Big five earn huge quarterly profits
Canada’s five biggest banks earned more than $10 billion in collective profits in the latest quarter to cap off a better-thanexpected year on the surprising strength of the domestic economy.
Despite worries about Canada’s overheated housing markets and the impact of measures to cool them down, credit trends and loan growth were solid in the fiscal fourth-quarter, said Meny Grauman, an analyst with Cormark Securities in Toronto. “It’s tied to the strength of the Canadian labour market. The Canadian economy is doing relatively well and it’s benefiting the banks … Overall, I think it’s a good time to be a Canadian bank,” Grauman said.
The Bank of Montreal wrapped the big banks’ earnings season on Tuesday with a drop in profits, which were hit by reinsurance claims related to hurricanes Irma, Maria and Harvey during the quarter ended Oct. 31.
Its net income fell to $1.23 billion, down from $1.35 billion during the same period a year earlier. The quarter included reinsurance claims of $112 million largely related to the hurricanes, which cost the bank 17 per cents in earnings per share, as well as the impact of a weaker U.S. dollar and a $41-million after-tax restructuring charge.
On an adjusted basis, BMO said it earned $1.31 billion or $1.94 per share, down from nearly $1.4 billion or $2.10 per share a year ago. That fell short of the $1.99 in earnings per share expected on average by analysts, according to Thomson Reuters. “We had a very strong year in both traditional wealth and insurance with earnings up 18 per cent, even with the impact of elevated claims in our reinsurance business this quarter,” chief executive Darryl White told analysts in his first earnings call since taking the top job on Nov. 1.
The other four biggest banks each posted a rise in quarterly earnings. They were led by the Canadian Imperial Bank of Commerce, which blew past expectations on a 25-per-cent bump in quarterly profit to hit $1.16 billion.
Also Tuesday, Scotiabank said its offer to buy a sizable stake in a Chilean bank for $2.9 billion has been accepted. Banco Bilbao Vizcaya Argentaria, S.A. agreed Tuesday to sell its 68.19-per-cent stake in BBVA Chile and its interests in certain subsidiaries. The deal would make Scotiabank the third-largest private sector bank in the country.
Overall, each of the five biggest Canadian lenders reported record annual profits for a total $40.3 billion in net income for fiscal 2017, up nearly 13 per cent from a year ago.