In the end, only CIBC beat analyst forecasts for the quarter to 30 April. National Bank of Canada (NBC) joins RBC, TD, BMO and Scotiabank in missing market forecasts. And as with its larger peers, a rise in loan loss provisions is the main factor. Specifically, provisions for credit losses rise from C$3m ($2.21) a year ago to C$85m.

NBC Q2 2023 net income is down by 5% y-o-y to C$847m. Revenue growth across the business segments is offset by higher non-interest expenses and higher provisions for credit losses. For the year to date, NBC’s net income of C$1.73bn is also down by 5% y-o-y.

“The bank delivered solid second-quarter results and an industry-leading ROE amidst a challenging environment. The results underscore its core strength, discipline and resiliency,” said Laurent Ferreira, President and CEO, NBC. “Our defensive posture with strong capital and liquidity positions and prudent levels of allowances for credit losses will continue to support profitable growth and help us navigate the uncertainty that may lie ahead.”

National Bank of Canada Q1 2023 key takeaways

The bank’s personal and commercial unit posts second quarter net income of C$335m, up 14% y-o-y. This is driven by growth in total revenues, tempered by higher non-interest expenses and higher provisions for credit losses. Income before provisions for credit losses and income taxes totals C$499m in Q2, up 22% y-o-y. Personal lending is ahead by 4% and commercial lending rises by 13%. Net interest income at the unit rises by 20% y-o-y. In turn this boosts the net interest margin. This rises by 24 basis points from a year ago to 2.34% in the second quarter. But Q2 provisions for credit losses rose C$26m from the year ago quarter. This is mainly due to higher allowances for credit losses on non-impaired loans and on impaired loans. Retail deposits rise by 19.2% y-o-y with non-retail deposits ahead by 16.4%.

One notable highlight is an improvement in the cost-income ratio, down from 57.4% a year ago to 54.6%.

Wealth management net income rises by 9% to C$178m. And wealth management total revenues rise by 7% y-o-y to C617m.

The NBC quarterly dividend rises by C$0.05 or 5% to C$1.02.