MAJOR BANKS REPORT STRONG EARNINGS.
Four biggest lenders boost dividends
TORONTO — Four of Canada’s biggest banks delivered first-quarter results on Thursday that outshone analyst expectations, helped by improvement in their lending operations.
Both Royal Bank and TD Bank boosted their quarterly dividend payments, while CIBC and National Bank of Canada will keep payouts at their current level. But aside from the disappointment, the results from the banks included more positive surprises than negative ones.
Royal Bank said that net income rose 12 per cent to $2.07 billion, or $1.36 per share, in the period. Adjusted earnings amounted to $1.38 per share, beating analyst estimates by six cents, according to a survey by Thomson Reuters.
TD Bank’s earnings grew 21 per cent to $1.79 billion, or $1.86 per share. Adjusted profits were $1.92 billion or $2 per share, eight cents above a consensus estimates.
CIBC delivered the weakest overall results with profits falling more than four per cent to $798 million, or $1.91 per share, affected by a $148 million loss booked in its structured credit business. The bank said when filtering out those costs, adjusted earnings rose to $868 million or $2.15 per share, seven cents above the consensus estimate.
National Bank reported adjusted net income of $2.02 per diluted share for the first quarter of fiscal 2013, beating analyst estimates by a penny.
Total revenue for the quarter, however, was $1.24 billion, mostly flat compared to the year earlier period and below analyst expectations of $1.29 billion.
Concerns the banking sector is headed toward more challenging times didn’t appear to be as evident as some analysts had anticipated before the quarterly reports began earlier this week.
The banks demonstrated that their personal and commercial loans businesses are still solid, even as expectations point to consumer lending growth slowing in the coming quarters amid persistent economic weakness.
“The results that have come out of the domestic businesses have just been much better than my expectations,” said Tom Lewandowski, a financial services analyst with Edward Jones.
“I’ve held the contention that as you see slower growth (the banks are) going to have to reposition your balance sheet into lower yield securities. If business growth continues to keep up with what we’ve seen here in the first quarter, that ... may be less of a concern.”
On the dividend front, Royal Bank will rise five per cent to 63 cents per share. TD’s payout will rise four cents to 81 cents per share. CIBC will keep its dividend unchanged, despite expectations from analysts to the contrary.
CIBC president and CEO Gerry McCaughey defended the bank’s decision to holding steady on the dividend.
National, Quebec’s largest bank, said net income for the quarter ended Jan. 31 was $364 million, up from $351 million in the same quarter of fiscal 2012.