EU FINANCIALS: National Bank of Canada (NACN) - Q2 25 Earnings Headlines
(Very) small credit negative. The initial provision and higher cost of risk (ex CWB) are just enough to offset strong revenue growth and ex CWB results. If the bank can embed the asset successfully and realise synergies it could be more positive going fwd.
• Reported net income C$1.04bn, (+5% QoQ, +15% YoY) reflects sharp revenue and cost increases. (all ex CWB). Including CWB, net income was -1% YoY, due to the elevated initial provision.
• PCL was C$545mn, including an initial CWB provisions of C$230m. Adjusted for CWB, PCL rose C$59m, which still marks a reasonable increase.
• CET1 declined 0.16%, o.w. -9bps is due CWB transaction impact. Generation was 68bps. Distributions were -27bps and RWA growth was -36bps.
• "*NATIONAL BANK OF CANADA 2Q ADJ EPS C$2.85, EST. C$2.40
• *NATIONAL BANK OF CANADA 2Q PROVISION FOR CREDIT LOSSES C$545M" - bbg
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OUTLOOK: Price Signal Summary - EURUSD Trend Needle Points North
- In FX, the latest pullback in EURUSD is considered corrective and the trend structure remains bullish. Moving average studies are in a bull-mode position signalling a dominant uptrend, and the latest move down is allowing an overbought condition to unwind. A resumption of gains would open 1.1608 next, the Nov 9 2021 high. Key support is unchanged at the 20-day EMA, at 1.1217. A break of this average would signal scope for a deeper retracement.
- Bullish trend conditions in GBPUSD remain intact. The latest pullback appears corrective. Note that a deeper retracement would allow an overbought condition to unwind. Support to watch is 1.3153, the 20-day EMA. The pair has recently breached 1.3207, the Apr 3 high and a bull trigger, resuming the uptrend. Moving average studies are in a bull-mode position, signalling a dominant uptrend. Sights are on 1.3434, the Sep 26 ‘24 high.
- Recent gains in USDJPY are considered corrective. Resistance to watch is 144.47, the 20-day EMA. A clear break of this level would signal scope for a stronger recovery. Resistance at the 50-day EMA, is at 147.26. Moving average studies are in a bear-mode position highlighting a dominant downtrend. A resumption of the trend would open 139.79 next, a 1.382 projection of the Feb 12 - Mar 11 - 28 price swing.
US TSY FUTURES: Long Setting Further Out The Curve Dominated In Friday's Rally
OI data points to a mix of net short cover (TU & FV) and long setting (TY, UXY, US & WN) on Friday, with the long setting seen further out the curve comfortably outweighing the short cover seen further forwards.
| 25-Apr-25 | 24-Apr-25 | Daily OI Change | OI DV01 Equivalent Change ($) |
TU | 4,056,227 | 4,093,805 | -37,578 | -1,397,855 |
FV | 6,784,668 | 6,789,533 | -4,865 | -209,823 |
TY | 4,870,217 | 4,814,940 | +55,277 | +3,581,991 |
UXY | 2,257,134 | 2,246,830 | +10,304 | +912,905 |
US | 1,810,858 | 1,794,307 | +16,551 | +2,129,806 |
WN | 1,881,468 | 1,878,183 | +3,285 | +627,224 |
|
| Total | +42,974 | +5,644,248 |
BOE: Will "gradual" remain in the May guidance? (2/2)
- The second buzzword is “careful” – and this is a word that the MPC has communicated means that there is elevated uncertainty. Uncertainty has risen, rather than fallen, since the last MPC meeting. And hence it would be very surprising to us if this language was to change.
- That leaves “gradual” as the last significant part of the guidance. The market has taken “gradual” to mean quarterly and indeed external MPC member Professor Alan Taylor stated in a Treasury Select Committee that his view of gradual was that it meant quarterly cuts. If the MPC wants to potentially open the door to a change in the guidance it could remove the word “gradual” but temper it by keeping “restrictive” and “careful”. This effectively would signal to the market that there was a possibility that the BOE may accelerate rate cuts as far as neutral, which would at least open up the potential for back-to-back cuts between May and August.
- We do hear from both Governor Bailey and Deputy Governor Lombardelli again this week, but we would be very surprised if either said anything pertinent to the near-term monetary policy outlook.
