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1. Company Snapshot

1.a. Company Description

National Bank of Canada provides various financial products and services to retail, commercial, corporate, and institutional clients in Canada and internationally.It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International.The Personal and Commercial segment offers personal banking services, including transaction solutions, mortgage loans and home equity lines of credit, consumer loans, payment solutions, and savings and investment solutions; various insurance products; and commercial banking services comprise credit, and deposit and investment solutions, as well as international trade, foreign exchange transactions, payroll, cash management, insurance, electronic transactions, and complimentary services.


The Wealth Management segment comprises investment solutions, trust services, banking services, lending services, and other wealth management solutions.The Financial Markets segment offers corporate banking, advisory, and capital markets services; and project financing, debt, and equity underwriting; advisory services in the areas of mergers and acquisitions, and financing.The U.S. Specialty Finance and International segment provides specialty finance products; financial products and services to individuals and businesses in Cambodia; and investment solutions, guaranteed investment certificates, mutual funds, notes, structured products, and monetization.


It provides its services through a network of 384 branches and 927 banking machines.National Bank of Canada was founded in 1859 and is based in Montreal, Canada.

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1.b. Last Insights on NA

National Bank of Canada's recent performance has been driven by strong financial results, strategic initiatives, and expansion efforts. The bank reported robust earnings and revenue growth, beating Q4 earnings and revenue estimates. It also announced a 6% dividend hike and completed two sizeable acquisitions, reshaping its national footprint. Additionally, the bank is exploring defence finance, adding a new line of business with a global angle. Analysts have refined their fair value estimate to C$170.71, citing revenue growth and risk as key factors. The bank flags macro risks, including slower hiring and geopolitical tensions.

1.c. Company Highlights

2. National Bank of Canada's Q1 2026 Earnings: A Strong Start to the Year

National Bank of Canada reported a robust Q1 2026, with EPS coming in at $3.25, beating estimates of $3.01, and representing an 11% year-over-year increase. Revenue rose 21% year-over-year, driven by a strong performance across retail and business segments, as well as cost and funding synergies from the CWB transaction. The bank's return on equity (ROE) was 16.6%, with a solid CET1 ratio of 13.7%. The company's net income was bolstered by a 23% growth in pre-tax pre-provision (PTPP) income.

Publication Date: Feb -26

📋 Highlights
  • 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.

3. NewsRoom

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How The Story Is Shifting For National Bank Of Canada (TSX:NA) After New Street Targets

Apr -27

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FRN Variable Rate Fix

Apr -27

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Canada's Retail Sales Momentum May Fade Later in The Year, Says National Bank

Apr -27

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National Bank of Canada Announces the Election of Directors

Apr -24

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Teranet-National Bank House Price Index Shows Decline in Canadian Prices Accelerated in March

Apr -17

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OSFI's Annual Risk Outlook Flags Key Risks For Financial Sector, Regulator's Response

Apr -14

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How Mortgage Risks And Earnings Shape The Evolving Story At National Bank Of Canada (TSX:NA)

Apr -12

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National Bank On What It Will Be Watching For Next Week

Apr -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.60%)

6. Segments

Personal and Commercial

Expected Growth: 6.0%

The segment is expected to grow faster than the overall bank due to its strong presence in the Canadian market and the increasing demand for digital banking services. The bank's efforts to expand its digital capabilities are likely to drive growth.

Financial Markets (Excluding USSF&I)

Expected Growth: 5.8%

The segment is expected to grow in line with the overall bank, driven by the increasing demand for risk management services and the bank's diversified revenue streams. The segment's exposure to market volatility is a risk, but the bank's strong market position is likely to mitigate this.

Wealth Management

Expected Growth: 7.0%

The segment is expected to grow faster than the overall bank, driven by the increasing demand for wealth management services and the bank's strong market position. The aging population and increasing wealth are likely to drive growth in this segment.

U.S. Specialty Finance and International (USSF&I)

Expected Growth: 5.0%

The segment is expected to grow at a slower rate than the overall bank, due to the challenging market conditions in the US and international markets. However, the bank's diversified revenue streams and strong market position are likely to mitigate this risk.

Other

Expected Growth: 5.6%

The segment is expected to grow in line with the overall bank, driven by the bank's efforts to optimize its operations and improve efficiency. The segment's growth is likely to be driven by the bank's internal initiatives.

7. Detailed Products

Personal Banking

National Bank of Canada offers a range of personal banking services, including chequing and savings accounts, credit cards, loans, and investment products.

Credit Cards

National Bank of Canada offers a variety of credit cards with different features and benefits, such as cashback rewards, travel insurance, and purchase protection.

Mortgages

National Bank of Canada offers a range of mortgage products, including fixed-rate and variable-rate mortgages, to help individuals purchase or refinance a home.

Investments

National Bank of Canada offers a range of investment products, including mutual funds, exchange-traded funds (ETFs), and portfolio management services.

Business Banking

National Bank of Canada offers a range of business banking services, including business accounts, credit cards, loans, and cash management solutions.

Commercial Banking

National Bank of Canada offers a range of commercial banking services, including commercial loans, lines of credit, and cash management solutions.

Wealth Management

National Bank of Canada offers a range of wealth management services, including investment advice, portfolio management, and estate planning.

Insurance

National Bank of Canada offers a range of insurance products, including life insurance, disability insurance, and home and auto insurance.

8. National Bank of Canada's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for National Bank of Canada is medium due to the presence of alternative financial institutions and digital payment methods.

Bargaining Power Of Customers

The bargaining power of customers is low for National Bank of Canada due to the lack of negotiating power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for National Bank of Canada due to the bank's large size and negotiating power.

Threat Of New Entrants

The threat of new entrants is low for National Bank of Canada due to the high barriers to entry in the banking industry.

Intensity Of Rivalry

The intensity of rivalry is high for National Bank of Canada due to the presence of several major banks in Canada, leading to intense competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 69.33%
Debt Cost 9.53%
Equity Weight 30.67%
Equity Cost 9.53%
WACC 9.53%
Leverage 226.02%

11. Quality Control: National Bank of Canada passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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TD Bank

A-Score: 7.1/10

Value: 5.2

Growth: 6.3

Quality: 4.9

Yield: 7.0

Momentum: 9.0

Volatility: 10.0

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BMO

A-Score: 7.0/10

Value: 5.1

Growth: 6.6

Quality: 4.1

Yield: 8.0

Momentum: 8.5

Volatility: 10.0

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JPMorgan Chase

A-Score: 6.6/10

Value: 5.6

Growth: 5.2

Quality: 6.5

Yield: 5.0

Momentum: 8.5

Volatility: 9.0

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NatBank

A-Score: 6.5/10

Value: 3.7

Growth: 6.4

Quality: 4.9

Yield: 6.0

Momentum: 8.0

Volatility: 10.0

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Citigroup

A-Score: 6.4/10

Value: 6.3

Growth: 4.7

Quality: 4.4

Yield: 6.0

Momentum: 9.0

Volatility: 8.0

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Bank of America

A-Score: 6.0/10

Value: 5.4

Growth: 5.2

Quality: 4.9

Yield: 4.0

Momentum: 7.5

Volatility: 9.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

205.04$

Current Price

205.04$

Potential

-0.00%

Expected Cash-Flows