A breakdown of the big banks’ fourth-quarter earnings so far

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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.

Bank of Nova Scotia

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• 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-T reported 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.

Royal Bank of Canada (RBC)

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• 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-T reported 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.

Canadian Imperial Bank of Commerce (CIBC)

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• 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-T reported 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.

Toronto-Dominion Bank (TD Bank)

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• 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-T reported 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.

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