‘A big step forward’: National Bank CEO praises federal cybersecurity plan
The federal budget tabled on Tuesday proposed various cybersecurity-related commitments, including $155.2 million over five years so that the Communications Security Establishment could create a new “Canadian Centre for Cyber Security.”
The centre, the budget said, would create a single source of expertise, “providing Canadian citizens and businesses with a clear and trusted place to turn to for cyber security advice.”
Louis Vachon, president and chief executive officer of National Bank, was asked about the federal budget during the Montreal-based lender’s first-quarter conference call on Wednesday. Vachon’s response included praise for the government’s cybersecurity plans, and particularly those for CSE.
“National Bank is responsible for protecting its clients and our information and data, so we’re not looking to hide behind the government,” he said. “However, should we come under attack by state actors, we do expect the appropriate government agencies to be able to react, and also, very importantly, to co-ordinate response with the private sector.”
“I think the federal government took a big step forward on that with the announcement yesterday,” Vachon added.
Vachon is not the only bank CEO thinking about cybersecurity, especially as more transactions are happening online. Dave McKay, president and chief executive officer of Royal Bank of Canada, told a conference earlier this year that it is one of his worries, saying “that ever-vigilant world around cybersecurity, and the malicious intent that’s out there, is what keeps me up at night.”
Vachon’s comments followed the release of National’s first-quarter earnings, which the bank said were aided by its digital efforts. Ghislain Parent, chief financial officer of National, said that the bank continues to “invest massively in our digital capabilities,” and was focused on cutting costs through automation and otherwise.
“Investments in our transformation continue to produce tangible results,” Parent said, noting that the bank’s efficiency ratio improved by 190 basis points year-over-year.
National, Canada’s sixth-largest bank by market capitalization, reported net income of $550 million for the quarter ended Jan. 31, an increase of 11 per cent from a year ago. Diluted earnings per share were $1.46, up nine per cent, while adjusted earnings per share were a better-than-expected $1.48.
Vachon said in a press release that the bank had seen “excellent performance in each business segment, particularly sustained revenue growth and effective cost management.”
National’s financial markets segment reported a particularly strong quarter, as net income for the business rose 14 per cent year-over-year to $204 million. The bank said financial markets revenue jumped nine per cent to $454 million, mainly due to commissions.
“We view this as a solid start to 2018 for National Bank as the bank continues to deliver on expense targets,” said Eight Capital analyst Steve Theriault. “That said, the largest driver of the beat was the division the market is reluctant to pay for (Financial Markets) and Personal and Commercial earnings are 3 per cent below consensus.”
The bank also said profit for its personal and commercial business increased 11 per cent compared to last year, totalling $230 million for the first quarter.
National’s results continued a string of steady results from Canada’s Big Six banks this earnings season. Toronto-Dominion Bank will be the last of the six to report earnings this quarter when it releases results on Thursday.
“We believe that National’s results were quite strong and speak to the diversification of its platform,” said John Aiken, analyst at Barclays Capital. “However, with sequential declines in domestic retail and its international operations, we do not believe that the market will give the bank full credit for the beat, despite double-digit earnings growth in each segment on a year-over-year basis.”
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