Canada’s biggest banks reported their fourth-quarter earnings this week, covering the three months ending Oct. 31, as analysts gauge the strength of the banking sector before heading into an expected slowdown (and possible recession) next year.
Bank of Nova Scotia, Royal Bank of Canada and Toronto-Dominion Bank topped analysts’ forecasts. Meanwhile, National Bank, Canadian Imperial Bank of Commerce and Bank of Montreal fell short of analysts’ expectations.
As central banks raise interest rates to slow inflation, economic fears have held bank stocks back compared with the overall market. Markets are watching these earnings closely for signs of how they will be affected in future quarters by decades-high inflation and central banks’ rapid rate hikes.
Here’s a breakdown of the Big Six banks’ fourth-quarter earnings.
Bank of Nova Scotia
The Bank of Nova Scotia building, in Toronto, on Aug. 22, 2017.Nathan Denette/The Canadian Press
Earnings Q4 2022: $2.1 billion ($1.63 per share)
Earnings Q4 2021: $2.6 billion ($1.97 per share)
Adjusted EPS $2.06
Analysts’ expectations: $1.99 per share (adjusted)
Dividend: $1.03 per share, unchanged from Q3
Bank of Nova Scotia reported a lower fourth-quarter profit as expenses increased and the bank set aside more money to cover loans that could default, but still beat low expectations on the strength of robust retail banking revenues.
Scotiabank earned $2.1-billion, or $1.63 per share, in the quarter that ended Oct. 31. That compared with $2.6-billion, or $1.97 per share, in the same quarter last year.
The bank’s fiscal fourth-quarter results included several charges that reduced earnings, including a $340-million loss from the sale of investments in Venezuela and Thailand, a $66-million restructuring charge and $98-million in costs to expand the bank’s Scene+ loyalty program.
On an adjusted basis, the bank said it earned $2.06 per share, which was ahead of the $1.99 per share anticipated by analysts, according to Refinitiv. Scotiabank kept its quarterly dividend unchanged at $1.03 per share.
Scotiabank also earmarked $529-million in provisions for credit losses – the money banks set aside to cover loans that may default. That was a large increase from a year ago, at $168-million, when Scotiabank was recovering provisions it had set aside during the early months of the COVID-19 pandemic.
The bank is in the midst of a transition in leadership, as Scott Thomson prepares to be its next chief executive. He will assume the top job on Jan. 31, when current CEO Brian Porter retires.
Royal Bank of Canada
A person walks past RBC signage in Toronto, on Sept. 20.Alex Lupul/The Canadian Press
Earnings Q4 2022: $3.88 billion ($2.74 per share)
Earnings Q4 2021: $3.89 billion ($2.68 per share)
Adjusted EPS $2.78
Analysts’ expectations: $2.69 per share (adjusted)
For the three months that ended Oct. 31, RBC earned $3.88-billion or $2.74 a share. That compared with $3.89-billion or $2.68 in the same quarter last year. On an adjusted basis, RBC said it earned $2.78 a share, above analysts’ consensus estimate of $2.69, according to Refinitiv.
The bank also increased its quarterly dividend by 4 cents to $1.32 per share, a three-per-cent hike.
Chief executive officer Dave McKay warned there are still several warning signs in the economy. With inflation, a potential recession on the horizon and labour-market pressures driving costs higher, “there’s a higher level of uncertainty and therefore you have higher tail risk right now,” Mr. McKay said.
National Bank
A National Bank sign is seen May 30, 2016 in Montreal.Paul Chiasson/The Canadian Press
Earnings Q4 2022: $738 million ($2.08 per share)
Earnings Q4 2021: $776 million ($2.19 per share)
Adjusted EPS $2.08
Analysts’ expectations: $2.22 per share (adjusted)
Dividend: $0.97 per share, up 5 cents from Q3
National Bank of Canada reported a 4-per-cent drop in fiscal fourth-quarter profit and raised its dividend by 5 per cent as rising provisions against loan losses outweighed strong gains in retail banking.
In the fiscal fourth quarter, National Bank earned $738-million or $2.08 a share, compared with $776-million or $2.19 a year earlier. On average, analysts were expecting earnings per share of $2.22. For the full fiscal year, National Bank’s profit and revenue were both up 8 per cent, to $3.38-billion and $9.65-billion respectively.
National Bank raised its quarterly dividend by five cents to 97 cents per share, a five-per-cent increase, and announced a plan to buy back as many as seven million shares, or 2.1 per cent of total shares outstanding.
Rising provisions for credit losses weighed heavily on results. National Bank set aside $87-million in provisions, after recovering $41-million from its reserves in the same quarter last year.
CEO Laurent Ferreira told analysts on Wednesday that economic indicators “are moving in the right direction,” but that the bank is nonetheless keeping “a defensive positioning” and watching central banks’ tone on monetary policy.
Canadian Imperial Bank of Commerce
The lobby of CIBC’s headquarters, in Toronto, on Oct. 25, 2021.Evan Buhler/The Canadian Press
Earnings Q4 2022: $1.19 billion ($1.26 per share)
Earnings Q4 2021: $1.44 billion ($1.54 per share)
Adjusted EPS $1.39
Analysts’ expectations: $1.72 per share (adjusted)
CIBC earned $1.19-billion, or $1.26 per share, in the fourth quarter. That compared with $1.44-billion, or $1.54 per share, a year earlier.
The bank’s results included several special charges, including a $91-million increase in legal provisions, a $37-million charge from consolidating its real estate portfolio and $12-million of costs related to the bank’s acquisition of the credit card portfolio of retailer Costco in Canada.
“CIBC had a big miss in the quarter and, while some of it related to higher provisions on performing loans, the bank’s domestic net interest margin contraction was disappointing,” said John Aiken, an analyst at Barclays Capital Inc., in a note to clients.
Adjusted to exclude those items, CIBC said it earned $1.39 per share. That was far shy of analysts’ estimate of $1.72 per share, according to Refinitiv.
CIBC raised its quarterly dividend by two cents to 85 cents per share.
For the full fiscal year, CIBC’s profit fell 3 per cent to $6.2-billion.
Bank of Montreal
A BMO branch in Ottawa, on Feb. 14, 2019.CHRIS WATTIE/Reuters
Earnings Q4 2022: $4.48 billion ($6.51 per share)
Earnings Q4 2021: $2.16 billion ($3.23 per share)
Adjusted EPS $3.04
Analysts’ expectations: $3.11 per share (adjusted)
Dividend: $1.43 per share, up four cents from Q3
Bank of Montreal reported adjusted fourth-quarter profit that fell 4 per cent and raised its dividend as higher costs and lower returns from investment and corporate banking weighed on earnings.
The bank’s earnings for the quarter that ended Oct. 31 were affected by two large items. It had revenue of $3.37-billion from a hedging strategy designed to offset the impact of interest rate changes on the closing cost of its $17.1-billion deal to acquire California-based Bank of the West. And it took a previously-announced legal provision of $1.14-billion after a U.S. court found the bank liable for damages in a lawsuit related to a prominent Ponzi scheme.
BMO earned $4.48-billion, or $6.51 per share, compared with $2.16-billion, or $3.23 per share, in the same quarter last year.
Adjusted to exclude the one-time items, BMO said it earned $2.14-billion, or $3.04 per share. On average, analysts expected adjusted earnings of $3.11 per share, according to Refinitiv.
The bank raised its quarterly dividend by four cents to $1.43 per share.
BMO’s results represent “a mixed quarter,” said Scotia Capital Inc. analyst Meny Grauman, in a note to clients. “There is plenty to like here despite the headline miss.”
For the full fiscal year, Adjusted profit of $9-billion was up 4 per cent.
Toronto-Dominion Bank
A TD Bank branch in Halifax, on March 30, 2017.Andrew Vaughan/The Canadian Press
Earnings Q4 2022: $6.67 billion ($3.62 per share)
Earnings Q4 2021: $3.78 billion ($2.04 per share)
Adjusted EPS $2.18
Analysts’ expectations: $2.07 per share (adjusted)
Dividend: $0.96 per share, up seven cents from Q3
Toronto-Dominion Bank reported adjusted fourth-quarter profits that beat expectations and raised its dividend as higher margins earned on loans helped drive strong retail banking returns in Canada and the U.S..
Its results were helped by a favourable tax rate, and included two large items that boosted results: a $2.3-billion gain on an interest-rate hedging strategy tied to its US$13.4-billion acquisition of First Horizon Corp., and a $997-million gain on the sale of shares in Charles Schwab Corp.
TD earned $6.67-billion, or $3.62 per share, compared with $3.78-billion, or $2.04 per share, in the same quarter last year.
After adjusting for special items, TD said it earned $4.07-billion, or $2.18 per share. On average, analysts expected adjusted earnings per share of $2.07, according to Refinitiv.
TD raised its quarterly dividend by 7 cents to 96 cents per share.
Margins have been a focal point for analysts and investors this quarter as a key support for banks’ earnings, faced with an array of economic headwinds.
“If rates continue to rise then you would expect that to be helping margins,” said Kelvin Tran, TD’s chief financial officer, in an interview. “But that also depends on the competitiveness of the loan pricing.”
For the full fiscal year, TD’s adjusted profit was up 5 per cent to $17.43-billion.
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.
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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