Business

Banks cut jobs, trim expenses as economic fears weigh on earnings

Published

11 months ago

November 30, 2023

TD Bank posted $266-million in after-tax restructuring charges through measures including job cuts and real estate reductions.Fred Lum/the Globe and Mail

Canadian banks are slashing jobs to curb mounting expenses and taking higher loan loss provisions as they grapple with the threat of an economic slowdown.

Some of the country’s largest lenders reported mixed fourth-quarter earnings results, with Royal Bank of Canada RY-T and Canadian Imperial Bank of Commerce CM-T posting higher profit on Thursday that beat analyst expectations, while Toronto-Dominion Bank reported lower net income that missed estimates.

Each bank outlined plans to restructure their operations – measures that include work-force reductions and trimming their real estate footprints – as they look to rein in rising costs ahead of a potential economic slowdown.

TD TD-T posted $266-million in after-tax restructuring charges through measures including job cuts and real estate reductions. The lender expects to book savings of about $400-million pretax in 2024.

The bank said it will reduce its work force by 3 per cent. In the fourth quarter ended Oct. 31, the bank shed about 0.5 per cent of its employee base, or more than 500 jobs. Chief financial officer Kelvin Tran said the restructuring charges also include plans to accelerate the bank’s transition to new technology platforms and reduce its corporate and branch real estate premises.

“We saw the opportunity to undertake a restructuring program to streamline and deliver efficiencies that enabled us to create capacity to invest for future growth,” Mr. Tran said in an interview.

Also Thursday, CIBC recorded $114-million in severance charges, capping off the fiscal year with a 5-per-cent reduction in full-time staff.

RBC said in its third-quarter results that its total number of employees fell 1 per cent from the previous quarter, and that it expected to further decrease its work force by 1 per cent to 2 per cent in the fourth quarter.

On Thursday, the bank said that it posted a severance charge of $157-million as its work force dropped by 2.5 per cent, trimming 2,355 jobs. RBC expects savings of $235-million starting in the next quarter, and that growth in expenses should drop from double-digit increases to low- to mid-single digits in 2024.

RBC earned $4.1-billion, or $2.90 per share, a 6-per-cent jump from the same period last year as a surge in capital markets earnings and lower taxes offset climbing loan-loss provisions. CIBC booked $1.5-billion, or $1.53 per share, a 25-per-cent increase as provisions for bad loans were lower than analysts anticipated and retail banking profits rebounded.

TD however posted a 57-per-cent drop in profit to $2.9-billion, or $1.49 per share, as higher expenses and acquisition and integration costs from its takeover of New York-based investment bank Cowen Inc. sent capital markets profit plunging.

CIBC’s share price climbed 5.1 per cent and RBC’s stock rose 3.2 per cent, while TD slumped 0.7 per cent on Thursday in Toronto.

On Tuesday, Bank of Nova Scotia BNS-T posted lower profit that missed analyst expectations. Bank of Montreal BMO-T and National Bank of Canada NA-T will release results on Friday.

As delinquencies recover from their lows in 2021, Canada’s largest lenders are increasing their provisions for credit losses – the funds banks set aside to cover loans that may default. RBC set aside $720-million for potentially sour loans, more than analysts expected. TD and CIBC reserved $878-million and $541-million respectively, less than analysts expected.

“The environment this quarter was more stable,” CIBC chief financial officer Hratch Panossian said in an interview. “Things like forward view of debt-service ratios based on the view of interest rates, which started shifting a bit this quarter. And unemployment continues to be generally fairly strong.”

TD investors are waiting for details on the fines or other penalties stemming from probes by regulators and law-enforcement agencies, including the U.S. Department of Justice, related to its anti-money-laundering practices that derailed its acquisition of Tennessee-based First Horizon Corp.

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. However, it expects that the actions will not have a material impact on the bank’s financial condition. Analyst estimates on the potential penalty range between US$500-million and $1-billion.

“Notwithstanding the progress we have made in our U.S. business, it was disappointing that some shortcomings in our anti-money-laundering control environment were identified during the year, which we are working hard to address, and I am confident that in time we will,” TD chief executive officer Bharat Masrani said in fourth-quarter filings. He added that while the decision to terminate the deal “was a difficult decision – and one not taken lightly – it was the right one for the bank under the circumstances.”

RBC is still in the midst of acquiring the Canadian subsidiary of Britain-based banking giant HSBC Holdings PLC after the foreign company decided to exit the market. Despite escalating scrutiny from political opposition parties and environmental and other stakeholder groups, RBC said it still expects the deal to close in the first quarter of 2024.

“All parties in the approval process understand the benefits to the country of tax revenue and dividend increases, of investment in Canada and incremental investment in Canada, of the benefits to employees and to clients – everybody understands that,” RBC chief executive officer Dave McKay said during a conference call with analysts. “Everybody understands that HSBC has made a choice to leave, and it would look horrible on Canada if you didn’t allow the free flow of capital.”

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Business

What Difference Will You Make to an Employer?

Published

11 hours ago

October 21, 2024

Nick Kossovan

It’s common knowledge that companies don’t hire the most qualified candidates. Employers hire the person they believe will deliver the best value in exchange for their payroll cost.

Since most job seekers know the above, I’m surprised that so few mention their Employee Value Proposition (EVP). Most job seekers list their education, skills, and experience without substantiating them and expect employers to determine whether they can benefit their company; hence, most resumes and LinkedIn profiles are just a list of opinions—borderline platitudes—that are meaningless and, therefore, have no value. Job seekers need to better explain, along with providing evidence, how they’ll contribute to an employer’s success.

Employers don’t hire opinions (read: talk is cheap); they hire results.

You’re not offering anything tangible when you claim:

I’m a great communicator.
I’m detail oriented.
I’m a team player.

Tangible:

“At Global Dynamics, I held quarterly town hall meetings with my 22 sales reps, highlighting our accomplishments, identifying opportunity areas, and recognizing outstanding performers.”
“For eight years, I managed Vandelay Industries IT department, overseeing a staff of 18 and a 12-million-dollar budget while coordinating cross-specialty projects. My strong attention to detail is why I never exceeded budget.”
“While working at Cyberdyne Systems, I was part of the customer service team, consisting of nine of us, striving to improve our response time. Through collaboration and sharing of best practices, we reduced our average response time from 48 to 12 business hours, resulting in a 35% improvement in customer feedback ratings.”

These examples of tangible answers provide employers with what they most want to hear from candidates but rarely do; what value the candidate will bring to the company. Typically, job seekers present their skills, experience, and unsubstantiated opinions and expect recruiters and employers to figure out their value, which is a lazy practice.

Getting hired isn’t based on “I have an MBA in Marketing and Sales,” “I’ve been a web designer for over 15 years,” “I’m young, beautiful and energetic,” blah, blah, blah. Likewise, being rejected isn’t based on “I’m overqualified,” “I’m too old,” “I don’t have enough education,” blah, blah, blah. Getting hired depends entirely on showing employers that you can add value and substance to their company; that you’ll serve a purpose.

When you articulate a solid value offer, the “blah, blah, blah” doesn’t matter. Job seekers focus too much on the “blah, blah, blah,” and when not hired, they say, “It’s not me, it’s…” The biggest mistake I see job seekers make is focusing on the “blah, blah, blah”—their experience and education—believing this is what interests employers. Hiring managers are more interested in whether you can solve the problems the position exists to solve than in your education and experience.

Not impressive: Education

Impressive: A track record of achieving tangible results.

You aren’t who you say you are; you are what you do.

If you want to be somebody who works hard, you have to actually work hard. If you want to be somebody who goes to the gym, you actually have to go to the gym. If you want to be a good friend, spouse, or colleague, you have to actually be a good friend, spouse, or colleague. Actions build reputations, not words.

The biggest challenge job seekers face today is differentiating themselves. To stand out and be memorable, don’t be like most job seekers, someone who’s all talk and no action. Any recruiter or hiring manager will tell you that the job market is heavily populated with job seekers who talk themselves up, talk a “good game” about everything they can “supposedly” do, drop names, etc., but have nothing to show for it.

More than ever, employers want to hear candidates offer a value proposition summarizing what value they bring. If you’re looking for a low-hanging fruit method to differentiate yourself, do what job seekers hardly ever do and make a hard-to-ignore value proposition.

Increase sales: “Based on my experience managing Regina and Saskatoon for PharmaKorp, I’m confident that I can increase BioGen’s sales by no less than 25% in Winnipeg and the surrounding area by the end of 2025.”
Reduce cost: “During my 12 years as Taco Town’s head of purchasing, I renegotiated contracts with key suppliers, resulting in 15% cost savings, saving the company over $450,000 annually. I know I can do the same for The Pasta House.”
Increase customer satisfaction:“During my time at Globex Corporation, I established a systematic feedback mechanism that enabled customers to share their experiences. This led to targeted improvements, increasing our Net Promoter Score by 15 points. I can increase Dunder Mifflin’s net promoter score.”
Save time: “As Zap Delivery’s dispatcher, I implemented advanced routing software that analyzed traffic patterns, reducing average delivery times by 20%. My implementation of this software at Froggy’s Delivery can reduce your delivery times by at least 20%, if not more.”

If you want to achieve job search success as soon as possible, structure your job search with a single thread that’s evident and consistent throughout your résumé, LinkedIn profile, cover letters and especially during interviews; clearly convey what difference you’ll make to the employer.

_____________________________________________________________________

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

Business

Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

Published

4 days ago

October 17, 2024

Anne Joseph

Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

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Business

All Magic Spells (TM) : Top Converting Magic Spell eCommerce Store

Published

4 days ago

October 17, 2024

Sven Eggers

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