National Bank of Canada (TSX: NA) recently reported results for the first quarter of its fiscal year 2024 on February 28. The bank beat analysts’ expectations on both earnings and revenue despite the challenging economic environment caused by rising interest rates and inflationary pressures.
This is one of the key reasons why National Bank’s share prices have already gone up by nearly 7% in 2024 so far after delivering an 11% positive return last year. With this, NA stock is now at $107.95 per share with a market cap of $36.6 billion. Before I tell you why I find National Bank stock even more attractive to buy after its latest earnings event, let’s take a closer look at some key highlights from its first-quarter earnings report.
National Bank beats revenue and earnings estimates
In the latest quarter, National Bank of Canada once again demonstrated its robust financial health and operational excellence. In the quarter ended in January 2024, the bank’s total revenue rose 4% from a year ago to $2.82 billion, beating Bay Street analysts’ expectations with growth in all business segments, underlining the diversity and strength of its operations.
As a result, its quarterly total net profit of $922 million was up 5% on a YoY (year-over-year) basis. Similarly, National Bank’s adjusted quarterly earnings rose to $2.59 per share from $2.47 per share in the first quarter of 2023, exceeding Street analysts’ estimates of $2.36 per share.
Quarterly profits from its personal and commercial banking segment witnessed a 4% YoY increase, driven by growth in total revenues, especially from higher net interest income and net interest margin. Loan and deposit volumes experienced healthy growth, indicating strong customer activity. Although National Bank’s profits from the wealth management segment saw a slight dip last quarter, this segment still saw a 4% rise in revenue, fueled by growth in fee-based revenues due to robust stock market performance.
To add optimism, National Bank’s income from its other two main segments, financial markets and U.S. specialty finance and international, inched up in the last quarter.
Is National Bank stock a buy now?
National Bank has emerged as one of the most attractive Canadian bank stocks to hold in recent years due mainly to the stock’s strong performance even in the difficult market environment. While the TSX Composite Index has risen 34.2% in the last five years, NA stock has outperformed the market by a huge margin with its solid 74% return during the same period. At the current market price, this stock also offers a decent 3.9% annualized dividend yield.
In the January quarter, higher allowances for credit losses on impaired loans affected the performance of National Bank’s personal and commercial banking segment. Nonetheless, as the Bank of Canada is expected to slash interest rates in the coming quarters, its credit losses could reduce and boost its profitability.
Besides that, the National Bank’s diversified exposure could help it benefit from the economic recovery. Given these positive factors, National Bank of Canada could be a very reliable dividend-paying stock to buy now and hold for years to come.
