* Q4 adj EPS C$1.63 vs est C$1.57
* Raises quarterly dividend 6.5 pct
* Results driven by retail banking, held back by markets (Adds details, analyst comment)
By Cameron French
TORONTO, Nov 30 (Reuters) - National Bank of Canada (NA.TO) posted a stronger than expected 19 percent jump in quarterly profit on Tuesday, and became the first major domestic bank to resume dividend hikes in the wake of the financial crisis with a 6.5 percent rise.
Canada’s No. 6 bank earned C$287 million ($279 million), or C$1.66 a share, in the fourth quarter, ended Oct. 31. That compared with a profit of C$241 million, or C$1.39 a share, in the year-before period.
The bank said the increase was driven by stronger retail banking and wealth management results.
National raised its quarterly dividend to 66 Canadian cents a share from 62 Canadian cents, the first dividend increase for the bank since 2007 and the first by any of Canada’s “big six” banks since 2008.
Canada’s financial regulator told the banks in 2008 to avoid big capital layouts due to the uncertainty of looming regulatory changes brought on by the financial crisis.
It lifted the ban in September.
“The implication is that capital has gotten to a level where the banks are comfortable starting to deploy some of it,” said Craig Fehr, an analyst at Edward Jones in St. Louis.
“(But) I don’t think this necessarily puts a lot of pressure on the rest of the banks.
A similar move by any of the other big banks is seen as unlikely until the first quarter of 2011, although regional lender Canadian Western Bank (CWB.TO) has suggested it could raise its payout this quarter.
National’s Tier 1 capital ratio was 14 percent at the end of the quarter.
Excluding items, adjusted profit was C$1.63 a share, topping analysts’ expectations for a profit of C$1.57 a share, according to Thomson Reuters I/B/E/S.
“It looks to me that loan growth is a little bit stronger than I would have expected,” said Fehr.
Personal and commercial banking income, which relies on consumer and business loans, rose 34 percent, while wealth management income increased 27 percent. Return on equity was 18 percent.
Louis Vachon, the bank’s chief executive, said in a statement that the strong result was helped by the bank’s “one client, one bank” strategy, which focuses on cross-selling customers on different bank products.
Results from National’s financial markets business fell 19 percent.
Earlier, the bank’s shares fell 1.3 percent, after reports it had cut jobs at its financial markets unit. A spokesman would not comment on the reports.
The bank’s shares ended down 89 Canadian cents at C$67.84 on the Toronto Stock Exchange.
The results, which were released after markets closed, are the first from Canada’s big lenders this quarter, and National’s strong retail banking profit could bode well for other banks.
Canadian Imperial Bank of Commerce (CM.TO) and Toronto-Dominion Bank (TD.TO) will report on Thursday, followed by Royal Bank of Canada (RY.TO) and Bank of Nova Scotia (BNS.TO) on Friday. Bank of Montreal (BMO.TO) will release its results next week.
$1=$1.03 Canadian Reporting by Cameron French; editing by Rob Wilson