National Bank of Canada profit boosted by markets, buy backs eyed

Wed Feb 25, 2015 3:08pm EST
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By Jeffrey Hodgson

TORONTO (Reuters) - National Bank of Canada (NA.TO: Quote), the country's sixth-largest lender, reported a stronger-than-expected profit on Wednesday, helped by gains at its financial markets division.

The Montreal-based lender said net income rose to C$415 million ($334 million), or C$1.16 per share, in the first quarter ended Jan. 31 from C$405 million, or C$1.15 per share, a year earlier.

The bank said diluted earnings per share excluding some items were C$1.14. Analysts, on average, had expected C$1.12, according to Thomson Reuters I/B/E/S. National shares gained 2.75 percent to C$48.19.

National also said it would sell more than 9 million of its shares in Fiera Capital Corp FSZ.TO, reducing its stake in the investment manager to about 22 percent.

National executives said they expected to keep their Fiera stake above 20 percent, and the sale was prompted by regulations that changed the impact of the Fiera stake on National's capital ratios.

The bank is in the process of seeking regulatory approval to renew its share buy back program. But it isn't considering buying back shares until its common equity tier 1 ratio, a measure of financial strength, reaches at least 9.5 percent. It stood at 9.3 percent in the most recent quarter.

Chief Executive Louis Vachon said on conference call the priority for capital is to finance organic growth and acquisitions, but the bank should be in position in the next quarter or two to buy back stock if the economic outlook is stable.

"If our stock is trading again at what we consider accretive levels for us to buy it back, we'd like to be in a position to do that sooner as opposed to later," he said. "Below 10 times earnings we feel that it is significantly accretive for us to buy back our shares."   Continued...