BMO profit slips, but big banks up overall
Canada’s top five lenders earned more than $10B
Canada’s five biggest banks earned more than $10 billion in collective profits in the latest quarter to cap off a better-than-expected 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 in an interview.
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. The Canadian lender’s net income slipped 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 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 after CEO Bill Downe’s retirement.
Overall, each of the five biggest Canadian lenders reported record annual profits for a total of $40.3 billion in net income for fiscal 2017, up nearly 13 per cent from a year earlier.