National Bank Of Canada (TSX:NA) Stock Retreat Deepens Despite 26% EPS Growth

National Bank of Canada stock has slipped in recent weeks, down about 8% over the past month, yet the latest quarter delivered the kind of profitability many investors say they want from a premium-priced bank. Earnings per share came in at CA$3.29 and return on equity held at a firm 16.8%, with revenue of CA$3.8b helping to support that level of profitability.

The real story this quarter is the earnings engine. Strong net income of CA$1.3b and positive operating leverage put the focus squarely on whether the recent share price weakness reflects sentiment more than it does the underlying business.

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Q3 2026 Earnings Summary

• Revenue, Q3 2026 vs. Q3 2025: CA$3,807m vs. CA$3,246m (up about 17.3%)
• Net Income, Q3 2026 vs. Q3 2025: CA$1,266m vs. CA$1,023m (up about 23.8%)
• Basic EPS, Q3 2026 vs. Q3 2025: CA$3.29 vs. CA$2.61 (up about 26.0%)
• Cost to Income Ratio, Q3 2026 vs. Q3 2025: 49.8% vs. 52.4% (improved efficiency)

Prefer visual charts instead of scrolling through more earnings tables and ratio breakdowns? See National Bank of Canada’s full financial picture with an at-a-glance view of its valuation in the company report for National Bank of Canada.

National Bank of Canada: Bull Case Execution Check

The bullish story argues that National Bank of Canada can turn the CWB deal, wealth growth and tech spend into faster, higher quality earnings. Q3 goes a long way toward that. EPS rose 26% and ROE held at 16.8%, while revenue grew 18% with positive operating leverage of about 6%. That directly supports the idea of efficiency gains rather than growth that depends only on volume. CWB synergy milestones are also being hit. Management reports CA$238m of cost and funding synergies captured so far, a target of CA$270m by the end of 2026, and early delivery of the initial CA$50m revenue synergy goal with CA$52m already realized. Strength in Wealth Management net income, up 22% to CA$299m, and Capital Markets net income, up 32% to CA$442m, backs the push toward more fee based, balance sheet light earnings.

Risks, CWB Timing And The Bear Case

The bear story focuses on concentration, credit risk, margin pressure and the risk that CWB economics arrive late or below plan. Recent results give that view some support. The stock fell 5.83% on the day of the release and is down about 8% over 30 days as investors question durability. AIRB conversion of CWB portfolios has been pushed into late 2027 and the CET1 uplift is now guided to the low end of the prior 35 to 55 basis point range. Management also cited higher observed default rates in the acquired book. PCL of CA$246m at 31 basis points and slightly higher PCL on impaired loans sit within guidance yet feed worries that credit costs are moving up while P&C NIM has slipped 7 basis points. That combination challenges the clean margin expansion outlined in the bullish narrative.

With higher default rates in the acquired CWB book, a lower than 100% allowance for bad loans, and timing shifts on CET1 benefits, some investors will want to stress test whether this is just surface noise or a sign of deeper fragility. Review the full risk analysis for National Bank of Canada which shows 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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