Canada's National Bank misses estimates on capital markets, provisions

FILE PHOTO: The National Bank of Canada logo is seen outside of a branch in Ottawa

(Reuters) -National Bank of Canada on Wednesday reported quarterly earnings below analysts' expectations hurt by weakness in its capital markets business and higher bad loan provisions.

The smallest of Canada's big six banks is the latest to set aside more funds in case consumers have trouble paying back their loans and mortgages amid central bank interest rate hikes and the rising cost of living.

The Montreal-based bank recorded C$111 million in provisions for credit losses versus C$57 million a year earlier.

Chief Executive Officer Laurent Ferreira said the results also reflected a less constructive backdrop in the financial markets segment, which includes advisory services in the areas of mergers and acquisitions and financing.

That unit recorded a 27% slide in net income hurt by lower trading activity and "exceptionally" low market volatility, National Bank said.

That also hurt the bank's overall net interest income - the difference between what it earns on loans and pays on deposits - which fell to C$958 million from C$1.48 billion a year earlier on an adjusted basis.

"A challenging quarter overall," KBW analyst Mike Rizvanovic said, noting that most of the weakness was driven by the always volatile capital markets business.

The bank's adjusted profit for the three months ended July 31 was C$790 million ($582 million), or C$2.21 per share, down from C$826 million, or C$2.35 per share.

Analysts were expecting C$2.38 per share, according to Refinitiv IBES data.

($1 = 1.3564 Canadian dollars)

(Reporting by Nivedita Balu in Toronto and Sri Hari N S in Bengaluru; editing by Louise Heavens and Jason Neely)