National Bank of Canada's third-quarter profit topped expectations, even as the bank continued to put aside large sums to account for potential bad loans during the COVID-19 pandemic.
The Montreal-based bank said Wednesday that it earned $602 million or $1.66 per diluted share for the quarter ended July 31, which compared with a profit of $608 million or $1.66 per diluted share in the same quarter last year.
Provisions for credit losses amounted to $143 million, up from $86 million a year ago and $504 million in the prior quarter.
"We were very proactive last quarter and significantly increased our PCLs, primarily to reflect the deterioration in the macroeconomic cost conditions caused by COVID-19," bank chief executive Louis Vachon told financial analysts.
"In the third quarter, we continue to prudently build reserves, although at a much lower pace."
The bank was able to slow down on its provisions for credit losses in part because the quarter saw a drop to 10,000 payment deferral requests, down from 75,000 in the previous quarter.
Meanwhile, the bank's revenue totalled $2.02 billion, down from $2.04 billion and excluding specified items, it earned $1.66 per diluted share, the same as a year ago.
Analysts on average had expected an adjusted profit of $1.30 per share, according to financial markets data firm Refinitiv.
The earnings pushed the bank's stock up by 3.22 per cent or $2.19 to reach $70.24 in early afternoon trading.
Vachon said he was pleased with how the bank has navigated the ongoing crisis and sees reasons to be confident in the country's financial outlook.
"After an extraordinary plunge in the first half of the year, Canadian and Quebec economies have been climbing back with a phased reopening," he said.
The bank's economists are forecasting an eight per cent contraction of the GDP in 2020 in the province, followed by a 5.5 per cent recovery in 2021.
"While significant uncertainty remains regarding the duration and the impact of the crisis, there are clear signs that the economy is rebounding," he said.
This report by The Canadian Press was first published Aug. 26, 2020.
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Tara Deschamps, The Canadian Press