UPDATE 1-National Bank of Canada posts lower first-quarter profit

(Adds tax expense, other details) March 1 (Reuters) - National Bank of Canada reported a 5% decline in quarterly profit on Wednesday, as the lender set aside bigger rainy-day funds to deal with economic uncertainty, which outweighed gains stemming from higher interest rates. Profit for the three months ended Jan. 31 was C$881 million ($647.94 million) or C$2.49 per share, compared with C$930 million or C$2.64 per share a year earlier. Surging inflation has squeezed consumers' financial strength, prompting banks to increase provisions in case of delays or defaults in loan repayments by borrowers. The bank reported C$86 million in provisions for credit losses (PCLs) for the quarter. In the same quarter last year, it had released C$2 million of those provisions. In January, the Bank of Canada hiked its key interest rate to the highest level in 15 years, but said it would hold off on further increases as long as prices eased as expected. Still, uncertainty persists as the central bank has not ruled out further hikes, stating that the economy is still overheated. National Bank also reported a C$32 million tax expense tied to the Canada Recovery Dividend, a one-time tax imposed on some of the country's biggest financial firms. Separately, the lender said its former Chief Financial Officer Ghislain Parent, who is currently the executive vice president of its international operations, will retire in October.
($1 = 1.3594 Canadian dollars) (Reporting by Niket Nishant in Bengaluru; editing by Uttaresh Venkateshwaran)