National Bank’s expectations were high, with a 23% dividend bonus and a significant increase in profits also failing to satisfy investors. The valuation of the bank’s action in recent months has also been appreciated with major advertising forecasts.
The title of Quebec’s largest banking institution fell 3.5% on Wednesday to close at $ 95.84 in Toronto. This is the biggest fall in the title in one session this year. The stock has now lost nearly ten dollars since reaching a $ 106 high on November 22, but has risen nearly 35% this year.
In addition to the 23% increase in dividends, management revealed that it intends to repurchase up to 2% of its shares or to cancel 7 million shares.
Royal Bank announced on Wednesday that it had increased its dividend by 11%, and Scotia also announced the day before.
“We were a little embarrassed”
“As I expected, all the banks that have reported their results so far have announced the biggest increase in the national dividend,” said Darko Mihelik, an analyst at RBC.
His colleague Scott Chan at Canacord recalled that he expected the National Dividend to increase by more than 30%.
“We may have a little trouble, but we’re very comfortable with the announced increase,” new CEO Laurent Ferreira said in an interview.
Laurent Ferreira’s officially took over from Louis Vuitton as head of the bank under some pressure when he saw the title push during the epidemic.
“I want to have a stronger foundation than the other way around in this situation,” he says. I am comfortable with Bank Positioning and we will work hard to develop it. ”
Regarding the response of investors on Wednesday, he ruled that expectations on National Bank were higher than other banks. He said there may also be more short-term investors in shareholding. “You have to wait until the end of the results season to form an impression,” he said.
Although the Laurent Ferreira Omicron variant has appeared recently, the economic recovery is looking positive. “We are gaining momentum in all our business ventures. However, the two sources of uncertainty we see in our scenarios are diversity and inflation. We are careful. We do not know how the variant will react in vaccinated and non-vaccinated populations.”
Laurent Ferreira expects the bank to grow at around 5% profit by 2022 and hopes to lead the bank in a sustainable spirit by focusing on the company’s momentum in the business sector and asset management.
National Bank’s profits for August, September and October stood at 776 million, an increase of 58% over the same period last year.
On an adjustment basis, earnings were $ 2.21 per share, lower than analysts’ consensus, around $ 2.24 per share. “Mainly due to lower income and higher-than-expected costs,” Scott Chan said.
In fiscal year 2021, national profits reached 3.2 billion, an increase of 53% over the previous fiscal year.
Dividend increase announcements by Canadian banks came after the superintendent of financial institutions suggested that financial institutions across the country could once again raise regular dividends and repurchase stocks this fall.
The Office of the Superintendent of Financial Institutions called on financial institutions in March last year to halt the rise in dividends, share buybacks and increase in employee compensation due to the challenges posed by the epidemic and the financial climate.