National Bank to buy wealth manager as profit rises

TORONTO — National Bank of Canada reported a higher quarterly profit on Thursday, driven largely by growth in its lending and wealth management businesses.

The Montreal-based bank, which also raised its quarterly dividend payout, announced a long anticipated move to acquire all the common shares of Wellington West that it does not own.

Wellington is an employee-owned firm that has become one of the largest full-service wealth management firms in Canada with over $10-billion in assets under administration.

“This highly strategic acquisition will contribute to the continued growth of National Bank’s wealth management platform,” said Luc Paiement head of National Bank’s wealth management arm. “It also aligns with National Bank’s strategy to increase its scale and presence outside of Quebec.”

The transaction values Wellington West at $333-million, including excess cash of $74-million. Excluding National’s current ownership of about 18%, the amount payable to Wellington West shareholders is $273-million.

The net outlay for the acquisition is about $199-million after deducting the excess cash acquired as part of the deal, said National Bank in a statement.

The closing of the transaction, anticipated for July 2011, remains subject to the approval of Wellington West shareholders and regulators.

National Bank’s earnings excluding one-time items in the quarter ended April 30 rose 13% to $295-million, or $1.69 a share, from a profit of $261-million, or $1.50, a year earlier.

Analysts on average had forecast earnings of $1.68, according to Thomson Reuters.

While earnings were strong, investors are more likely to focus on the Wellington West acquisition and the dividend increase, said Barclays analyst John Aiken.

“We would anticipate both these issues to be received reasonably favourably, although they should not be too much of a surprise to the market,” he said in a note to clients.

The bank raised its quarterly dividend payout 8% to 71 cents a share, from 66 cents a share.

National Bank of Canada

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