December 2, 2016 / 11:57 AM / 3 years ago

National Bank of Canada wants stronger capital buffer

TORONTO (Reuters) - National Bank of Canada (NA.TO) on Friday reported better-than-expected profit for the fourth quarter of its fiscal year and said it planned to further strengthen its capital position next year.

A sign is pictured outside a National Bank of Canada branch in Ottawa, Ontario, Canada on August 27, 2009. REUTERS/Chris Wattie/File Photo

Canada’s sixth-biggest bank based on assets raised C$300 million ($226 million) through a share offering last year after its core tier 1 ratio, a key measure of financial strength, fell to the 9.5 percent minimum required by the country’s financial regulator.

Since then, it has rebuilt its capital buffer to 10.1 percent at the end of October and Chief Executive Louis Vachon said he wanted to continue that progress and bring the bank’s core tier 1 ratio up to 10.5 percent.

“I think we want to get to ten-and-a-half pretty quickly, either by the end of Q2 or Q3 at the latest. Once we get there, we’ll be able to be a bit more generous in terms of dividend increases,” Vachon told analysts on a conference call.

Shares in National Bank of Canada were up 0.2 percent at midday on Friday.

Net income at the bank’s personal and commercial division increased by 7.1 percent to C$196 million ($147 million) in the three months ended Oct.31.

The Montreal-based lender’s profit at its wealth management unit rose 20 percent to C$84 million.

However, National Bank of Canada’s overall net income fell 11.5 percent to C$307 million, or 78 Canadian cents per share, hurt by certain one-time charges.

The bank incurred a restructuring charge of C$96 million and an asset impairment charge of C$32 million among others in the latest quarter.

Excluding such charges, the bank’s profit rose 11 percent to C$463 million, or C$1.24 per share, beating analysts average estimate of C$1.21, according to Thomson Reuters I/B/E/S.

The company said provision for credit losses fell by C$2 million to C$59 million, mainly as it set aside less money for credit cards and personal and commercial banking loans.

National Bank of Canada also raised its quarterly dividend by 1 Canadian cent to 56 Canadian cents per share.

The bank’s total revenue rose 11.7 pct to C$1.57 billion.

Reporting by Matt Scuffham in Toronto and Vishaka George in Bengaluru; Editing by Savio D'Souza and Andrew Hay

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