National Bank of Canada Earnings: Headwinds From Expenses and Credit Costs

Narrow-moat National Bank of Canada reported slightly disappointing first-quarter results and updated 2025 guidance, with expenses and credit costs as major headwinds. Adjusted revenue increased 19% year over year to CAD 3.2 billion, mostly driven by double-digit growth in wealth management and financial market segments. Personal and commercial banking revenue only grew 4% from a year ago. Adjusted net income increased 14% from last year to CAD 1.1 billion. As we incorporate these results, we anticipate increasing our 2025 trading revenue and 2025 net interest income growth projections (excluding Canadian Western Bank, or CWB) but expect a higher 2025 expense forecast will largely offset the benefit of higher top-line results. As such, we don’t anticipate materially changing our CAD 110 fair value estimate and view the shares as slightly overvalued. We have already included a negative CAD 1.5 per share impact from the CWB acquisition.