The Montreal-based bank said Thursday that its quarterly dividend will rise by four cents to 79 cents per share, a five per cent increase.
National Bank (TSX:NA) said its second-quarter net income was up 69 per cent from $327 million in the same quarter last year. About $212 million of that profit came from a gain on the bank's sale of Natcan Investment Management in April.
The bank's net income before adjustments amounted to $3.22 per diluted share, or $1.95 per share after adjustments.
Analyst estimates compiled by Thomson Reuters put revenue for the second quarter at $1.28 billion and earnings per share at $1.86.
Revenue for the quarter was $1.5 billion, up from $1.2 billion in the same quarter last year, also beating analysts' estimates.
"Overall, National Bank delivered solid volume growth in loans and deposits," president and chief executive officer Louis Vachon told financial analysts on a conference call.
"For 2012, we had anticipated an environment of low economic growth, intense competition and global uncertainties," Vachon said. "So far this year, this describes pretty well the reality in which we operate. Nonetheless we continue to attract new customers and gain market share in selected markets."
Excluding special items, National Bank had $347 million of net income in the three months ended April 30 — up six per cent from a year earlier.
Vachon said while the bank is increasing its dividend payout, it isn't taking an aggressive approach.
"We just want to be steady as she goes on the dividend. I think having a steady increase in the dividend over a longer period of time in line with earnings growth, I think, is the best thing to do."
He also said the bank will seek regulatory approval for its share buy-back program in the third quarter.
The bank's wealth management division had quarterly net income of $233 million, up from $49 million in the same quarter last year, helped by the sale of the Natcan investment service.
In the bank's personal and commercial segment, quarterly net income rose 14 per cent to total $166 million.
In the financial markets division, net income totalled $115 million for the second quarter of 2012, down $12 million from $127 million in the same quarter of 2011.
The bank had $49 million in credit losses to cover bad loans, $6 million lower than the same quarter in 2011.
RBC Capital Markets analyst Andre-Philippe Hardy noted that how the bank achieved its high quarterly earnings could mute some of the market reaction, given that most of its segments reported results in line with his expectations.
"The source of the higher-than-expected earnings should mitigate the market's reaction relative to the earnings 'beat,'" Hardy said in a research note, referring to the one-time gain from the Natcan sale.
Hardy also said the bank's earnings per share and adjusted earnings per share were in line with estimates, adding that the dividend increase of four cents was expected.
Vachon also noted that National Bank's Quebec business represent two-thirds of its retail volume growth.
Shares in the National Bank were up 48 cents to $73.62 in afternoon trading on the Toronto Stock Exchange.