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National Bank of Canada (TSE:NA) saw its shares soar by 5.9% to an all-time high of C$126.91 on Wednesday, marking the stock's largest single-day gain since May 2020. This remarkable surge comes on the heels of better-than-expected earnings results for the third quarter of fiscal 2025, with all business segments outperforming analyst profit expectations. The impressive performance extended the bank's significant outperformance this year, with shares rising 25% compared to a modest 5.7% increase in the S&P/TSX Composite bank index.
Stellar Earnings Drive Share Price Surge
National Bank's third-quarter adjusted earnings came in at C$2.68 per share, easily surpassing the analyst consensus estimate of C$2.47 per share. This marks the bank's fourth consecutive quarter of earnings beats, underscoring its consistent ability to exceed market expectations.
The capital-markets segment was the standout performer, with profit surging 55% year-over-year to C$318 million. This growth was primarily driven by strong global markets and a rise in investment-banking revenues. Meanwhile, personal and commercial banking earnings also saw a significant increase of 15%, totaling C$366 million for the quarter ending July 31, 2024. The wealth management and U.S. specialty finance divisions also contributed to the strong results, each posting double-digit gains.
Provisions for credit losses were reported at C$149 million, aligning with market expectations. This contrasts with the Bank of Montreal (BMO), which reported disappointing provisions and faced multiple analyst downgrades earlier in the week.
Strategic Moves and Market Leadership
National Bank’s performance has set it apart from its peers, particularly its largest rival, Royal Bank of Canada (RBC), which has gained approximately 20% this year. In June, National Bank announced a strategic move to acquire Edmonton-based Canadian Western Bank, a deal that is currently undergoing regulatory approval. This acquisition is part of National Bank’s broader strategy to strengthen its domestic market position, while other Big Six banks, such as RBC and BMO, are increasingly looking to the U.S. for growth opportunities.
Chief Executive Officer Laurent Ferreira, during an analyst conference call, expressed optimism about the merger with Canadian Western Bank, noting that both institutions are actively collaborating on the integration road map. The successful integration of this acquisition could further bolster National Bank’s market position and drive continued growth in the coming quarters.
