The National Bank missed the analysts’ target by publishing its quarterly results on Wednesday, in particular due to the performance recorded in the financial markets sector.
Adjusted to exclude certain items, the profits of the largest bank in Quebec reached 790 million for the months of May, June and July, down 4% year-on-year.
The bank said its adjusted earnings per share reached $2.21, while analysts had expected adjusted earnings per share of $2.37.
“Revenue and net income growth in our retail and commercial, wealth management and specialty finance segments in the U.S. and internationally were partially offset by a less favorable environment for the financial markets segment,” comments the big boss of the National Bank, Laurent Ferreira, by press release.
“The bank is well positioned to navigate continued uncertainty and deliver long-term profitable growth,” he added.
The financial markets sector recorded a net profit of 205 million, down 27% compared to the same period a year ago.
Analyst Mike Rizvanovic, from the Keefe, Bruyette firm
According to Doug Young of Desjardins Securities, it appears that the situation is attributable to global markets, in particular to the decline in trading activities on behalf of certain clients.
At Scotia, Meny Grauman also acknowledges that the disappointment is largely due to trading activities, which recorded an “exceptionally weak” performance.
As a result, this expert says he expects the bank’s stock to be under pressure during Wednesday’s trading session since the stock had recently performed better than its comparables on the stock market. “Speculation is that part of this recent outperformance was linked to rumors of the National Bank acquiring Laurentian Bank, which is clearly not in the headlines today,” he says.
At Barclays, analyst John Aiken points out that National Bank has become known for the stability of earnings in its capital markets division and the decline disclosed, although potentially temporary, could have a more lingering impact on the valuation. of the action of the banking institution. “The situation is unfortunate because the underlying growth in the other business segments has been solid during this quarter. »
Laurentian Bank and CIBC will reveal their quarterly performance Thursday morning.