National Bank considering new acquisitions in Canadian wealth management

National Bank (TSX:NA) says it’s interested in new acquisitions but will be very selective about which sectors it looks to.

“Wealth management does remain a priority for us,” said president and chief executive Louis Vachon during a conference call Friday.

“Should the right fit from a cultural and strategic standpoint come along, we would be interested.”

The bank recently finished integrating two other wealth management acquisitions, Wellington West Holdings Inc. and HSBC Securities full-service investment advisory business, into its operations.

But the Montreal-based bank said it will steer clear of private and commercial banking acquisitions, after facing some issues while trying to integrate a $330 million, uninsured mortgage portfolio.

“The acquired portfolio is performing according to expectations, but during the transition to our system there were some operational issues that impacted both the (provisions for credit losses) and delinquencies,” said William Bonnell, vice president of risk management.

National Bank also announced Friday it is hiking its dividend and buying back some of its shares and reported a second-quarter profit that beat analyst estimates by a wide margin.

Canada’s sixth-largest bank increased its quarterly dividend by four cents to 87 cents per share, starting with the August payout.

It also announced a share buyback program that will enable it to repurchase and cancel up to 3.2 million shares in the 12 months beginning June 20.

National Bank earned a second-quarter profit of $434 million or $2.49 per share, down from $553 million or $3.22 per share in the quarter ended April 30, 2012 when it saw a one-time boost of $198 million.

The bank reported an adjusted profit of $369 million — up six per cent from the same time last year. That equalled $2.08 per share, a seven per cent increase from $1.95 per share in the same quarter last year.

Revenue dropped eight per cent to $1.386 billion from $1.499 billion.

Analysts had been looking for National Bank to produce $1.98 per share in adjusted earnings and $1.99 per share in net income with $1.26 billion of revenue, according to a consensus estimate from Thomson Reuters.

John Aiken, an analyst at Barclays, labelled the results positive.

“Overall, we expect a positive reaction to National’s results and its shareholder-friendly capital actions; however, the reaction may be muted by recognition that the strength in adjusted EPS came from high trading revenue and investment gains,” said Aiken in a note.

National Bank shares closed up $1.46, or 1.93 per cent, at $77.02 in trading Friday on the Toronto Stock Exchange.