National Bank sticking with guidance despite tariff threat

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This article was published 26/02/2025 (582 days ago), so information in it may no longer be current.

National Bank of Canada says it sees heightened uncertainty from potential tariffs but isn’t yet adjusting its earnings expectations because of the threat.

The bank, like others that have reported so far, isn’t factoring much in the way of a hit as it maintains its forecast of mid-single digit earnings per share growth. 

“We continue to be prudent, but we have not yet incorporated any material impact for the tariffs. We’re still comfortable with guidance that we’ve shared,” said chief financial officer Marie Chantal Gingras on an earnings call Wednesday.

However, the bank is in close contact with clients, said Michael Denham, executive vice-president of commercial and private banking.

“In moments like this, which are challenging, kind of going back to COVID, going back to previous tariffs, we’re in very, very close touch with our clients. So we’re going to be able to respond when our clients need us to respond.”

There’s heightened risk, but it’s also not yet clear what impact there will be and how much Canadian companies might be able to raise prices, he said.

The bank is sticking with its guidance of low double-digit growth on commercial loans because its main customers won’t be as affected by tariffs.

“Based on what we’re seeing right now in our pipelines and client discussions, we stand by that.,” said Denham.

“One of the main reasons is a lot of our growth does boil back to insured commercial real estate and there — notwithstanding the second- and third order-effects of tariffs — the underlying intrinsics remain positive in terms of the desire for, the need for more accommodation, the need for more development.”

The bank said its exposure to higher risk industries like automotive, aluminum and steel is a fraction of a per cent of its wholesale book.

While the bank has yet to incorporate any material impact for the tariffs in its guidance, chief executive Laurent Ferreira used the analyst call to push for economic reforms he thinks are necessary to meet the moment. 

“We must not only rebuild our relationship and negotiate economic and trade terms with our largest partner, we must also get investments off the ground in our country,” he said.

Ferreira called for the appointment of a non-partisan head of deregulation, along with accelerated depreciation on capital investments, reduced taxes on capital gains for business owners, and allowing tax deferrals when transferring a business to future generations or selling to employees to preserve the Canadian ownership of businesses.

He also said the government needs to increase Canadian procurement in aerospace, manufacturing and critical infrastructure and to ensure the full economic potential of Canada’s natural resources is realized. 

And while tariffs are a big focus everywhere, National Bank is also working to integrate its acquisition of Canadian Western Bank that closed Feb. 3. 

The bank is bringing CWB employees on board and plans to integrate clients in the summer, it said.

As for its most recent quarter, National Bank reported a first-quarter profit of $997 million, up from $922 million a year earlier, helped by strength in its wealth management and financial markets operations.

The bank says its adjusted profit, which excludes items related to its CWB acquisition, amounted to $2.93 per diluted share, up from an adjusted profit of $2.59 per diluted share a year ago.

Analysts on average had expected an adjusted profit of $2.65 per share, according to LSEG Data & Analytics.

Revenue for the quarter totalled $3.18 billion, up from $2.71 billion in the same quarter last year.

National Bank’s provisions for credit losses in the quarter amounted to $254 million, up from $120 million compared with the prior year. 

This report by The Canadian Press was first published Feb. 26, 2025.

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