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Provisions for credit losses for the bank’s fourth quarter were $110 million, an increase of 24 per cent from a year earlier. However, National’s results were helped by a boost from its U.S. specialty finance and international division, the profit from which was up 36 per cent from a year earlier, to $106 million.
The CET1 ratio for National rose to 11.8 per cent to end its fiscal 2020, up from 11.4 in the prior quarter and 11.7 per cent a year earlier. CET1 increases were also reported by Bank of Nova Scotia and Bank of Montreal on Tuesday.
National, though, is already putting some capital to use, announcing Wednesday that it is boosting its stake in Atlanta, Ga.-based Credigy Ltd. to 100 per cent, buying the remaining 20 per cent of the firm it didn’t already own for approximately US$235 million.
Credigy, which buys consumer debt from lenders, is part of National’s U.S. specialty finance and international arm. Louis Vachon, president and CEO of National, said the purchase of the remaining 20 per cent was being funded with cash on hand, and not by issuing shares.
“We continue to see attractive growth potential in the future,” Vachon said during a conference call on Wednesday.
Although RBC sees internal growth opportunities, acquisitions remain a possibility as well, particularly in the U.S.
“If there’s an opportunity that presents itself, that checks the boxes, we will absolutely use that surplus capital to execute a growth trajectory,” McKay said on Wednesday.
Financial Post
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