TD-T -0.10%decrease reported a first-quarter profit of $2.82-billion, up from $1.58-billion a year earlier, as its revenue also climbed higher.
The bank says the profit amounted to $1.55 per diluted share for the quarter ended Jan. 31, up from a profit of 82 cents per diluted share in the same quarter last year.
Revenue totalled $13.71-billion, up from $12.20-billion.
TD’s provisions for credit losses for the quarter amounted to $1.00-billion, up from $690-million a year earlier.
On an adjusted basis, TD says it earned $2.00 per diluted share, down from an adjusted profit of $2.23 per diluted share in its first quarter last year.
Analysts on average had expected a profit of $1.89 per share, according to estimates compiled by financial markets data firm Refinitiv.
Canadian Imperial Bank of CommerceCM-T -0.10%decrease reported first quarter profit that beat analysts’ estimates on stronger performance in Canadian banking, even as the lender posted higher provisions for loans that could default.
CIBC earned $1.73-billion, or $1.77 per share, in the three months that ended Jan. 31. That compared with $433-million, or $0.39 per share, in the same quarter last year when the bank’s earnings were weighed down by a large legal provision.
Adjusted to exclude certain items, including a charge stemming from a special assessment by the U.S. Federal Deposit Insurance Corp., the bank said it earned $1.81 per share, a 7-per-cent decrease from the same quarter a year prior. That topped the $1.68 per share analysts expected, according to data from the London Stock Exchange Group.
“These first-quarter results demonstrate our success in executing on our client-focused strategy which is delivering results for our stakeholders,” CIBC chief executive officer Victor Dodig said in a statement. “We have clear momentum in attracting and deepening client relationships, underpinned by continued expense discipline, a robust capital position, and strong credit quality, giving us a strong foundation as we continue to proactively manage our bank to further our progress and momentum in 2024.”
The bank kept its quarterly dividend unchanged at $0.90 per share.
CIBC is the fifth major Canadian bank to report earnings for the fiscal first quarter. Toronto-Dominion Bank is also releasing results on Thursday. The rest of the Big Six banks reported earlier this week, with Bank of Nova Scotia, Royal Bank of Canada and National Bank of Canada beating analyst expectations, while Bank of Montreal missed estimates.
In the quarter, CIBC set aside $585-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $93-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, CIBC set aside $295-million in provisions.
Total revenue rose 5 per cent in the quarter, to $6.22-billion as expenses decreased 22 per cent to $3.47-billion. On an adjusted basis, excluding last year’s large legal provision, expenses increased 3 per cent on higher technology and staffing costs.
Profit from Canadian personal and small business banking was $650-million, up 10 per cent from a year earlier, as wider net interest margins offset higher provisions. Loan balances were up 2 per cent.
The Canadian commercial and wealth management division generated $498-million of profit, up 6 per cent on lower provisions and higher revenue.
The bank’s U.S. division posted a loss of $9-million, as lower deposit balances, static loan growth and higher expenses, weighed on earnings. The U.S. business booked higher provisions, largely stemming from impaired loans in the commercial real estate portfolio. It also took the charge related to the special assessment imposed by the FDIC.
And capital markets profit was flat year-over-year at 612-million as expenses outpaced revenue with lower activity in corporate banking offsetting a boost from global markets, investment banking and direct financial services.
Canada’s biggest banks report their first-quarter earnings this week, covering the three months that ended Jan. 31, as experts cite concerns with commercial real estate loans and warn of significant losses in the sector.
Ahead of the latest results, many analysts have cut their estimates – extending a trend seen throughout 2023. The analysts anticipate that earnings will drop as much as 12 per cent year-over-year, pressed by dampened loan demand and higher loan loss reserves driven by rising risk in commercial real estate, credit cards and auto lending. The good news is that the banks have also been setting aside more money for loans that could default, known as provisions for credit losses, to help them absorb the impact of those losses.
So far, Bank of Nova Scotia, Royal Bank of Canada and National Bank have reported first-quarter profits that beat analysts’ estimates. Meanwhile, Bank of Montreal missed analysts’ estimates. Toronto-Dominion Bank TD-T -0.10%decrease and Canadian Imperial Bank of Commerce CM-T -0.10%decrease round out this week’s bank earnings with the release of their first-quarter results on Friday.
Here’s a breakdown of the big banks’ first-quarter earnings so far.
Bank of Nova Scotia
A Bank of Nova Scotia branch, in Toronto, on Dec. 13, 2021.CARLOS OSORIO/REUTERS
Earnings Q1 2024: $2.2 billion ($1.68 per share)
Earnings Q1 2023: $1.76-billion ($1.35 per share)
Adjusted EPS: $1.69 per share
Analysts’ expectations: $1.61 per share (adjusted)
Scotiabank earned $2.2-billion, or $1.68 per share, in the three months that ended Jan. 31. That compared with $1.76-billion, or $1.35 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $1.69 per share. That edged out the $1.61 per share analysts expected, according to Refinitiv.
In the quarter, Scotiabank set aside $962-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included just $20-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, Scotiabank set aside $638-millions in provisions.
“The Bank delivered solid earnings this quarter driven by strong revenue growth, margin expansion and expense discipline,” Scotiabank chief executive officer Scott Thomson said in a statement. “I am encouraged by the early progress against our strategic priorities, and the further strengthening of our balance sheet metrics.”
The bank kept its quarterly dividend unchanged at $1.51 cents per share.
Total revenue rose 6 per cent in the quarter to $8.4-billion as expenses also climbed 6 per cent to $4.7-billion.
Bank of Montreal (BMO)
The Bank of Montreal building, in Toronto’s Financial District, is on April 10 2019.FRED LUM/THE GLOBE AND MAIL
Earnings Q1 2024: $1.29 billion ($1.73 per share)
Earnings Q1 2023: $133-million ($0.14 per share)
Adjusted EPS: $2.56 per share
Analysts’ expectations: $3.02 per share (adjusted)
Dividend: $1.51 per share
Bank of Montreal BMO-T -0.61%decrease first quarter profit missed analysts’ estimates on a slump in capital markets profit and an uptick in reserves for loans that could default.
Adjusted to exclude certain items, the bank said it earned $2.56 per share. That fell below the $3.02 per share analysts expected, according to Refinitiv.
In the quarter, BMO set aside $627-million in provisions for credit losses. That was higher than analysts anticipated, and included $154-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, BMO set aside $217-million in provisions.
“Against an uncertain economic outlook, we continued to demonstrate the strength and resilience of our diversified businesses and the benefit of strategic acquisitions,” BMO chief executive officer Darryl White said in a statement. “Although the environment has constrained revenue growth in market sensitive businesses in the near term, with the strength of our personal and commercial businesses and our sharp focus on positioning the bank effectively for long-term success by reducing expenses, optimizing our balance sheet and growing customer relationships, we are poised to create significant value for our shareholders.”
The bank kept its quarterly dividend unchanged at $1.51 cents per share.
Total revenue rose 50 per cent in the quarter to $7.7-billion as BMO integrates its acquisition of California-based Bank of the West. But expenses also rose 23 per cent to $5.9-billion, which the bank said was driven by acquisition costs, partially offset by the bank reaching its target of $800-million in deal-related cost synergies – savings the bank expected to achieve by streamlining its operations and technology platforms with Bank of the West.
Royal Bank of Canada (RBC)
An RBC branch in Halifax, on April 2, 2019.ANDREW VAUGHAN/THE CANADIAN PRESS
Earnings Q1 2024: $3.6-billion ($2.50 per share)
Earnings Q1 2023: $3.2-billion ($2.29 per share)
Adjusted EPS: $2.85 per share
Analysts’ expectations: $2.80 per share (adjusted)
RBC earned $3.6-billion, or $2.50 per share, in the three months that ended Jan. 31. That compared with $3.2-billion, or $2.29 per share, in the same quarter last year.
Adjusted to exclude certain items, including transaction and integration costs related to its proposed takeover of HSBC Bank Canada, the bank said it earned $2.85 per share, down 6 per cent from the same quarter last year. That edged out the $2.80 per share analysts expected, according to Refinitiv.
“Underpinned by our balance sheet strength, prudent approach to risk management and diversified business model, we delivered solid, client-driven volume growth and a continued focus on expense control,” RBC chief executive officer Dave McKay said in a statement. “As we look towards the completion of our planned HSBC Canada acquisition, we remain focused on being a trusted adviser to clients through the delivery of new and differentiated banking experiences.”
The bank kept its quarterly dividend unchanged at $1.38 per share.
RBC’s pending takeover of British-based banking giant HSBC’s Canadian unit received approval from the Finance Minister in December, and is expected to close at the end of the first calendar quarter.
In the quarter, RBC set aside $813-million in provisions for credit losses. That was higher than analysts anticipated, and included $133-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, RBC had set aside $532-million in provisions.
Total revenue rose 1 per cent in the quarter to $13.5-billion on slimmer net interest margins – the difference between what banks earn on loans and pay on deposits. Expenses increased 10 per cent to $8.3-billion, in part driven by costs related to its HSBC Canada deal and higher salaries and benefits, partly offset by a staff reduction announced last year.
National Bank of Canada
A National Bank of Canada branch in Ottawa.CHRIS WATTIE/REUTERS
Earnings Q1 2024: 922-million ($2.59 per share)
Earnings Q1 2023: $876-million ($2.47 per share)
Adjusted EPS: $2.59 per share
Analysts’ expectations: $2.36 per share (adjusted)
National Bank earned $922-million, or $2.59 per share, in the three months that ended Jan. 31. That compared with $876-million, or $2.47 per share, in the same quarter last year.
On an adjusted basis, the bank said it earned $2.59 per share. That edged out the $2.36 per share analysts expected, according to Refinitiv.
“National Bank delivered strong performance and excellent return on equity for the first quarter of 2024, underpinned by sustained momentum and execution across our business segments,” National Bank chief executive officer Laurent Ferreira said in a statement. “These results reflect the earnings power of our diversified business mix and relevance of our defensive posture.”
The bank kept its quarterly dividend unchanged at $1 .06 per share.
In the quarter, National Bank set aside $120-million in provisions for credit losses. That was higher than analysts anticipated, and included $30-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, National Bank reserved $86-million.
Total revenue rose 6 per cent in the quarter to $2.71-billion, while expenses increased 4 per cent to $1.45-billion.
Baytex Energy Corp. (BTE) on Wednesday reported a fourth-quarter loss of $459.7 million, after reporting a profit in the same period a year earlier.
The Calgary, Alberta-based company said it had a loss of 55 cents per share. Earnings, adjusted for asset impairment costs, were 18 cents per share.
The oil and natural gas company posted revenue of $782.7 million in the period.
For the year, the company reported a loss of $172.9 million, or 24 cents per share, swinging to a loss in the period. Revenue was reported as $2.51 billion.
In the final minutes of trading on Wednesday, the company’s shares hit $3.45. A year ago, they were trading at $3.87.
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This story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research.
MDA Ltd. MDA-T +2.06%increase reported a fourth-quarter profit of $13.5-million, up from $8.8-million a year earlier, as its revenue rose 10 per cent.
The robotics and space technology firm says the profit amounted to 11 cents per diluted share for the quarter ended Dec. 31, up from seven cents per diluted share in the last three months of 2022.
Revenue for the three-month period totalled $205.0-million, up from $186.1-million a year earlier.
On an adjusted basis, MDA says it earned 23 cents per diluted share in its latest quarter, up from an adjusted profit of 18 cents per diluted share a year earlier.
In its outlook for 2024, the company says it expects full year revenue to total between $950-million and $1.05-billion, an estimate that would mean growth of about 25 per cent based on the midpoint of the guidance compared with its result for 2023.
For the first quarter of 2024, MDA says it expects revenue between $205-million and $215-million.
The U.S. economy grew at a solid clip in the fourth quarter amid robust consumer spending, the government confirmed on Wednesday, which bodes well for the outlook this year despite a weak start because of bad weather.
The report from the Commerce Department showed a much stronger growth profile last quarter, with upgrades to consumer spending, state and local government investment as well as residential and business outlays.
“Though weather wreaked havoc on some of the data for January, including retail sales, housing starts, and home sales, risks are still weighted toward the upside for growth early this year,” said Ryan Sweet, chief U.S. economist at Oxford Economics. “A weather-related rebound in activity in February coupled with a recent surge in tax refunds should provide a boost to growth in retail sales.”
Gross domestic product increased at a 3.2 per cent annualized rate last quarter, revised slightly down from the previously reported 3.3 per cent pace, the Commerce Department’s Bureau of Economic Analysis said in its second estimate of fourth-quarter GDP growth.
Economists polled by Reuters had expected that GDP growth would be unrevised. The modest downward revision reflected a downgrade to private inventory investment, which was now estimated to have increased at a $66.3-billion rate instead of the previously reported $82.7-billion pace.
Inventories subtracted 0.27 per cent percentage point from GDP growth instead of being almost neutral as initially thought.
The economy grew at a 4.9 per cent pace in the July-September quarter. It expanded 2.5 per cent in 2023, an acceleration from 1.9 per cent in 2022, and is growing above what Federal Reserve officials regard as the noninflationary growth rate of 1.8 per cent.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.0 per cent rate. It was previously estimated to have grown at a 2.8 per cent pace. Domestic demand was stronger than initially thought, growing at a 2.9 per cent rate instead of the previously reported 2.6 per cent rate.
Inflation was fairly mild last quarter, though revised slightly up from previously reported estimates. The personal consumption expenditures (PCE) price index excluding the volatile food and energy components rose at a 2.1 per cent pace.
The so-called core PCE price index was initially reported to have increased at a 2.0 per cent rate. Core inflation last quarter was a touch above the Fed’s 2 per cent target, and continues to be driven by higher housing costs.
PCE services inflation excluding energy and housing increased at a 2.7 per cent rate, revised up from the previously estimated 2.6 per cent pace. Policy-makers are watching this so-called super core inflation measure to assess progress in their fight against inflation.
Financial markets expect the Fed to start cutting interest rates in June, a bet that has been pushed back from May. Since March 2022, the U.S. central bank has raised its policy rate by 525 basis points to the current 5.25 per cent-5.50 per cent range.
Growth in business investment was raised last quarter to a 2.4 per cent rate from the previously estimated 1.9 per cent pace, driven by upgrades to spending on nonresidential structures like factories.
But business investment in equipment was revised down to show it contracting at a 1.7 per cent pace instead of rising at a 1.0 per cent.
Business spending on equipment appears to have remained weak at the start of the first quarter as shipments of non-defense capital goods fell by the most in more than three years in January. While retail sales, housing starts, durable goods orders and production at factories dropped in January, the declines were blamed on freezing temperatures as well as difficulties adjusting the data for seasonal fluctuations at the start of the year. Economists are not forecasting a recession this year.
A separate report from the Commerce Department on Wednesday showed a widening in the goods trade gap last month.
The goods trade deficit increased 2.6 per cent to $90.2 last month, the Commerce Department’s Census Bureau said. Exports rose 0.2 per cent to $170.4-billion. They were outpaced by a 1.1 per cent jump in imports to $260.6-billion. Exports added 0.69 percentage point to GDP growth last quarter.
The report also showed wholesale inventories declined 0.1 per cent in January after rising 0.4 per cent in the prior month. Stocks at retailers increased 0.5 per cent after advancing 0.6 per cent in December.
National Bank of CanadaNA-T +3.41%increase reported higher first-quarter profit that beat analysts’ estimates as a revenue boost in Canadian banking and capital markets offset higher reserves for loans that could default.
National Bank earned $922-million, or $2.59 per share, in the three months that ended Jan. 31. That compared with $876-million, or $2.47 per share, in the same quarter last year.
On an adjusted basis, the bank said it earned $2.59 per share. That edged out the $2.36 per share analysts expected, according to Refinitiv.
“National Bank delivered strong performance and excellent return on equity for the first quarter of 2024, underpinned by sustained momentum and execution across our business segments,” National Bank chief executive officer Laurent Ferreira said in a statement. “These results reflect the earnings power of our diversified business mix and relevance of our defensive posture.”
The bank kept its quarterly dividend unchanged at $1 .06 per share.
National Bank is the fourth major Canadian bank to report earnings for the fiscal first quarter. Royal Bank of Canada also released results on Wednesday. Bank of Nova Scotia and Bank of Montreal reported financial results Tuesday. Toronto-Dominion Bank and Canadian Imperial Bank of Commerce will close out the week on Thursday.
In the quarter, National Bank set aside $120-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $30-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, National Bank reserved $86-million.
Total revenue rose 6 per cent in the quarter to $2.71-billion, while expenses increased 4 per cent to $1.45-billion.
Profit from Canadian personal and commercial banking was $339-million, up 4 per cent from a year earlier, driven by growth revenue which were partially offset by higher expenses and provisions for credit losses.
And capital markets profit rose 3 per cent to $308-million as activity increased in global markets and corporate and investment banking services.
The wealth management division generated $196-million, down 1 per cent. Profit from the bank’s U.S. arm was down 7 per cent to $51-million.
Royal Bank of CanadaRY-T +0.53%increase reported first quarter profit that beat analysts’ estimates even as the lender set aside more loan loss reserves driven by rising risk in real estate.
Canadian banks have been reserving more money to absorb loans that could default as consumers and businesses grappled with higher interest rates and inflation. RBC set aside $813-million in provisions for credit losses – the funds banks set aside to cover loans that may default – which was higher than analysts anticipated, and included $133-million against loans that are still being repaid.
In the same quarter last year, RBC had set aside $532-million in provisions.
To help customers withstand the higher cost of borrowing as Canada’s economic growth lags the United States, RBC chief executive officer Dave McKay said that the Bank of Canada is likely to start cutting interest rates earlier than the U.S. Federal Reserve this year.
“Growing consumer demand and rising unemployment points to a softening in the Canadian economic backdrop,” Mr. McKay said during a conference call with analysts. “In contrast, the U.S. is showing continued strength in labour markets, above average wage growth, a resilient U.S. consumer and higher corporate profits.”
Provisions for losses in Canadian personal and commercial banking were bolstered by reserves for credit cards and increased risk across all products.
A significant part of the increase flowed from rising risk in real estate, particularly commercial properties. In its capital markets division, RBC booked large provisions on an impaired office loan and a multi-family residential loan, both of which were in the U.S.
While gross impaired loans – debt that the bank believes will not be repaid – in real estate more than doubled since the same quarter last year, the bank’s provisions for the sector jumped to 182-million from $16-million in the first quarter a year prior.
“While you’re seeing the stresses you would anticipate related to increases in the sector, we have been provisioning for those sufficiently,” RBC chief financial officer Nadine Ahn said in an interview. “We have been building reserves commensurate with that, but given the diversification of our portfolio, we do feel that it’s within our risk appetite and we are comfortable overall with our exposure.”
The bank is on the cusp of closing the largest-ever domestic banking deal. RBC’s pending $13.5-billion takeover of British-based banking giant HSBC’s Canadian unit received approval from Finance Minister Chrystia Freeland in December. The deal, which was initially set to be completed last year until it faced delays with approvals, is expected to close at the end of March.
The bank updated its financial expectations for the deal. RBC anticipates pre-tax acquisition and integration costs of about $1.5-billion, up from $1-billion when it announced the deal in late 2022. But it also expects to close the deal with a higher capital tier one (CET1) ratio – a measure of a bank’s ability to absorb losses – at 12.5 per cent, up from the previous 11.5 per cent estimate.
Canada’s banking regulator requires banks to maintain a minimum of 11.5 per cent.
RBC is the third major Canadian bank to report earnings for the fiscal first quarter. National Bank of Canada also released results on Wednesday. Bank of Nova Scotia and Bank of Montreal reported financial results Tuesday. Toronto-Dominion Bank and Canadian Imperial Bank of Commerce will close out the week on Thursday.
RBC earned $3.6-billion, or $2.50 per share, in the three months that ended Jan. 31. That compared with $3.2-billion, or $2.29 per share, in the same quarter last year.
Adjusted to exclude certain items, including transaction and integration costs related to its proposed takeover of HSBC Bank Canada, the bank said it earned $2.85 per share, down 6 per cent from the same quarter last year. That edged out the $2.80 per share analysts expected, according to data from the London Stock Exchange Group.
Total revenue rose 1 per cent in the quarter to $13.5-billion on slimmer net interest margins – the difference between what banks earn on loans and pay on deposits. Expenses increased 10 per cent to $8.3-billion, in part driven by costs related to its HSBC Canada deal and higher salaries and benefits, partially offset by a staff reduction announced last year.
Profit from personal and commercial banking was $1.97-billion, down 4 per cent from a year earlier, mostly due to higher loan loss provisions and expenses.
The wealth management division generated $606-million of profit, down 27 per cent largely due to costs from an industry-wide special assessment by the U.S. Federal Deposit Insurance Corporation, as well as investments in its Los Angeles-based bank, City National.
Capital markets profit fell 7 per cent to $1.15-billion, driven by lower revenue in Global Markets and higher provisions.
Bank of Montreal’s BMO-T -1.02%decrease first quarter profit missed analysts’ estimates on a slump in capital markets profit and an uptick in reserves for loans that could default.
Adjusted to exclude certain items, the bank said it earned $2.56 per share. That fell below the $3.02 per share analysts expected, according to Refinitiv.
In the quarter, BMO set aside $627-million in provisions for credit losses — the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $154-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, BMO set aside $217-million in provisions.
“Against an uncertain economic outlook, we continued to demonstrate the strength and resilience of our diversified businesses and the benefit of strategic acquisitions,” BMO chief executive officer Darryl White said in a statement. “Although the environment has constrained revenue growth in market sensitive businesses in the near term, with the strength of our personal and commercial businesses and our sharp focus on positioning the bank effectively for long-term success by reducing expenses, optimizing our balance sheet, and growing customer relationships, we are poised to create significant value for our shareholders.”
The bank kept its quarterly dividend unchanged at $1.51 cents per share.
BMO is the second major Canadian bank to report earnings for the fiscal first quarter. Bank of Nova Scotia also released its financial results early Tuesday morning. Royal Bank of Canada and National Bank of Canada will release their results on Wednesday and Toronto-Dominion Bank and Canadian Imperial Bank of Commerce will close out the week on Thursday.
Total revenue rose 50 per cent in the quarter to $7.7-billion as BMO integrates its acquisition of California-based Bank of the West. But expenses also rose 23 per cent to $5.9-billion, which the bank said was driven by acquisition costs, partially offset by the bank reaching its target of $800-million in deal-related cost synergies – savings the bank expected to achieve by streamlining its operations and technology platforms with Bank of the West.
Profit from Canadian personal and commercial banking was $921-million, down 3 per cent from a year earlier as higher expenses offset a rise in revenue. Loan balances rose 5 per cent year over year.
Profit from the bank’s U.S. arm was down 16 per cent to $419-million, which the bank attributed to a weaker U.S. banking environment.
The wealth management division generated $240-million of profit, up 52 per cent on a boost from higher assets under management and the Bank of the West integration.
And capital markets profit fell 19 per cent to $393-million as global markets revenue slumped on lower trading revenue, which included the impact of the federal government’s proposal to eliminate the tax deductibility of certain Canadian dividends.
