05/26/2011 09:53 EDT | Updated 07/26/2011 05:12 EDT

National Bank Q2 Profit Up, Beating Analyst Estimates

MONTREAL (CP) - National Bank of Canada (TSX:NA) has beat analyst estimates on both earnings and revenue for the second quarter and says it will increase its quarterly dividend by five cents.

Canada's sixth-largest bank said Thursday that net income for the quarter ended April 30 was $295 million or $1.48 per diluted share, compared with $261 million or $1.50 in the same 2010 period.

Excluding specified items, diluted earnings were $1.69 per share, up 13 per cent from the same quarter of 2010.

Revenue for the three-month period ended April 30 was $1.14 billion, up from $1.05 billion in the year-earlier period.

National Bank was expected to earn $1.68 per share on $1.06 billion of revenues in the quarter, compared with $1.50 per share a year earlier, according to analysts polled by Thomson Reuters.

National Bank was expected to be among the country's financial institutions to deliver good news on its operations along with possible dividend increases.

It did so on both counts Wednesday, increasing earnings and announcing it was raising its dividend for the quarter ending July 31 to 71 cents from 66 cents, payable to shareholders of record on June 23.

Over the last two quarters, National Bank, Laurentian Bank (TSX:LB), Scotiabank (TSX:BNS) and TD Bank (TSX:TD) have all raised dividends.

National Bank promised in February to increasingly reward shareholders as it reviewed its quarterly dividend and prepared to reactivate a program to repurchase common shares.

Meanwhile, Montreal-based National also announced it plans to acquire Winnipeg-based wealth management firm Wellington West Holdings Inc. in a deal that values the company at $333-million, including excess cash of $74 million.

Excluding National Bank's current ownership of 18.2 per cent, the amount payable to Wellington West shareholders is $273 million and the net outlay for the bank is approximately $199 million after deducting the excess cash acquired as part of the transaction, the bank said in a statement.

Wellington West shareholder will be entitled to receive, at their option, either cash or common shares of National Bank, up to an aggregate maximum of 2.2 million common shares.

National said the transaction would be neutral to fiscal year 2011 earnings and accretive thereafter and reduce its common equity Tier 1 ratio under Basel III rules by just 20 basis points, leaving its strong capital ratios intact.

Employee-owned Wellington West group provides full-service brokerage, financial planning, asset management and capital markets services through 223 advisers located in 50 branches across Canada and has more than $10 billion in assets under administration.

"National Bank is fortunate to have had Wellington West as a business partner for many years," said Louis Vachon.

"Our two organizations share a distinctive entrepreneurial culture with complementary operations. The combination adds to National Bank's geographic diversity and makes us a stronger national organization. This transaction marks the natural evolution of a mutually successful partnership."

National Bank, Quebec's largest bank and second-largest financial institution, has more than 18,000 employees, 2.3 million clients and $152.5 billion of assets.

Recently, it joined a nine-member consortium forming Maple Group Acquisition that has bid $3.6 billion to purchase the Toronto Stock Exchange.