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National Bank’s capital markets revenues surged 21 per cent from a year earlier, while fixed-income trading revenues jumped 29 per cent over the period.Fernando Morales/The Globe and Mail

Breathe easy, bank executives. Investors remain willing to show you some love.

National Bank of Canada's third-quarter profits demonstrated good growth across all of its core units, and the lender's shares popped 3 per cent on the news. Though the rise wasn't astronomical, it is a welcome sign in the face of fears that the banks are becoming victims of their own success.

After so many rounds of record profits, investors can be a bit immune to the lenders' large bottom lines. The market seemed rather unfazed by Royal Bank of Canada's record earnings last week, and also by decent profits from both Bank of Montreal and Bank of Nova Scotia Tuesday.

However, the boost to National Bank's shares prove investors are still happy to invest – so long as lenders can prove they will deliver consistent growth.

Much like its peers that have reported earnings, National Bank benefited from surging capital markets revenues, which popped 21 per cent over the year prior. Underwriting fees and advisory mandates led the charge, and supercharged fixed-income trading revenues, up 29 per cent over the year prior, also helped in a big way.

Hot markets have also helped boost wealth management earnings across Bay Street, because the banks earn more money on their assets under management. National Bank's wealth management profit climbed 36 per cent higher relative to the year prior – however, the bank also made an acquisition in the interim, and the latest quarter hasn't shown much growth relative to more recent reporting periods.

Arguably the most exciting aspect of National Bank's earnings are its encouraging personal and commercial banking results. Because the bank is based in Quebec and derives most of its plain-vanilla retail and business banking profits from inside the province, Quebec's recent economic woes have weighed on the bank's outlook. But the province appears to be turning the corner – something rating agencies have recently noted – and management has also pushed hard on products such as credit cards, moves which are now paying off. Credit card revenues were up a healthy 10 per cent from the prior year.

Over all, National Bank's annual personal and commercial banking growth amounted to 6 per cent. That figure isn't stellar, but it's solid in a such a low rate environment that weigh on the unit's margins.

"The biggest issue or surprise for the industry … is that rates are lower," chief executive officer Louis Vachon said in a conference call. Banks were hoping rates would start to rise because of a stronger U.S. economy and strong stock markets. Instead the five-year government of Canada bond yield has dropped 42 basis points since the start of the year.

If you had predicted this environment at the beginning of the year, Mr. Vachon said, "nobody would have believed you."

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:15pm EDT.

SymbolName% changeLast
BMO-N
Bank of Montreal
+1.35%97.68
BMO-T
Bank of Montreal
+1.13%132.25
BNS-N
Bank of Nova Scotia
+1.21%51.78
BNS-T
Bank of Nova Scotia
+0.94%70.07
NA-T
National Bank of Canada
-0.45%114.06
RY-N
Royal Bank of Canada
+0.48%100.88
RY-T
Royal Bank of Canada
+0.29%136.62

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