TD Bank and Bank of Montreal signage in Toronto’s financial district, on Sept. 8.Andrew Lahodynskyj/The Canadian Press
Canada’s biggest banks report their fourth-quarter earnings this week, covering the three months that ended October 31, capping off a fiscal year marked by spiking expenses, rising capital requirements and higher provisions for potentially bad loans.
Ahead of the latest results, analysts slashed their expectations – as they did ahead of most of the quarters throughout this year. They anticipate that earnings will drop between 3 per cent and 7 per cent year-over-year, weighed down by mounting costs, rising risks and tepid loan growth.
Bank of Nova Scotia kicked off the week of earnings on Tuesday, reporting results that missed analysts’ estimates. Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce reported on Thursday while Bank of Montreal BMO-T, National Bank of Canada NA-T will release their fourth-quarter results on Friday.
Here’s a breakdown of the big banks’ fourth-quarter earnings so far.
A person walks past a sign for The Bank of Nova Scotia, in Toronto, on Dec. 13, 2021.CARLOS OSORIO/Reuters
Earnings Q4 2023: $1.4 billion ($1.02 per share)
Earnings Q4 2022: $2.1-billion ($1.63 per share)
Adjusted EPS: $1.26 per share
Analysts’ expectations: $1.65 per share (adjusted)
Dividend: $1.06 per share, unchanged from Q2
Bank of Nova Scotia BNS-Treported lower fourth-quarter profit that missed analysts’ estimates as a jump in loan loss reserves and mounting expenses weighed on the lender’s financial results.
Scotiabank earned $1.4-billion, or $1.02 per share, in the three months that ended Oct. 31, compared with $1.63 per share, in the same quarter last year. Adjusted to exclude certain items, the bank said it earned $1.26 per share. That fell below the $1.65 per share analysts expected, according to Refinitiv.
The lender also booked more than $590-million in charges as it cuts 3 per cent of its global work force, trims its real estate premises, and took a write down of the value of an investment in China-based Bank of Xi’an Co. Ltd. The bank has been focused on reining in mounting expenses and building its deposit base as it prepares to unveil its new strategic plan in December under new chief executive officer Scott Thomson.
In the quarter, Scotiabank set aside $1.3-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 $454-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses.
Total revenue rose 9 per cent in the quarter, to $8.3-billion. But expenses surged 22 per cent to $5.5-billion, which the bank said was driven by higher staffing, performance-based compensation and technology costs and taxes.
A sign for the Royal Bank of Canada, in Toronto, on Dec. 13, 2021.CARLOS OSORIO/Reuters
Earnings Q4 2023: $4.1-billion ($2.90 per share)
Earnings Q4 2022: $3.9-billion ($2.74 per share)
Adjusted EPS: $2.78 per share
Analysts’ expectations: $2.65 per share (adjusted)
Dividend: $1.38 per share
Royal Bank of Canada RY-Treported higher fourth-quarter profit that beat analysts’ estimates as a surge capital markets earnings and lower taxes offset climbing loan loss provisions.
RBC earned $4.1-billion, or $2.90 per share, in the three months that ended Oct. 31. That compared with $3.9-billion, or $2.74 per share, in the same quarter last year. Adjusted to exclude certain items, the bank said it earned $2.78 per share. That edged out the $2.65 per share analysts expected, according to Refinitiv.
“In a year defined by uncertainty, RBC served as a stabilizing force for our clients, communities, colleagues and shareholders,” RBC chief executive officer Dave McKay said in a statement. “Our overall performance in 2023 exemplifies our standing as an all-weather bank.”
The bank raised its quarterly dividend to $1.38 per share.
In the quarter, RBC set aside $720-million in provisions for credit losses. That was higher than analysts anticipated, and included $194-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 a set aside of $381-million in provisions.
Total revenue rose 4 per cent in the quarter, to $13-billion, while expenses increased 13 per cent to $8.14-billion.
A CIBC branch in Toronto, on June 2.CARLOS OSORIO/Reuters
Earnings Q4 2023: $1.48-billion ($1.53 per share)
Earnings Q4 2022: $1.185-billion ($1.26 per share)
Adjusted EPS: $1.57 per share
Analysts’ expectations: $1.55 per share (adjusted)
Dividend: 90 cents per share, up by 3 cents
Canadian Imperial Bank of Commerce CM-Treported higher fiscal fourth-quarter profit and raised its dividend as provisions for bad loans were lower than analysts anticipated and retail banking profits rebounded.
CIBC earned $1.48-billion, or $1.53 per share, in the quarter that ended Oct. 31, compared with $1.185-billion, or $1.26 per share, in the same quarter last year. After adjusting for certain items, CIBC said it earned $1.52-billion or $1.57 per share, ahead of analysts’ consensus estimate of $1.55 per share, according to data from the London Stock Exchange Group.
CIBC raised its quarterly dividend by 3 cents to 90 cents per share.
The Toronto-based bank reported provisions for credit losses of $541-million in the quarter. That was less than analysts expected, and mostly earmarked for loans that are already past due. CIBC earmarked only $63-million against loans that are performing but could go sour in future.
Fourth-quarter revenue increased 8 per cent year over year to $5.8-billion, while expenses were down 1 per cent to $3.4-billion.
For the full fiscal year that ended in October, CIBC’s revenue increased nearly 7 per cent to $23.3-billion, though adjusted profit dipped slightly to $6.5-billion as expenses increased 12 per cent to $14.3-billion.
A TD Bank branch in Toronto, on Sept. 20, 2022.Alex Lupul/The Canadian Press
Earnings Q4 2023: $2.9-billion ($1.49 per share)
Earnings Q4 2022: $6.67 billion ($3.62 per share)
Adjusted EPS: $1.83 per share
Analysts’ expectations: $1.91 per share (adjusted)
Toronto-Dominion Bank TD-Treported lower fourth-quarter profit that missed analysts’ estimates as the lender booked climbing expenses and lower capital markets earnings.
TD earned $2.9-billion, or $1.49 per share, down 57 per cent in the three months that ended Oct. 31. Adjusted to exclude certain items, the bank said it earned $1.83 per share. That fell below the $1.91 per share analysts expected, according to Refinitiv.
“In a complex operating environment, we continued to adapt, invest in new capabilities and take important steps to deliver efficiencies and drive growth across the bank,” TD chief executive officer Bharat Masrani said in a statement.
Since terminating its acquisition of Tennessee-based First Horizon Corp. investors are waiting for further details on the expected fines or other penalties stemming from probes by regulators and law-enforcement agencies, including the United States Department of Justice, related to its anti-money-laundering practices. The lender said Thursday that it does not yet know the outcomes of the inquiries and investigations, but it expects monetary and non-monetary penalties.
In the quarter, TD set aside $878-million in provisions for credit losses. That was lower than analysts anticipated, and included $159-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses.
Total revenue fell 16 per cent in the quarter, to $13.1-billion. But expenses increase 20 per cent to $7.9-billion, which the bank said was driven by higher employee costs, restructuring charges and acquisition-related costs.
Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.
I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.
Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.
Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.
NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.
Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.
The air transportation increase, it further states, will be implemented over a longer period.
It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.
Gasoline and heating fuel prices approached $5 a litre at the start of this month.
Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.
“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.
The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.
“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.
Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.
Additionally, she said the government has donated $150,000 to the Norman Wells food bank.
In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.
It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.
This report by The Canadian Press was first published Oct. 21, 2024.
TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.
The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs
It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.
The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.
Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.
Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.
This report by The Canadian Press was first published Oct. 22, 2024.
