National Bank CEO Sees M&A Helping Results as Trading Boom Cools

(Bloomberg) -- National Bank of Canada Chief Executive Officer Louis Vachon expects an increase in mergers and acquisitions to bolster the company’s financial-markets business in the year ahead, propping up results as a boom in trading cools off.

Profit in National Bank’s financial-markets business rose 3% to C$209 million ($162 million) in the fiscal fourth quarter, helped by gains in fixed-income trading and corporate and investment banking, the company reported Wednesday. But the trading surge that fueled earnings earlier in the pandemic showed some cracks, with revenue from equities, commodities and foreign-exchange declining from a year earlier.

With the turbulence of the early part of the pandemic fading, companies are increasingly looking to acquisitions to boost revenue at the same time that private equity firms are looking to deploy cash and baby-boomer entrepreneurs are looking to pass on their businesses, Vachon said in an interview Wednesday.

“Strategic-related M&A, private equity M&A and demographics-related M&A -- those are three global trends, but they’re also very much present in Canada,” Vachon said.

The Montreal-based bank reported overall earnings of C$1.69 a share, excluding some items, in the three months through October. That topped analysts’ C$1.52 average estimate. Net income fell 19% to C$492 million, or C$1.36 a share.

National Bank shares fell 1.2% to C$72.57 at 3:40 p.m. in Toronto. The shares have gained 0.7% this year, compared with a 1.9% decline for the S&P/TSX Commercial Banks index.

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