UPDATE 1-National Bank profit tops expectations; dividend raised

Fri May 24, 2013 9:24am EDT

TORONTO May 24 (Reuters) - National Bank of Canada reported a 6 percent increase in its quarterly operating profit on Friday, while also outlining plans to buy back shares and raise its quarterly dividend.

The Montreal-based bank, whose profit topped expectations, said its board has authorized the repurchase of up to 2 percent of its common shares, along with a 5 percent increase in its quarterly dividend payout.

The bank said profit from ongoing operations rose to C$369 million ($356.8 million) or C$2.08 a share in its fiscal second-quarter, up from C$347 million, or C$1.95 a share, a year ago.

Analysts on average had expected earnings of C$1.98 share, according to Thomson Reuters I/B/E/S.

"National reported a much better quarter than anticipated as strong trading and a slightly lower than anticipated tax rate benefited earnings," said Barclays analyst John Aiken, who sees the results and dividend increase lifting National Bank's share price.

Net income in the quarter ended April 30 however, fell to C$434 million, or C$2.49 a share, from C$533 million, or C$3.22 a share, a year earlier, when its profits were boosted by a one-time gain from the sale of its Natcan operations.

National Bank said it is raising its quarterly dividend to 87 Canadian cents a share from 83 Canadian cents a share. The dividend will be payable on Aug 1, to holders of record on June 20.

The new share buyback plan will begin on or about June 20, and will end at the latest on or about June 19, 2014. Under its existing share buyback plan, which expires on June 19, the bank has so far repurchased and cancelled 1 million common shares at an average price of $74.71 per share.

The company has roughly 162.33 million shares outstanding as of May 22 and the new repurchase plan will allow it to buy back up to roughly 3.25 million shares.