Author: Consultant

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.

Bank of Nova Scotia BNS-T -0.61%decrease booked higher reserves for loans that could default even as a rise in first quarter profit beat analyst estimates.

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.”

Scotiabank is the first major Canadian bank to report earnings for the fiscal quarter. Bank of Montreal is also releasing its financial results 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 6 per cent in the quarter to $8.4-billion as expenses also climbed 6 per cent to $4.7-billion.

Profit from Canadian banking was $1.1-billion, up 1 per cent from a year earlier as revenue rose on higher net interest margins. But loan balances were down 1 per cent year over year as mortgages slumped 5 per cent.

Profit from the bank’s international division was up 16 per cent to $746-million as a boost in revenue offset higher provisions for credit losses.

The global wealth management division generated $368-million of profit, down 4 per cent on higher mutual fund fees and lower expenses. And capital markets profit fell 15 per cent to $439-million as revenue slumped on lower net interest income.

Fertilizer giant Nutrien Ltd. says it sees promising signs of increased demand for potash in the year ahead.

The Saskatoon-based company says it expects full-year potash shipments of between 68 million to 71 million tonnes, up from the 67 million to 68 million it estimates went out in 2023.

Speaking on a conference call Thursday, company chief executive Ken Seitz says he was encouraged by the increased market stability in the second half of 2023.

He says prices have declined from historically elevated levels in 2022, but that the lower prices have resulted in improved demand in North America.

The company late Wednesday reported earnings of US$176 million for the fourth quarter of 2023, down 84 per cent from US$1.12 billion in the same period of 2022.

The company says its lower 2023 earnings reflect lower selling prices across all of its business segments, including potash prices that were down 55 per cent from a year earlier.

This report by The Canadian Press was first published Feb. 22, 2024.

Monday February 26

(8:30 a.m. ET) Canadian manufacturing sales for January.

(8:30 a.m. ET) Canadian wholesale trade for January.

(10 a.m. ET) U.S. new home sales for January. The Street is forecasting an annualized rate rise of 2.4 per cent.

(10:30 a.m. ET) U.S. Dallas Fed Manufacturing Activity survey for February.

Earnings include: Berkshire Hathaway Inc.; Cargojet Inc.; Emera Inc.; Ivanhoe Mines Ltd.; Secure Energy Services Inc.; Workday Inc.

—

Tuesday February 27

Japan CPI

Euro zone private sector credit

Germany consumer confidence

(8:30 a.m. ET) Canada’s Capital Expenditures Survey for 2024.

(8:30 a.m. ET) U.S. durable orders for January. Consensus is a decline of 4.8 per cent from December.

(8:30 a.m. ET) U.S. core orders for January. Consensus is a rise of 0.1 per cent from the previous month.

(9 a.m. ET) U.S. CoreLogic Case-Shiller Home Price Index (20 city) for December. The Street is estimating a rise of 0.2 per cent from November and up 6.1 per cent year-over-year.

(9 a.m. ET) U.S. FHFA House Price Index for December. Consensus is an increase of 0.3 per cent from November and 6.9 per cent year-over-year.

(10 a.m. ET) U.S. Conference Board Consumer Confidence Index. Consensus is a reading of 114.8, which is flat from January.

Earnings include: Bank of Montreal; Bank of Nova Scotia; Dell Technologies Inc.; Element Fleet Management Corp.; Lowe’s Companies Inc.; Ovintiv Inc.; Parkland Fuel Corp.; Topaz Energy Corp.; Tricon Capital Group Inc.

—

Wednesday February 28

Euro zone economic confidence

(8:30 a.m. ET) Canada’s current account balance for Q4.

(8:30 a.m. ET) U.S. real GDP for Q4. Consensus is an annualized rate rise of 3.2 per cent with the GDP deflator up 1.5 per cent.

(8:30 a.m. ET) U.S. goods trade deficit for January.

(8:30 a.m. ET) U.S. wholesale and retail inventories for January.

Also: G20 finance ministers and central bank governors meet in Sao Paulo, Brazil (through Thursday)

Earnings include: Capital Power Corp.; EQB Inc.; George Weston Ltd.; Granite REIT; Green Thumb Industries Inc.; Kinaxis Inc.; National Bank of Canada; Royal Bank of Canada; Salesforce Inc.; Spin Master Corp.; Stantec Inc.; Tamarack Valley Energy Ltd.; TJX Companies Inc.; Winpak Ltd.; WSP Global Inc.

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Thursday February 29

Japan retail sales and industrial production

(8:30 a.m. ET) Canadian real GDP for Q4. The Street is forecasting an annualized rate rise of 1.0 per cent.

(8:30 a.m. ET) Canada’s monthly real GDP for December. Consensus is a month-over-month increase of 0.2 per cent.

(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 24. Estimate is 211,000, up 10,000 from the previous week.

(8:30 a.m. ET) U.S. personal spending and income for January. The Street expects increases of 0.2 per cent and 0.3 per cent, respectively, from December..

(8:30 a.m. ET) U.S. core PCE price index for January. Consensus is a rise of 0.4 per cent from December and 2.8 per cent year-over-year.

(9:45 a.m. ET) U.S. Chicago PMI for February.

(10 a.m. ET) U.S. pending home sales for January.

Also: Alberta and Nova Scotia budgets are released

Earnings include: Atco Ltd.; Athabasca Oil Corp.; Canadian Imperial Bank of Commerce; Canadian Natural Resources Ltd.; Canadian Utilities Ltd.; Crescent Point Energy Corp.; InterRent REIT; Laurentian Bank of Canada; MEG Energy Corp.; NuVista Energy Ltd.; Parex Resources Ltd.; Stella-Jones Inc.; Toronto-Dominion Bank

—

Friday March 1

Japan and China manufacturing PMI

Euro zone CPI and jobless rate

(9:30 a.m. ET) Canada’s S&P Global Manufacturing PMI for February.

(10 a.m. ET) U.S. ISM manufacturing PMI for February.

(10 a.m. ET) U.S. construction spending for January. Consensus is a month-over-month rise of 0.2 per cent.

(10 a.m. ET) U.S. University of Michigan consumer sentiment for February.

Also: Canadian and U.S. auto sales for February; U.S. Fed monetary policy report is expected

Earnings include: Boralex Inc.; Canadian Western Bank; NextGen Energy Ltd.; SNC-Lavalin Group Inc.

Published: 2/23/2024 3:17 PM ET | 

Despite tensions in the Red Sea due to attacks by Houthi militants near Yemen, crude oil futures settled sharply lower on Friday as concerns about the outlook for demand and the recent data showing a jump in U.S. crude inventories weighed on prices.

Data showing a contraction in the German economy and persisting worries about an economic slowdown in China raised concerns about oil demand.

Uncertainty about Federal Reserve’s interest-rate outlook also contributed to the drop in oil prices.

West Texas Intermediate Crude oil futures for April ended down $2.12 or about 2.65% at $76.49 a barrel.

Brent crude futures were down $1.91 or 2.28% at $81.76 a barrel a little while ago.

According to Baker Hughes, the oil rig count in the U.S. rose by six to 503 this week.

Meanwhile, ceasefire talks are underway in Paris, aiming to halt the conflict in Palestine and get Israeli and foreign hostages released.

Enerplus Corporation (“Enerplus”) (TSX:ERF.TO) (NYSE:ERF) today announced that its dividend will increase 8%, to US$0.065 per share, effective with the March 15, 2024 dividend, which is payable to all shareholders of record at the close of business on March 4, 2024. The ex-dividend date for this payment is March 1, 2024.

Read more at newswire.ca

Manulife Financial Corp. says it had a net income attributed to shareholders of $1.66 billion for the quarter ending Dec. 31, up 81 per cent from $915 million in the same quarter last year.

The insurance giant reported core earnings of $1.77 billion, or 0.92 cents per share in the quarter, up from $1.54 billion or 0.77 cents per share last year.

Manulife says core earnings exclude the impact of market swings and some other factors to give a better indication of the long-term potential of the business.

Results saw its Asia core earnings up 14 per cent to $414 million, Canada core earnings up 19 per cent to $352 million, and U.S. earnings up 16 per cent to US$349 million.

Global wealth and asset management had a 29 per cent increase in core earnings to $353 million, though unadjusted net income was down nine per cent to $365 million.

Earnings from the 2022 quarter are based on adjusted results following the shift to a new accounting standard.

This report by The Canadian Press was first published Feb. 14, 2024.