strategic commodities.In its outlook on Canadian economy, the National Bank said the impact of the oil shock on the country's economy continues to generate "debate"."It is generally acknowledged that Canada is relatively better positioned than many other countries to cope with rising oil prices, given its status as a net exporter. That does not mean, however, that the Canadian economy will benefit in the short term from the tensions in the Middle East.""To be sure, improved terms of trade support nominal GDP as well as public finances. In addition, higher prices are a positive factor for the energy sector. However, because this increase is currently viewed as temporary, it should not lead to a marked rebound in investment or job creation. Moreover, households may be forced to reduce discretionary spending because of higher prices at the pump," the bank said in its outlook.Shares closed down $0.98 at $212.40 in Toronto on Tuesday.
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