Author: Consultant

Canadian stocks edged higher on Friday as investors welcomed the developments in U.S.-Iran negotiations to end the war. However, today’s economic data release, technically indicating the economy is in recession, held traders back from big moves which capped the gains.

After opening higher than yesterday’s close, today the benchmark S&P/TSX Composite Index gave ground initially but later gained momentum to trade positively throughout the rest of the session before settling at 34,758.57, up by 240.87 points (or 0.70%).

Five of the 11 sectors posted gains today, with the IT sector leading the pack.

As the U.S.-Israel versus Iran war entered day number 91 today, the ceasefire announced early in April still holds.

A couple of days before, U.S. forces stationed near Iran targeted Iranian boats attempting to lay sea mines across the Strait of Hormuz and missile-launching sites near the port city of Bandar Abbas in southern Iran. In retaliation, Iran’s Islamic Revolutionary Guards Corps launched strikes on U.S. bases.

Yesterday, Axios reported that a Memorandum of Understanding, aiming to extend the ongoing ceasefire for another 60 days and allow the immediate reopening of the Strait of Hormuz, has been drafted.

The report stated that the proposal needs to be approved by U.S. President Donald Trump. According to the MoU, the 60-day period would be dedicated for discussing Iran’s nuclear programs.

Today, Trump explained his stance on the framework agreement through Truth Social. Trump acknowledged that the negotiations have advanced on lesser issues but stated that key points needed to be worked out.

Trump reiterated that Iran must neither develop nor possess a nuclear bomb and repeated his demand for unearthing the enriched uranium material buried deep underground (Nuclear Dust) in Iran and destroy it with assistance from the U.S., Iran, and the International Atomic Energy Agency.

Trump wanted the immediate reopening of the Strait of Hormuz with unrestricted shipping traffic in both directions and no tolls levied. He urged Iran to remove or detonate all the sea mines planted by the nation earlier.

Trump promised to lift the U.S. naval blockade on Iranian ports if Iran complies with his demands. Trump added that he would take a final call after a meeting in the Situation Room of the White House.

Following Trump’s post, expectations of the resumption of oil and energy trade across the Strait of Hormuz after nearly three months’ time increased and market sentiments received a boost.

On the economic front, data released by Statistics Canada revealed that the Gross Domestic Product in Canada decreased at an annualized 0.10% rate in the first quarter, extending the 1.00% drop from the previous period.

With imports surging, and falling business capital investment (0.70%) and government capital investment (2.50%), the numbers reveal that three of the last four quarters have posted negative GDP growth.

Economists are concerned that the economy has slipped into a technical recession. However, since monthly GDP figures suggested mild positive growth in Q1 2026, the true trajectory of the economy is uncertain, according to experts.

Q2 2026 numbers will be released by Statistics Canada on August 28.

Yesterday, the Bank of Canada released its annual Financial Stability Report.

The report warned of increasing vulnerabilities, especially from the Middle East war, all of which could crystallize and expose Canada’s economy to more damage.

Major sectors that gained in today’s trading were IT (4.68%), Materials (2.61%), Communication Services (0.48%), Financials (0.34%), and Consumer Staples (0.24%).

Among the individual stocks, Celestica Inc (10.17%), Coveo Solutions Inc (7.49%), Kinaxis Inc (5.56%), Montage Gold Corp (8.34%), Equinox Gold Corp (8.29%), and Aya Gold and Silver Inc (7.84%) were the prominent gainers.

Major sectors that lost in today’s trading were Industrials (0.19%), Healthcare (0.39%), Real Estate (0.88%), Utilities (0.98%), and Energy (1.16%).

Among the individual stocks, International Petroleum Corporation (3.07%), Vermilion Energy Inc (3.06%), Imperial Oil (3.06%), Hydro One Limited (2.31%), Firstservice Corporation (3.41%), and Mda Space Ltd (8.42%) were the notable losers.

Elbows UP?

More like pants down!

Compared to Other G7 countries:

Canada ranks as one of the smaller G7 economies by total GDP but performs solidly in several areas, though it lags in per capita terms and productivity growth. The G7 includes Canada, the US, UK, Germany, France, Italy, and Japan. Here’s a comparison based on recent data (primarily 2025–2026 projections from IMF, OECD, and national sources).

Total GDP (Nominal, 2026 Projections)

Canada has the smallest or near-smallest total economy in the G7:

• US: ~$32.4 trillion (by far the largest)
• Germany: ~$5.0–5.5 trillion
• Japan: ~$4.3 trillion
• UK: ~$3.9–4.0 trillion
• France: ~$3.4 trillion
• Italy: ~$2.5–2.6 trillion
• Canada: ~$2.51 trillion (11th globally)

Canada’s economy is resource-heavy (energy, commodities) and closely tied to the US via trade.

GDP Growth

Canada has shown resilience in total GDP growth, often ranking near the top of the G7, largely driven by population growth (immigration).

• Recent performance: It entered a TECHNICAL RECSSION with contractions in late 2025 and Q1 2026 (e.g., -1.0% in Q4 2025, -0.1% in Q1 2026 annualized).
• Longer-term: Strong total GDP growth since the 2000s (often 2nd to the US), but this is heavily population-driven.

GDP Per Capita

This is where Canada lags:

• Canada’s per capita GDP (~$60,300 in recent IMF data) is solid but trails the US, UK, and Germany significantly.
• Per capita growth has been weak or negative in recent years due to rapid population increases outpacing output. Canada had the worst per capita GDP growth in the G7 from 2014–2023 in some analyses.
• This reflects lower productivity growth compared to peers.

Unemployment

Canada’s rate is higher than the G7 average:

• Canada: ~6.7–6.9% as of early-mid 2026 (second-highest in G7 behind France in some periods).
• G7 average: ~4.6–5.3%.
• Lower rates in Japan (~2.5%), Germany (~3–4%), and the US.

Canada’s labour market has softened with higher immigration and slower hiring.

Debt and Fiscal Position

• Government debt-to-GDP: Canada ~103–111% (mid-range in G7). Better than Japan (>200%), Italy (~135%), and the US (~121%), but worse than Germany (~64%).
• Canada has a relatively smaller deficit than the US but has seen rising debt burdens in recent years.

Other Factors

• Inflation: Canada has generally managed it better than some G7 peers post-pandemic.
• Strengths: Resource exports, trade ties with the US (USMCA), fiscal soundness relative to some peers, and adaptability.
• Challenges: Productivity stagnation, housing affordability, reliance on immigration for growth, energy price volatility, and recent trade/tariff pressures. Per capita metrics and business investment have been weak.

Summary: Canada has one of the smallest total economies in the G7 but often ranks high in total GDP growth thanks to population gains. It underperforms on per capita growth, productivity, and unemployment compared to top peers like the US and Germany. Its economy remains resilient and resource-rich but faces structural issues around living standards and efficiency. Data can shift with new releases from IMF/OECD/Statistics Canada.

Globe & Mail: May 29/2026

The Canadian economy stalled in the first quarter of the year, posting a small, annualized decline in gross domestic product as the country struggles to grow in the face of trade tensions with the United States.

Canada’s real GDP contracted 0.1 per cent on an annualized basis between January and March, Statistics Canada reported Friday. This was much weaker than the 1.5-per-cent growth predicted by economists at the Bank of Canada and on Bay Street and follows a 1-per-cent decline in the fourth quarter of 2025.

Two consecutive quarters of negative GDP growth is sometimes referred to as a “technical recession.” However, economists cautioned that it may be premature to use the term, as the first-quarter decline was small, and could easily be revised upward.

The last time the country saw back-to-back quarterly declines in GDP was at the outset of the COVID-19 pandemic in 2020. The Canadian economy has now contracted in three of the past four quarters.

“While there will be plenty of debate over whether this constitutes a recession (we would say ‘no, not really’)  ???????, there is little debate that the economy has struggled to make any headway over the past year amid the ongoing trade conflict,” Douglas Porter, chief economist at the Bank of Montreal, wrote in a note to clients.

On a per capita basis, GDP rose 0.2 per cent compared with the previous quarter, as the population declined for the second consecutive quarter on the heels of more restrictive immigration policy.

Statscan’s separate monthly GDP report, published Friday, showed a 0.1 per cent month-to-month decline in March. An advanced estimate for April showed 0.4-per-cent growth, suggesting the economy began to pick up steam at the start of the second quarter.

The weak first-quarter number likely reinforces the case for the Bank of Canada to remain on hold in the coming months. The central bank has kept its policy rate at 2.25 per cent for four consecutive decisions. Recently, it has had to balance upside risks to inflation from the global oil price shock with downside risks to inflation stemming from slack in the Canadian economy.

“Overall, this should really throw a wet blanket on rate-hike talk, as the economy is in no condition to deal with higher rates,” Mr. Porter wrote.

Financial markets have pulled back on their expectations for multiple rate hikes from the Bank of Canada this year, but still see one quarter-point hike, in December, according to Bloomberg data.

Geopolitical, trade risks pose rising threat to financial stability, Bank of Canada warns

The first quarter GDP contraction was led by a combination of weak investment and a jump in imports, which are subtracted from the GDP tally.

Government capital investment fell 2.5 per cent quarter-to-quarter, as Ottawa slowed its pace of spending on new weapons systems.

Business capital investment fell 0.7 per cent – the fifth consecutive quarterly decline – with higher spending on machinery and equipment and mineral exploration offset by a decline in spending on engineering structures.

“Business investment continues to be the Achilles’ heel of the Canadian economy,” Marc Desormeaux, economist and vice-president of policy at the Business Council of Canada, said in an interview.

“The big thing is uncertainty – uncertainty around trade policy, uncertainty around geopolitical developments,” he said, pointing to the upcoming review of the United States-Mexico-Canada trade agreement.

Meanwhile, the soggy housing market continued to be a drag, with resale housing activity down 9.9 per cent in the first quarter, following a 3.4-per-cent decline in 2025 overall.

A big jump in imports compared with exports also dragged down the GDP calculation in the first quarter. Imports were up 2.9 per cent, driven by imports of gold, passenger cars and industrial machinery and equipment. By contrast, exports were down 0.1 per cent in the quarter, with fewer shipments of cars and trucks heading to the U.S. because of tariffs.

Consumer spending grew 0.4 per cent in the quarter, following a 0.7-per-cent increase in the fourth quarter of 2025. Increases in spending on financial services and food were offset by lower spending on vehicles.

“Overall this was a very weak report from most angles that shows that trade uncertainty and tariffs are continuing to hold back growth, while consumers have little ammunition left for spending ahead, and interest-sensitive sectors are lagging,” Katherine Judge, senior economist with Canadian Imperial Bank of Commerce economist, wrote in a note to clients.

“Our base case also assumes progress towards reducing some tariffs (namely aluminum and possibly steel) in the coming months, and if the oil price shock starts to fade over that period as well, GDP will return to sustainable growth for the rest of the year,” she wrote.

Conservative MPs pounced on the report Friday to criticize the Liberal government’s economic record, leaning into the notion that the country is in a “technical recession.”

Mark Carney “has been Prime Minister for four quarters now. The economy has shrunk in three of those quarters,” Conservative Leader Pierre Poilievre told reporters.

Finance Minister François-Philippe Champagne defended the government’s record in Friday’s Question Period, saying “Canadians understand that the world is facing some headwinds.”

With a report from Bill Curry

{NOTE: Bill Curry is a veteran parliamentary reporter with Liberal Bias}

 Jonathan Chandran

President/CEO

TRAIN2INVEST

The Power To Prosper

www.train2invest.com

Tel.: 204-488-3559

Email: admin@train2invest.com

Statistics Canada says economic growth stalled in the first quarter and real gross domestic product was slightly negative on an annualized basis.

Real GDP has now declined for two consecutive quarters – meeting the definition of a technical recession – though a close look at the data paints a mixed picture of the economy.

The agency mainly blames higher imports of gold and a weak month for Canada’s resource extraction industries in March for dragging down recent economic activity.

More to come

May 29, 2026

Executive Summary

All six major Canadian banks (RBC, TD, Scotiabank, BMO, CIBC, National Bank) reported Q2 2026 earnings that beat analyst expectations with year-over-year profit growth. Key drivers: strong Canadian retail/commercial banking, capital markets performance, and lower provisions for credit losses (PCLs) versus the prior year. Five banks raised dividends; RBC and CIBC announced share buybacks. Canadian bank stocks are up ~16% YTD, outperforming the TSX.

Key Results (Q2 2026):

• RBC: $5.5B profit ($3.85/share, adj. $3.90 vs. $3.77 est.), +25% YoY. ROE 17.2%. PCL $912M (down from $1.4B). Dividend ↑ to $1.76.
• TD: Adj. $2.38/share (vs. $2.26 est.). Canadian banking strong (+15% profit). PCL $1.0B (down). Dividend ↑ to $1.12. US remediation ongoing.
• Scotiabank: $2.6B ($2.00/share, adj. $2.02 vs. $1.93 est.). PCL $1.2B. Dividend ↑ to $1.14. ROE improving toward 14% target in 2027.
• BMO: $2.6B ($3.53/share, adj. $3.67 vs. $3.41 est.), +34% YoY. Strong capital markets & US. PCL $739M. Dividend ↑ to $1.71. US ROE target 12% by 2028.
• CIBC: $2.47B ($2.53/share, adj. $2.54 vs. $2.42 est.), +23% YoY. Capital markets +40%. PCL flat at $605M. Dividend unchanged at $1.07. Selling Caribbean ops for ~US$1.6B.
• National Bank: $1.23B ($3.06/share, adj. $3.23 vs. $3.14 est.). Strong ROE 15.9%. PCL sharply down to $233M (post-CWB acquisition effects). Dividend ↑ to $1.32.

Review & Comments:

• Resilient performance: Banks continue to show strength despite economic uncertainty and USMCA trade risks. Lower PCLs (reflecting better-than-expected credit quality) were a major tailwind across the board.
• Segment highlights: Canadian personal & commercial banking remains solid. Capital markets performed well (notably RBC, BMO, CIBC). US operations mixed — BMO and TD focusing on improvement/remediation.
• Efficiency & strategy: Expense growth controlled (e.g., Scotiabank +2%). National Bank advancing CWB integration with cost savings. CIBC streamlining via Caribbean exit and management changes.
• Shareholder returns: Aggressive dividends and buybacks signal confidence and excess capital.
• Outlook context: Results support the sector’s YTD outperformance. Risks remain around economic slowdown, trade tensions, and higher-for-longer rates, but current provisioning and earnings suggest banks are well-positioned.

Bottom line: Solid quarter with beats, margin stability, and cautious optimism. No major red flags in credit or operations.

DETAILS:

Canada’s biggest banks reported their second-quarter earnings this week, covering the three months that ended April 30.

Bank of Nova Scotia, Bank of Montreal and National Bank of Canada kicked off the second-quarter earnings season on Wednesday, followed by Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank on Thursday.

All six banks reported higher profit that beat analysts’ estimates and all except CIBC also raised their quarterly dividends. Analysts expected the lenders to post a round of resilient profits, bucking economic uncertainty and looming trade pressure ahead of talks to renew the North American trade agreement, USMCA.

Canadian bank stocks have surged 16 per cent this year on the optimism surrounding the sector’s ability to withstand economic uncertainty, outperforming the S&P/TSX Composite Index’s 8-per-cent climb.

Here’s a breakdown of the big banks’ second-quarter results.

Bank of Nova Scotia (Scotiabank)

• Earnings Q2 2026: $2.6-billion ($2.00 per share)
• Earnings Q2 2025: $2-billion ($1.48 per share)
• Adjusted EPS: $2.02 per share
• Analysts’ expectations: $1.93 per share (adjusted)
• Dividend: $1.14 per share

Bank of Nova Scotia BNS-T -1.20%decrease reported higher second-quarter profit that beat analysts’ estimates on a boost from its Canadian banking unit as the lender seeks to bolster its profitability.

Scotiabank earned $2.6-billion, or $2.00 per share, in the three months that ended April 30, compared with $2-billion, or $1.48 per share, in the same quarter last year.

Adjusted to exclude certain items, the bank said it earned $2.02 per share. That edged out the $1.93 per share analysts expected, according to data from Bloomberg.

Last quarter, Scotiabank said it expects to hit its target of 14-per-cent return on equity in 2027, a year earlier than expected. In the second quarter, Scotiabank posted an adjusted return on equity of 13.2 per cent.

The bank raised its quarterly dividend by 4 cents to $1.14 per share.

In the quarter, Scotiabank set aside $1.2-billion in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $1.1-billion against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.

In the same quarter last year, Scotiabank set aside $1.4-billion in provisions.

Total revenue rose 8 per cent in the quarter to $9.8-billion. But expenses increased 2 per cent to $5.2-billion, which the bank said was driven by higher staffing, technology, advertising and business development costs.

Bank of Montreal (BMO)

• Earnings Q2 2026: $2.6-billion ($3.53 per share)
• Earnings Q2 2025: $1.96-billion ($2.50 per share)
• Adjusted EPS: $3.67 per share
• Analysts’ expectations: $3.41 per share (adjusted)
• Dividend: $1.71 per share

Bank of Montreal BMO-T -0.82%decrease reported higher second-quarter profit that topped analysts’ estimates on a boost from its capital markets business and its division in the United States.

BMO earned $2.6-billion, or $3.53 per share, in the three months that ended April 30, up 34 per cent from the same quarter last year.

Adjusted to exclude certain items, the bank said it earned $3.67 per share. That beat the $3.41 per share analysts expected, according to data from Bloomberg.

In March, BMO unveiled its new strategy to revive its U.S. business and boost its return on equity – a closely watched measure of profitability. In 2024, BMO set a goal of improving its ROE to 15 per cent by the end of 2027.

The U.S. division – which makes up 40 per cent of BMO’s earnings – is weighing on the bank’s profitability. BMO set a target to improve the unit’s ROE from 8 per cent to 12 per cent by 2028.

In the second quarter, BMO’s return on equity edged higher to 13 per cent and8.6per cent in its U.S. business.

The bank raised its quarterly dividend by 4 cents to $1.71 per share.

In the quarter, BMO set aside $739-million in provisions for credit losses. That was lower than analysts expected and included $734-million against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.

Revenue rose 10 per cent in the quarter to $9.6-billion, while expenses increased 6 per cent to $5.3-billion.

National Bank of Canada

• Earnings Q2 2026: $1.23-billion ($3.06 per share)
• Earnings Q2 2025: $896-million ($2.17 per share)
• Adjusted EPS: $3.23 per share
• Analysts’ expectations: $3.14 per share (adjusted)
• Dividend: $1.32 per share

National Bank of Canada NA-T +0.91%increase reported higher profit for the fiscal second quarter and raised its quarterly dividend as lower loan loss reserves and strong performance from capital markets as well as retail banking boosted the lender’s earnings.

National Bank earned $1.23-billion, or $3.06 a share, for the quarter that ended April 30. In the same quarter last year, the bank earned $896-million, or $2.17 a share.

After adjusting to exclude certain items, National Bank said it earned $3.23 a share. That beat analysts’ consensus expectation for profit of $3.14 a share, according to Bloomberg data.

Earnings in the second fiscal quarter last year were affected by National Bank’s acquisition of Canadian Western Bank (CWB), which added to its loan-loss reserves.

The Montreal-based bank is expecting to reap about $300-million in annual savings on costs and funding once it has merged CWB’s operations with its own. As of April 30, the bank said it has achieved $215-million so far, and is on track to reach $270-million by the end of the fiscal year.

National Bank raised its quarterly dividend by 8 cents to $1.32 per share. That was a larger increase than the 5 cents some analysts had expected.

Provisions for credit losses was $233-million, down from $545-million a year earlier.

A lower provision of $38-million on performing loans, which are still being paid back, largely accounted for the decrease. In the fiscal second quarter last year, the bank took an initial provision of $315-million, mostly because of the CWB acquisition.

National Bank’s return on equity was 15.9 per cent. And its key measure of capital reserves – the common equity Tier 1 ratio – was 13.5 per cent, down from 13.7 per cent in the prior quarter as the bank bought back 8.8 million shares so far this fiscal year.

Royal Bank of Canada (RBC)

• Earnings Q2 2026: $5.5-billion ($3.85 per share)
• Earnings Q2 2025: $4.39-billion ($3.02 per share)
• Adjusted EPS: $3.90 per share
• Analysts’ expectations: $3.77 per share (adjusted)
• Dividend: $1.76 per share

Royal Bank of Canada RY-T +0.37%increase posted higher second-quarter profit that beat analysts’ estimates, boosted by a surge in capital markets earnings and lower provisions for sour loans.

RBC’s profit climbed 25 per cent to $5.5-billion, or $3.85 per share, in the three months that ended April 30.

Adjusted to exclude certain items, the bank said it earned $3.90 per share. That topped the $3.77 per share analysts expected, according to Bloomberg data.

The bank raised its quarterly dividend by 12 cents to $1.76 per share. The lender also said it plans to repurchase 45 million of its shares, representing about 3 per cent of its common stock.

RBC has been focused on bolstering its profitability. During fourth-quarter earnings in December, the bank raised its return on equity (ROE) target to 17 per cent or more after surpassing the 16-per-cent goal the bank set at its investor day last year.

In the quarter, the bank posted higher ROE at 17.2 per cent.

RBC set aside $912-million in provisions for credit losses. That was lower than analysts anticipated, and included $899-million against loans the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.

In the same quarter last year, RBC set aside $1.4-billion in provisions as it built up reserves ahead of a potential economic downturn.

Canadian Imperial Bank of Commerce (CIBC)

• Earnings Q2 2026: $2.47-billion ($2.53 per share)
• Earnings Q2 2025 $2.01-billion ($2.04 per share)
• Adjusted EPS: $2.54 per share
• Analysts’ expectations: $2.42 per share (adjusted)
• Dividend: $1.07 per share

Canadian Imperial Bank of Commerce CM-T -1.97%decrease reported a 23-per-cent increase in fiscal second-quarter profit that beat analysts’ estimates, and announced a deal to sell its Caribbean division for US$1.6-billion.

Profits were up across each of the bank’s business units in the quarter that ended April 30. Capital markets earnings increased 40 per cent from a year earlier as revenue from trading and investment banking surged, and the bank recovered funds previously earmarked to cover losses on loans.

CIBC earned $2.47-billion, or $2.53 a share, compared with $2.01-billion, or $2.04 a share, in the same quarter last year.

After adjusting for amortization costs, CIBC said it earned $2.54 a share. The consensus estimate among analysts going into the quarter was $2.42 a share, according to Bloomberg.

The bank also announced a plan to buy back up to 30 million shares, or 3.3 per cent of its outstanding share count, over the next year. Its quarterly dividend was unchanged at $1.07 a share.

CIBC said it has reached a deal to sell its 91.67-per-cent stake in CIBC Caribbean to Bermuda-based The Bank of N.T. Butterfield & Son. CIBC will receive US$1-billion in cash and Butterfield shares currently worth US$645-million, and the transaction is expected to close in the first half of 2027.

Chief executive officer Harry Culham also announced the first changes to his senior executive team since he took the helm at the bank last November, creating roles with sole oversight for commercial banking as well as wealth management.

In the second fiscal quarter, CIBC’s provisions for credit losses was unchanged from a year earlier, at $605-million.

Provisions on loans that are past due increased by $85-million, to $548-million, which the bank attributed to “economic pressures” and some seasonal trends.

Toronto-Dominion Bank (TD Bank)

• Earnings Q2 2026: $$4.17 billion ($2.38 per share)
• Earnings Q2 2025: $3.63 billion ($1.97 per share)
• Adjusted EPS: $2.38 per share
• Analysts’ expectations: $2.26 per share (adjusted)
• Dividend: $1.12 per share

Toronto-Dominion Bank TD-T +0.24%increase posted earnings that topped analysts’ expectations on higher profit from its Canadian banking and capital markets units as the lender set aside fewer provisions for sour loans.

The bank said it earned $2.38 a share on an adjusted basis for the second quarter ended April 30. That beat the $2.26 a share analysts estimated, according to Bloomberg data.

The bank raised its quarterly dividend 4 cents to $1.12 a share. TD has also been buying back shares as it sits on a substantial amount of excess capital.

TD is betting on its Canadian businesses to prop up its growth ambitions as it cuts costs and remediates its anti-money-laundering failures in the United States.

Canadian personal and commercial banking profit was $1.93-billion, up 15 per cent from a year earlier on higher revenue and lower provisions. Loan balances were up 6 per cent year over year as deposits rose 3 per cent.

Adjusted net income from the bank’s U.S. arm was up 8 per cent at $960-million. Expenses climbed 10 per cent from the year prior as TD spends to fix gaps in its risk governance and controls. The bank has been restructuring its balance sheet and operations to cut costs.

TD set aside $1-billion in provisions for credit losses. That was lower than analysts anticipated, and included $973-million against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.

In the same quarter last year, TD set aside $1.34-billion in provisions.

The union that represents track signal workers at Canadian Pacific Kansas City Ltd. CP-T -2.17%decrease has issued a 72-hour strike notice, the Calgary-based railway said on Wednesday night.

Contract negotiations with the International Brotherhood of Electrical Workers will continue into the weekend as the two sides try to reach a new collective agreement, CPKC said in a statement.

Without elaborating, the railway said it has a back-up plan in place should the 300 workers strike, and operations will continue.

IBEW members install and repair trackside signals and switches as well as warning systems at road crossings on CPKC’s Canadian rail network.  

“We remain committed to bargaining in good faith with IBEW in order to reach a negotiated outcome that is in the best interests of our employees and their families, our customers, and the company,” CPKC said.

The union said its members will strike at 8 a.m. MT on Sunday.

Unions officials did not immediately respond to requests for comment.

Canadian Imperial Bank of Commerce CM-T -1.91%decrease reported a 23-per-cent increase in fiscal second-quarter profit that beat analysts’ estimates, and announced a deal to sell its Caribbean division for US$1.6-billion.

Profits were up across each of the bank’s business units in the quarter that ended April 30. Capital markets earnings increased 40 per cent from a year earlier as revenue from trading and investment banking surged, and the bank recovered funds previously earmarked to cover losses on loans.

CIBC earned $2.47-billion, or $2.53 a share, compared with $2.01-billion, or $2.04 a share, in the same quarter last year.

After adjusting for amortization costs, CIBC said it earned $2.54 a share. The consensus estimate among analysts going into the quarter was $2.42 a share, according to Bloomberg.

The bank also announced a plan to buy back up to 30 million shares, or 3.3 per cent of its outstanding share count, over the next year. Its quarterly dividend was unchanged at $1.07 a share.

On Wednesday, Bank of Nova Scotia BNS-T -1.32%decrease, Bank of Montreal BMO-T -1.10%decrease and National Bank of Canada NA-T +0.62%increase all reported profits that surpassed analysts’ expectations. Royal Bank of Canada RY-T +0.14%increase also topped estimates on Thursday.

CIBC said it has reached a deal to sell its 91.67-per-cent stake in CIBC Caribbean to Bermuda-based The Bank of N.T. Butterfield & Son. CIBC will receive US$1-billion in cash and Butterfield shares currently worth US$645-million, and the transaction is expected to close in the first half of 2027.

Selling the division “will allow the bank to reallocate capital towards strategic growth priorities in North America,” the bank said in a statement on Thursday.

CIBC has done business in the Caribbean since the 1920s, and previously tried to sell a majority stake in the unit to a group led by Colombian banker and real estate developer Jaime Gilinski. Regulators blocked that transaction amid a health crisis over the spread of COVID-19.

Chief executive officer Harry Culham also announced the first changes to his senior executive team since he took the helm at the bank last November, creating roles with sole oversight for commercial banking as well as wealth management.

Susan Rimmer has been named group head of commercial banking, adding responsibility for CIBC’s U.S. commercial operations to her existing duties leading the Canadian division.

Eric Belanger will be group head of wealth management, taking on oversight of the business in Canada and the U.S. from Ms. Rimmer. He was most recently head of CIBC Global Asset Management, and has worked at the bank for more than 30 years.

Kevin Li will continue to serve as group head of the U.S. region and CEO of CIBC Bank USA.

Chief of staff Amy South was also named chief administrative officer, as current CAO Christina Kramer will leave the bank on Oct. 31, after a stint as a special adviser.

Chief financial officer Robert Sedran adds oversight of enterprise transformation to his role.

The executive moves are effective on Thursday.

In the second fiscal quarter, CIBC’s provisions for credit losses – the money the bank earmarks to cover potential losses on defaulted loans – was unchanged from a year earlier, at $605-million.

Provisions on loans that are past due increased by $85-million, to $548-million, which the bank attributed to “economic pressures” and some seasonal trends.

Profit from Canadian personal and business banking was up 15 per cent to $846-million, compared with a year earlier. Loan balances increased 2 per cent and the profit margin on lending increased by 32 basis points. (100 basis points equal one percentage point).

Capital markets profit was $792-million, with revenue up 21 per cent. A busy quarter for equities trading and advisory work in corporate and investment banking helped boost the division’s earnings. The bank also reclaimed $15-million of previous loan-loss provisions.

Canadian commercial banking and wealth management profit increased 12 per cent to $614-million, as loans and deposits each increased 7 per cent and profit margins improved.

And the bank’s U.S. division, which focuses on commercial banking and wealth management, had profit of $260-million, up 56 per cent year over year. Provisions for credit losses were lower than a year ago, while loan and deposit balances were up 6 per cent and 8 per cent respectively.

Toronto-Dominion Bank TD-T -0.31%decrease posted earnings that topped analysts’ expectations on higher profit from its Canadian banking and capital markets units as the lender set aside fewer provisions for sour loans.

The bank said it earned $2.38 a share on an adjusted basis for the second quarter ended April 30. That beat the $2.26 a share analysts estimated, according to Bloomberg data.

TD chief executive officer Raymond Chun said it was “another strong quarter for TD.”

“We also continue to make consistent progress on our AML remediation and enhancements, which remain our top priority,” he said.

The bank raised its quarterly dividend 4 cents to $1.12 a share. TD has also been buying back shares as it sits on a substantial amount of excess capital.

TD is betting on its Canadian businesses to prop up its growth ambitions as it cuts costs and remediates its anti-money-laundering failures in the United States.

Canadian personal and commercial banking profit was $1.93-billion, up 15 per cent from a year earlier on higher revenue and lower provisions. Loan balances were up 6 per cent year over year as deposits rose 3 per cent.

Economic uncertainty, inflation and higher interest rates have weighed on the housing market and business sentiment, tempering demand for lending, in particular in real estate secured lending (RESL).

“The consumer continues to be resilient; however, when you look at RESL, the rates are a little bit higher than a few months ago, and that is putting pressure on volume for RESL,” TD chief financial officer Kelvin Tran said in an interview.

“On the business side, anecdotally, when you talk to clients over time, they say, well I’ve been pausing for some time now and I’m ready to invest. So there’s confidence in the outlook of Canada.”

Adjusted net income from the bank’s U.S. arm was up 8 per cent at $960-million. Expenses climbed 10 per cent from the year prior as TD spends to fix gaps in its risk governance and controls. The bank has been restructuring its balance sheet and operations to cut costs.

TD has previously said it expects expense growth this year to land in the mid-single-digit range. Mr. Tran said despite the higher costs this quarter, the bank is still comfortable with its previous guidance.

“Our focus is reducing structural costs, and that’s the same approach for the entire bank, whether it’s in Canada or in the U.S.,” Mr. Tran said. “In the U.S., even though this quarter the expenses were on the high side, we do expect the full year will be at the mid-single-digit growth range.”

TD is the final major Canadian bank to report earnings for the fiscal second quarter. Bank of Montreal BMO-T -1.14%decrease, Bank of Nova Scotia BNS-T -1.50%decrease and National Bank of Canada NA-T +0.39%increase reported earnings on Wednesday. Royal Bank of CanadaRY-T +0.09%increase and Canadian Imperial Bank of CommerceCM-T -1.70%decrease also posted earnings on Thursday.

TD set aside $1-billion in provisions for credit losses – the funds banks set aside to cover loans that may default. That was lower than analysts anticipated, and included $973-million against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.

In the same quarter last year, TD set aside $1.34-billion in provisions.

Capital markets profit climbed 46 per cent to $612-million, driven by higher revenue and lower provisions.

The wealth management and insurance division generated $837-million of profit, up 18 per cent on higher assets, insurance premiums and deposit volume growth.

Royal Bank of Canada RY-T +0.02%increase posted higher second-quarter profit that beat analysts’ estimates, boosted by a surge in capital markets earnings and lower provisions for sour loans.

RBC’s profit climbed 25 per cent to $5.5-billion, or $3.85 per share, in the three months that ended April 30.

Adjusted to exclude certain items, the bank said it earned $3.90 per share. That topped the $3.77 per share analysts expected, according to Bloomberg data.

“In a world that’s constantly changing and becoming more complex, our commitment to delivering trusted advice and helping clients navigate risk continues to produce exceptional outcomes,” RBC chief executive officer Dave McKay said in a statement.

The bank raised its quarterly dividend by 12 cents to $1.76 per share. The lender also said it plans to repurchase 45 million of its shares, representing about 3 per cent of its common stock.

RBC has been focused on bolstering its profitability. During fourth-quarter earnings in December, the bank raised its return on equity (ROE) target to 17 per cent or more after surpassing the 16-per-cent goal the bank set at its investor day last year.

In the quarter, the bank posted higher ROE at 17.2 per cent.

RBC is the fifth major Canadian bank to report earnings for the fiscal second quarter. Bank of Montreal BMO-T -0.88%decrease, Bank of Nova Scotia BNS-T -1.45%decrease and National Bank of Canada NA-T +0.32%increase reported earnings on Wednesday. Toronto-Dominion Bank TD-T +0.02%increase and Canadian Imperial Bank of Commerce CM-T -1.70%decrease also posted earnings on Thursday.

RBC set aside $912-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was lower than analysts anticipated, and included $899-million against loans the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.

In the same quarter last year, RBC set aside $1.4-billion in provisions as it built up reserves ahead of a potential economic downturn.

Profit from personal banking was $1.87-billion, up 17 per cent from a year earlier, on higher net interest income and lower provisions. Loan balances were up 4 per cent year over year while deposits decreased 1 per cent.

The commercial banking unit posted profit of $854-million, up 43 per cent from a year earlier, largely driven by lower provisions.

Capital markets posted earnings of $1.48-billion, an increase of 23 per cent from a year earlier, driven by higher revenue in global markets and corporate and investment banking.

The wealth management division generated $1.19-billion of profit, up 28 per cent on higher fee-based client assets and net interest income.

Profit from insurance was up 3 per cent at $218-million. RBC is restructuring the unit’s leadership as insurance head Jennifer Publicover is leaving the bank effective June 1.

Prime Minister Mark Carney said Canada has entered into negotiations to buy Swedish-made Saab early-warning aircraft technology, picking a non-U.S. supplier as he makes good on a promise to reduce spending on American military gear.

Mr. Carney announced the selection at the annual CANSEC defence trade show in Ottawa Wednesday.

He said Canada will proceed with the Swedish GlobalEye system, made by Saab. Other contenders were the Aeris X by L3Harris and the E-7 Wedgetail by Boeing.

The GlobalEye early warning system will be installed on Global 6500 jets made by Bombardier in Canada.