National Bank increases cost savings targets after Canadian Western Bank deal

Ernest Wong, head of research at Baskin Wealth Management, joins BNN Bloomberg to discuss National Bank's earnings.

MONTREAL — National Bank of Canada says it has upped its cost savings targets after acquiring Canadian Western Bank last year as it reported Wednesday that its profit rose last quarter.

The Montreal-based bank also raised its quarterly dividend, saying it will now pay $1.32 per share, an increase of eight cents per share.

National Bank reported a second-quarter profit of $1.23 billion, up from $896 million a year ago. That amounted to $3.06 per diluted share for the quarter ended April 30 compared with $2.17 per diluted share a year ago.

“Our second quarter was strong ... and while the macroeconomic context remains uncertain, we are really well-positioned to support our clients and continue delivering strong earnings growth and (return on equity),” National Bank chief executive Laurent Ferreira told a conference call with financial analysts.

The bank provided an update on its integration of CWB after closing that $5.3-billion transaction in early 2025.

Chief financial officer Marie Chantal Gingras said National Bank has made “solid progress” on realizing savings from the takeover, having achieved $215 million in cost and funding synergies so far. She said the bank is on track to reach $270 million in savings by the end of its 2026 fiscal year.

On an annualized basis, she said National Bank is now targeting $300 million in cost and funding savings related to the acquisition.

The bank has also realized $33 million in revenue synergies since the beginning of the fiscal year, mainly driven by fee income, a total that should reach around $50 million by the end of 2026. The bank is targeting $200 million to $250 million in revenue synergies by the end of fiscal 2028.

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The takeover of Edmonton-based lender CWB was part of National Bank’s efforts to expand its footprint in the West. CWB had about 65,000 clients and 39 branches — 30 of which were in British Columbia and Alberta. National Bank only had three branches in each of those provinces, compared with 280 in Quebec.

The second quarter saw National Bank bring in $3.91 billion in total revenue, up from $3.65 billion in the same quarter last year.

The bank’s provision for credit losses amounted to $233 million, down from $545 million a year ago.

Despite the decrease in funds set aside for bad loans, the bank expects “gradual” increases to that sum, reflecting the “current context of heightened uncertainty and softer labour market conditions,” said chief risk officer Jean Sébastien Grise on the call.

Ferreira attributed that heightened uncertainty to the Iran war, which he said has significantly affected the global and Canadian economies. He said it also feels like Canada is mired in a bit of a “lull” when it comes to business investment.

“We expect the conflict to drive inflation and higher rates as supply chains for critical goods are disrupted and reconfigured,” he said.

“This uncertainty could further impact business investment, which has slowed down over the past couple of years due to tariff-related uncertainty and excessive regulation.”

On an adjusted basis, National Bank said it earned $3.23 per diluted share in its latest quarter, up from an adjusted profit of $2.85 per diluted share a year ago.

Analysts on average had expected an adjusted profit of $3.13 per share, according to LSEG Data & Analytics.

Scotiabank analyst Mike Rizvanovic called it a “decent quarter overall,” with the bank’s financial markets segment driving the performance beat. That offset slightly weaker results in both Canadian personal and commercial banking and wealth management.

National Bank said its personal and commercial banking business earned $355 million compared with $132 million a year earlier, while its wealth management operations earned $274 million, up from $232 million in the same quarter last year.

The bank’s capital markets business earned $488 million, down from $501 million a year earlier.

National Bank’s U.S. specialty finance and international business earned $186 million, up from $169 million in the same quarter last year.

“Credit performance was also a positive in the quarter, with (provisions for credit losses) coming in lower than we had estimated, despite a slightly higher reserve build than last quarter, while there were no signs of any meaningful deterioration in other credit metrics,” Rizvanovic said in a note.

Sammy Hudes, The Canadian Press.

This report by The Canadian Press was first published May 27, 2026.