National Bank Q1 Profit Rises 22%, Smashes Estimates

National Bank of Canada (TSE: NA) 2022 first-quarter profit surged, boosted by gains across all of its divisions as well as the reversal of provisions for credit losses.

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Earnings & Revenue

Profit came in at C$932 million (C$2.65 per diluted share) in Q1 2022, up 22% from a profit of C$761 million (C$2.15 per share) in Q1 2021. Diluted EPS beat estimates of C$2.23 per share.

Revenue was C$2.47 billion, up 11% from C$2.22 billion in the prior-year quarter.

National Bank recovered C$2 million of its provisions in credit losses in the first quarter, compared to the C$81 million it had set aside for bad debts in the same quarter last year.

CEO Commentary

National Bank president and CEO Laurent Ferreira said, ”The Bank is entering fiscal 2022 on a positive note thanks to excellent performance by its business segments, strong regulatory capital, and adequate allowances for credit losses. Solid revenue growth helped the Bank achieve a high return on equity in the first quarter.”

Changes to Leadership Team

The Montreal-based bank announced that Ghislain Parent, who served as chief financial officer and executive vice-president for more than a decade, is moving into a new role as executive vice president — international. He will oversee the bank’s overseas subsidiaries Credigy in the United States and ABA Bank in Cambodia.

Marie Chantal Gingras will take over as chief financial officer and executive vice-president on April 1 after 24 years with the bank, most recently as senior vice-president — financial accounting.

Wall Street’s Take

Following the results, Canaccord Genuity analyst Scott Chan kept a Hold rating on NA and set a C$109 price target. This implies 5.7% upside potential.

The rest of the Street is neutral on NA with a Hold consensus rating based on three Buys, five Holds, and one Sell. The average National Bank of Canada price target of C$110.25 implies 6.9% upside potential to current levels.

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