National Bank moves forward with its Canadian Western Bank integration while maintaining earnings guidance
National Bank of Canada acknowledges increased uncertainty due to potential tariffs but has not adjusted its earnings expectations in response, according to The Canadian Press.
The bank continues to forecast mid-single-digit earnings per share growth, in line with its previous guidance.
“We continue to be prudent, but we have not yet incorporated any material impact for the tariffs. We're still comfortable with guidance that we've shared,” said Chief Financial Officer Marie Chantal Gingras during an earnings call on Wednesday.
Michael Denham, executive vice-president of commercial and private banking, stated that the bank remains in close contact with clients during uncertain periods.
“In moments like this, which are challenging, kind of going back to COVID, going back to previous tariffs, we're in very, very close touch with our clients. So, we're going to be able to respond when our clients need us to respond,” he said.
Denham noted that while the risk from tariffs has increased, the actual impact remains uncertain. He also highlighted that Canadian businesses might adjust prices to offset potential effects.
National Bank is maintaining its forecast of low double-digit growth for commercial loans, as its primary clients are not expected to be significantly affected by tariffs.
“Based on what we're seeing right now in our pipelines and client discussions, we stand by that,” said Denham.
He attributed this stability to the bank’s focus on insured commercial real estate, stating that “notwithstanding the second- and third-order effects of tariffs, the underlying intrinsics remain positive in terms of the desire for, the need for more accommodation, the need for more development.”
The bank reported that its exposure to high-risk sectors, such as automotive, aluminum, and steel, accounts for only a fraction of a percent of its wholesale portfolio.
While the bank has not factored tariffs into its current projections, Chief Executive Officer Laurent Ferreira used the earnings call to advocate for economic reforms.
“We must not only rebuild our relationship and negotiate economic and trade terms with our largest partner, we must also get investments off the ground in our country,” Ferreira said.
He called for appointing a non-partisan head of deregulation, accelerating depreciation on capital investments, reducing capital gains taxes for business owners, and allowing tax deferrals when transferring businesses to future generations or selling to employees to maintain Canadian ownership.
Ferreira also urged the government to boost Canadian procurement in aerospace, manufacturing, and critical infrastructure and to ensure full economic utilization of the country’s natural resources.
Beyond tariff concerns, National Bank is working on integrating its recent acquisition of Canadian Western Bank (CWB), which closed on February 3.
According to National Bank of Canada, the bank plans to onboard CWB employees and integrate clients by the summer as part of its national expansion strategy.
This acquisition aims to strengthen National Bank’s presence in Western Canada while providing expanded services to customers nationwide.
For its first quarter, National Bank reported a profit of $997m, up from $922min the same period last year, driven by growth in wealth management and financial markets operations.
Adjusted profit, which excludes items related to the CWB acquisition, amounted to $2.93 per diluted share, compared to $2.59 per share a year earlier.
Analysts had expected an adjusted profit of $2.65 per share, according to LSEG Data & Analytics, according to Yahoo Finance.
Revenue for the quarter reached $3.18bn, rising from $2.71bn in the prior year, while provisions for credit losses increased to $254m, up from $120m a year earlier.
The acquisition of CWB is expected to impact National Bank’s earnings trajectory.
Barry Schwartz, chief investment officer at Baskin Wealth Management, described National Bank as a “terrific operator” in mergers and acquisitions, noting that its previous acquisitions have been successful.
According to Wealth Professional, the bank’s approach to integrating CWB aligns with its history of executing strong strategic moves.
