Analyst Note
| Eric Compton, CFA |Narrow-moat National Bank of Canada reported mixed fiscal fourth-quarter results. Earnings per share were CAD 2.08, down 4% year over year and 11% quarter over quarter. We are starting to see some Canadian banks run into roadblocks when it comes to increasing net interest income. While one peer had previously reported that higher rates would lead to lower NII, most Canadian banks, including NBC, had not seemed to have reached that point just yet. Even so, NII dropped 15% quarter over quarter. While this could partially be blamed on trading-related NII falling in the quarter, as non-trading-related NII did increase, it was still surprising to see such a decline for trading-related NII. The bank still discloses a positive relationship between higher rates and NII growth, and it will be interesting to see if this plays out in 2023, or if rates act as a headwind.