National Bank (TSX:NA) is the smallest of the Big Six Canadian banks.
However, it put together the best performance of its peers in 2019. Shares have dropped 8% in 2020 as of close on June 8. However, the stock has increased 18% month over month.
The Montreal-based bank released its second-quarter 2020 results on May 26. Like its peers, National Bank struggled due to the challenges brought about by the COVID-19 pandemic.
The bank put aside $504 million in provisions for credit losses. Meanwhile, net income fell 33% year-over-year to $379 million. National Bank beat expectations as diluted earnings per share came in at $1.01, while analysts expected it to be below $0.95.
Ignoring the increase in provisions for credit losses, National Bank had a solid quarter in the face of a lot of adversity. It achieved revenue growth in all its business segments. This is especially encouraging as Canada’s provinces pursue a reopening ahead of the summer months.
The recovery will take time, but investors can hope for a return to some form of normality by the fall.
Shares of National Bank last had a favourable price-to-earnings ratio of 10 and a price-to-book value of 1.7. The bank maintained its quarterly dividend payout of $0.71 per share.
This represents a solid 4.3% yield. National Bank had one of the strongest showings after a brutal Q2 for Canadian banks. Investors may have missed their shot to buy at a 52-week low, but I still like National Bank’s price right now.
