Author: Consultant

Results for the second quarter of 2023 were affected by the following items of note aggregating to a positive impact of $0.06 per share:

• $114 million ($82 million after-tax) decrease in legal provisions (Corporate and Other); and
• $27 million ($21 million after-tax) amortization of acquisition-related intangible assets.

Our CET1 ratio⁽⁴⁾ was 11.9% at April 30, 2023, compared with 11.6% at the end of the prior quarter. CIBC’s leverage ratio⁽⁴⁾ and liquidity coverage ratio⁽⁴⁾ at April 30, 2023 were 4.2% and 124%, respectively.

CIBC announced an increase in its quarterly common share dividend from $0.85 per share to $0.87 per share for the quarter ending July 31, 2023.

https://www.newswire.ca/news-releases/cibc-announces-second-quarter-2023-results-871795459.html

Royal Bank of Canada¹¹ (TSX: RY) (NYSE: RY)) today reported net income of $3.6 billion for the quarter ended April 30, 2023, down $604 million or 14% from the prior year. Diluted EPS was $2.58, down 13% over the same period. Adjusted net income⁷ and adjusted EPS⁷ of $3.8 billion and $2.65 were down 13% and 11% from the prior year, respectively.

Results this quarter reflected higher provisions for credit losses, with a PCL on loans ratio of 30 bps, mainly attributable to provisions taken on performing loans in the current quarter, largely driven by unfavourable changes in our credit quality and macroeconomic outlook, as compared to releases in the prior year which reflected reduced uncertainty from the COVID-19 pandemic. The current quarter also reflected higher provisions on impaired loans.

Pre-provision, pre-tax earnings⁷ of $5 billion were up $54 million or 1% from a year ago, mainly reflecting higher net interest income driven by higher interest rates and strong loan growth in Canadian Banking and Wealth Management. Higher Corporate & Investment Banking revenue in Capital Markets also contributed to the increase. These factors were partially offset by higher expenses, mainly due to higher staff-related costs, including from headcount growth, as well as stock-based compensation. Higher professional fees (including technology investments) and higher discretionary costs to support strong client-driven growth also contributed to higher expenses.

Today we declared a quarterly dividend of $1.35 per share reflecting an increase of $0.03 or 2%.

https://www.newswire.ca/news-releases/royal-bank-of-canada-reports-second-quarter-2023-results-884048760.html

U.S. crude oil and distillate inventories fell unexpectedly last week as imports declined, while gasoline stockpiles dropped more than forecast, the Energy Information Administration said on Wednesday.

Crude inventories fell by 12.5 million barrels in the week to May 19 to 455.2 million barrels ahead of the driving-intensive Memorial Day weekend holiday, compared with analysts’ expectations in a Reuters poll for an 800,000-barrel rise.

Net U.S. crude imports fell by 1.25 million bpd, the EIA said, while the crude oil adjustment figure fell by 1.16 million barrels per day, according to the EIA data.

Gasoline, jet fuel and distillate product supplied – proxies for fuel demand – each rose last week, helping to fuel the drawdowns in stocks.

Refinery crude runs rose by 79,000 barrels per day, and refinery utilization rates fell by 0.3 percentage point in the week.

“It looks like demand is back. … Refiners are absolutely going max out with refinery runs right now, trying to keep up with demand,” said Phil Flynn, an analyst at Price Futures Group.

Distillate stockpiles, which include diesel and heating oil, fell by 600,000 barrels to 105.7 million barrels, their lowest level since May 2022, EIA data showed.

Gasoline stocks also fell by a more than expected 2.1 million barrels in the week to 216.3 million barrels, the EIA said.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.8 million barrels in the week, the EIA said.

Domestic production rose by 100,000 barrels per day in the week, but the four-week average of 12.275 million barrels per day is only up 3.4 per cent from year ago levels.

“The rate of growth is disappointing given the low price of oil and the fact that producers are slowing down on their capital spending for drilling,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

Bank of Nova Scotia (BNS) on Wednesday reported fiscal second-quarter net income of $1.57 billion.

The bank, based in Toronto, said it had earnings of $1.24 per share. Earnings, adjusted for non-recurring costs, were $1.25 per share.

The results did not meet Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of $1.32 per share.

The bank posted revenue of $12.78 billion in the period. Its revenue net of interest expense was $5.85 billion, which also missed Street forecasts.

Bank of Nova Scotia shares have climbed slightly since the beginning of the year. The stock has declined 23% in the last 12 months.

The bank says it will now pay a quarterly dividend of $1.06 per share, up from $1.03 per share.

BMO’s Second Quarter 2023 Report to Shareholders, including the unaudited interim consolidated financial statements for the period ended April 30, 2023, is available online at www.bmo.com/investorrelations and at www.sedar.com.

Financial Results Highlights

Second Quarter 2023 Compared with Second Quarter 2022:

• Net income of $1,059 million, compared with $4,756 million; adjusted net income^1,3 of $2,216 million, compared with $2,187 million
• Reported earnings per share (EPS)² of $1.30, compared with $7.13; adjusted EPS^1,2,3 of $2.93, compared with $3.23
• Provision for credit losses (PCL) of $1,023 million, compared with $50 million; adjusted PCL^1,3 of $318 million, compared with $50 million
• Return on equity (ROE) of 5.6%, compared with 34.5%; adjusted ROE^1,3 of 12.6%, compared with 15.7%
• Common Equity Tier 1 (CET1) Ratio⁴ of 12.2%, compared with 16.0%

Year-to-Date 2023 Compared with Year-to-Date 2022:

• Net income of $1,306 million, compared with $7,689 million; adjusted net income^1,3 of $4,488 million, compared with $4,771 million
• Reported EPS² of $1.62, compared with $11.57; adjusted EPS^1,2,3 of $6.15, compared with $7.12
• PCL of $1,240 million, compared with a recovery of $49 million; adjusted PCL^1,3 of $535 million, compared with a recovery of $49 million
• ROE of 3.4%, compared with 28.0%; adjusted ROE^1,3 of 13.0%, compared with 17.2%

BMO Financial Group Increases Common Share Dividend By 4 Cents From The Prior Quarter, Up 6 Per Cent From The Prior Year

https://www.newswire.ca/news-releases/bmo-financial-group-reports-second-quarter-2023-results-818090767.html

• Apple on Tuesday announced a new multibillion-dollar deal with Broadcom to develop 5G radio frequency components in the U.S.
• “We’re thrilled to make commitments that harness the ingenuity, creativity, and innovative spirit of American manufacturing,” Apple CEO Tim Cook said in a release.
• Apple said its deal with Broadcom is part of its 2021 commitment to invest $430 billion in the U.S. economy.

https://www.cnbc.com/2023/05/23/apple-announces-multibillion-dollar-deal-with-broadcom-for-us-made-chips.html

• Saudi oil minister Prince Abdulaziz bin Salman on Tuesday told market speculators to “watch out,” reiterating his warning that they could face pain ahead.
• “Speculators, like in any market, there are there to stay. I keep advising that they will be ouching. They did ouch in April. I don’t have to show my cards, I’m not [a] poker player (…) but I would just tell them, watch out,” he said at the Qatar Economic Forum.
• OPEC+ is next set to convene at a ministerial level on June 4 to decide further production policy steps.

Saudi oil minister Prince Abdulaziz bin Salman on Tuesday told market speculators to “watch out,” reiterating his warning that they could face pain ahead.

“Speculators, like in any market, they are there to stay. I keep advising that they will be ouching. They did ouch in April. I don’t have to show my cards, I’m not [a] poker player (…) but I would just tell them, watch out,” he said during an energy-focused panel of the Qatar Economic Forum in Doha.

The Saudi oil minister has previously struck out against oil price speculators looking to profit off predicting the output decisions of OPEC+, which next meets on June 4.

Most recently, several members of the OPEC+ alliance voluntarily — and independently from the group’s broader strategy — announced they would cut their crude oil production by a combined 1.6 million barrels per day. The move briefly boosted prices, which have since surrendered gains. Ice Brent futures with July expiry were up 50 cents per barrel from the May 22 settlement at $76.49 per barrel by 12:05 p.m. London time.  

OPEC+, a group of 23 oil-producing nations chaired by Saudi Arabia, in October decided to lower output by 2 million barrels per day in an effort to bolster prices, given concerns over global consumption. The move was met with immediate backlash from the U.S. over the strain on fuel-consuming households.

“We were, as OPEC+, blamed in October, blamed in April. Who has the right numbers? Who gauged the situation in a much more, I would say, responsible way, but attentive way?” Abdulaziz said on Tuesday.

“I think over the last six-seven months we have proven to be a responsible regulatory institution,” he added, remarking that the market is experiencing ongoing volatility and requires OPEC+ to stay proactive and pre-emptive.

In the weeks since April’s voluntary cuts were announced, crude prices have been depressed on the back of banking turmoil, recessionary signals and a slower-than-expected Beijing reopening and subsequent uptick in demand from China, the world’s largest importer of crude oil.

Market watchers are now questioning whether OPEC+ will in June move toward another production decline to crutch prices, even as Paris-based watchdog the IEA now sees a deep supply squeeze on the horizon.

“The current market pessimism … stands in stark contrast to the tighter market balances we anticipate in the second half of the year, when demand is expected to eclipse supply by almost 2 mb/d,” the IEA said in its latest Oil Market Report of May.

The organization’s Executive Director Fatih Birol nevertheless on Sunday told CNBC that a potential — if unlikely — U.S. debt default could trigger a drop in oil demand and prices.

In a May 17 note, analysts at Swiss bank UBS trimmed their Brent price forecasts by $10 per barrel to $95 per barrel by year-end, given higher-than-expected crude oil volumes and recession fears. They anticipate the market will be undersupplied by nearly 1.5 million barrels per day in June.

“With several OPEC+ member countries voluntarily removing barrels from the market, and amid rising demand during the Northern Hemisphere’s summer, we expect larger inventory draws to materialize and bring investors back to the oil market,” they said.

Saudi Arabia’s oil minister on Tuesday also emphasized the risks of market uncertainty, along with the progressive depletion of spare capacity in producing countries — an argument he has previously deployed to advocate for higher investment in fossil fuels, in addition to spending on renewable projects.

“Look at where we are now: energy security is being shackled, running out of capacities because countries are not investing both in oil and gas,” he said.

“We have a very funny trajectory of where demand will be. So if you are a hedger, as we are, we’ll have to take action to pre-empt any possibility of further volatility (… ) but we are forthrightly accepting the challenge, and we will continue attending to the challenge.”