Analyst Note| Eric Compton, CFA |
Narrow-moat rated National Bank of Canada reported solid fiscal third-quarter results. Earnings per share were CAD 2.36, representing solid year-over-year growth compared with EPS of CAD 1.66 in the same period a year ago and higher than last quarter’s EPS of CAD 2.25. Provisioning continues to be a major driver of improved earnings, coming in at a net benefit of CAD 43 million this quarter, a multi-year low and materially lower than the CAD 500 million charge the bank took in the second quarter of 2020. This aligns with our view that the Canadian banks will be fine from a credit perspective and that better results should be the norm going forward. We still expect the return of fee growth and much lower provisions to drive solid earnings growth for the rest of the year, while the lack of a boost from lower provisioning will make for tougher comps for the Canadian banks in 2022.