- EPS Growth: Q1 2026 EPS rose 11% to $3.25 YoY, driven by retail/business segments, CWB synergies, and share buybacks.
- Revenue Surge: Revenue grew 21% YoY to $2.1B+, with PTPP up 23%, fueled by CWB integration and organic gains.
- Capital Strength: CET1 ratio held at 13.74%, with ROE at 16.6%, targeting 17%+ by 2027 through efficiency and growth.
- Share Buybacks: NCIB expanded to repurchase 14.5M shares, boosting capital return and EPS outlook to 5-10% growth in 2026.
- Capital Markets Performance: Net income rose 6% to $443M, with ROE at mid-20%, supported by trading gains and M&A advisory growth.
Segment Performance
The bank's various segments performed well, with Personal and Commercial Banking delivering revenues over $1.5 billion and net income of $442 million. Wealth Management net income increased 13% year-over-year to $274 million, driven by a 3% growth in assets under administration (AUA) to nearly $900 billion. Capital Markets generated net income of $443 million, up 6% year-over-year, driven by strong trading and non-trading contributions.
Capital and Risk Management
The bank's CET1 ratio ended the quarter at 13.74%, with capital generation of 41 basis points. National Bank expects to converge to a CET1 ratio of 13% by the end of 2027. The bank's risk-weighted assets (RWAs) increased due to market risk, attributed to the Fundamental Review of the Trading Book (FRTB) regulations, but this is not expected to be a recurring trend. The bank's provision for credit losses (PCL) is expected to remain stable, with a guidance of 25-35 basis points for 2025.
Outlook and Valuation
The bank has raised its 2026 EPS growth outlook to the top end of 5-10%, with an ROE target of around 16%, and a path to 17% plus ROE by 2027. With a current P/E Ratio of 18.44 and P/B Ratio of 2.19, the bank's valuation appears reasonable. The bank's dividend yield stands at 2.5%, providing a relatively attractive return for income investors. Analysts estimate next year's revenue growth at 5.7%, indicating a stable outlook for the bank.
Synergies from CWB Transaction
The acquisition of Canadian Western Bank (CWB) has contributed to revenue synergies, primarily in non-interest income from capital markets. The bank expects these synergies to materialize in the second half of 2024, targeting $50 million for the year. The bank's executives stated that they are focused on growing deposits, particularly in Quebec, and are pleased with the momentum.