The Canadian banking sector’s latest earnings season continues to surprise investors. While some of Canada’s biggest banks, such as Royal Bank of Canada and Bank of Nova Scotia, continue to disappoint investors by missing analyst estimates, some smaller banks continue to beat expectations. In this article, I’ll talk about the latest quarterly results of one of my favorite Canadian banking stocks, which just proved again why it’s worth buying for the long term. Steady economic growth trends make it a very reliable stock to own, even for newbies to the market.
National Bank of Canada Q3 2022 Earnings Report
The reliable Canadian bank stock I want to highlight here is National Bank of Canada (TSX:NA). It’s a Montreal-based bank with a market capitalization of $30.8 billion, as NA stock is currently trading at $91.46 per share, down about 5.2% year-to-date. By comparison, Royal Bank and Scotiabank currently have much larger market capitalizations of about $174.8 billion and $90.3 billion, respectively. National Bank announced the results of the third quarter (Q3) of its financial year 2022 (ended July) on 24 August. During the quarter, the bank’s total revenue rose nearly 8% year-over-year to $2.5 billion, beating analysts’ estimates. Likewise, its adjusted earnings for the quarter came in at $2.35 per share — roughly flat year-over-year, but still slightly higher than the Street’s expectations.
Key growth drivers
National Bank of Canada’s personal and commercial division net income rose 11% year-over-year, helped by a 13% increase in divisional revenue. While its loan loss forecasts rose last quarter – like most major Canadian banks – steady growth in net interest income helped by higher loan and deposit volumes helped National Bank post industry-leading profit growth. Its wealth management earnings also rose about 10% year-over-year to about $181 million. In addition, National Bank’s financial markets division continued to perform well, despite the recent rise in market volatility and macroeconomic uncertainties. In the third quarter, the bank’s net profit from the financial market segment rose 12% year over year to about $280 million. However, higher credit loss forecasts weighed on the performance of the US specialty financial and international services industry in the July quarter.
Why it’s the best Canadian bank stock for beginners right now
Overall, National Bank of Canada’s latest quarterly results once again demonstrated its ability to continue to perform well, even in challenging economic environments. Last quarter, the bank recorded strong organic growth across all business lines helped by its defensive credit position and efforts to maintain prudent reserves. Despite better-than-expected third-quarter financial results, NA stock fell 0.9% on Wednesday. I expect National Bank’s strong economic growth performance to continue over the long term with the help of its strong balance sheet and cash flow, which will help its stock soar. In addition to its strong fundamentals, its attractive dividend yield of 4% at the current market price makes National Bank stock worth buying for long-term investors and stock market novices alike.
