National Bank's Q2 earnings hit by energy sector weakness
National Bank on Wednesday joined the list of financial institutions reporting their bottom lines have taken a hit from the battered oil and gas sector.
The bank reported net income of $210 million, or 52 cents a share, for its second quarter, down from $404 million, or $1.13 per share, in the same quarter of 2015,
National said the profit drop was "essentially as a result of a sectoral provision for credit losses recorded for producers and service companies in the oil and gas sector."
Excluding the after-tax provision of $183 million and other items, the bank said its net income totalled $420 million, up two per cent from $411 million in the second quarter of 2015.
"The bank took action, by way of a sectoral provision, to address credit uncertainties in its oil and gas producer and service company loan portfolio," said Louis Vachon, National's president and CEO.
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"The credit quality of the overall loan portfolio, excluding the oil and gas producer and service company loan portfolio, remains within expectations," Vachon said in a statement.
In the wake of the earnings release, investors sent shares of National down 63 cents to $42.89 in morning trading on the TSX.
"Outside of the provisions taken against the energy portfolio, [National's] results were reasonably solid and the sole focus of investors should not be on oil's impact on National going forward," said Barclays analyst John Aiken in a commentary.