A person makes their way past the Bank of Montreal (BMO) building in the Financial District of Toronto, on Monday, Aug. 14, 2023. THE CANADIAN PRESS/Spencer ColbySpencer Colby/The Canadian Press
Canada’s biggest banks report their first-quarter earnings this week, covering the three months that ended Jan. 31, as experts cite concerns with commercial real estate loans and warn of significant losses in the sector.
Ahead of the latest results, many analysts have cut their estimates – extending a trend seen throughout 2023. The analysts anticipate that earnings will drop as much as 12 per cent year-over-year, pressed by dampened loan demand and higher loan loss reserves driven by rising risk in commercial real estate, credit cards and auto lending. The good news is that the banks have also been setting aside more money for loans that could default, known as provisions for credit losses, to help them absorb the impact of those losses.
Bank of Nova Scotia, Royal Bank of Canada, National Bank, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank have all reported first-quarter profits that beat analysts’ estimates. Meanwhile, Bank of Montreal missed analysts’ estimates.
Here’s a breakdown of the big banks’ first-quarter earnings so far.
Bank of Nova Scotia
A Bank of Nova Scotia branch, in Toronto, on Dec. 13, 2021.CARLOS OSORIO/Reuters
- Earnings Q1 2024: $2.2 billion ($1.68 per share)
- Earnings Q1 2023: $1.76-billion ($1.35 per share)
- Adjusted EPS: $1.69 per share
- Analysts’ expectations: $1.61 per share (adjusted)
- Dividend: $1.06 per share
Bank of Nova Scotia BNS-T booked higher reserves for loans that could default even as a rise in first quarter profit beat analyst estimates.
Scotiabank earned $2.2-billion, or $1.68 per share, in the three months that ended Jan. 31. That compared with $1.76-billion, or $1.35 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $1.69 per share. That edged out the $1.61 per share analysts expected, according to Refinitiv.
In the quarter, Scotiabank set aside $962-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included just $20-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, Scotiabank set aside $638-millions in provisions.
“The Bank delivered solid earnings this quarter driven by strong revenue growth, margin expansion and expense discipline,” Scotiabank chief executive officer Scott Thomson said in a statement. “I am encouraged by the early progress against our strategic priorities, and the further strengthening of our balance sheet metrics.”
Total revenue rose 6 per cent in the quarter to $8.4-billion as expenses also climbed 6 per cent to $4.7-billion.
Bank of Montreal (BMO)
The Bank of Montreal building, in Toronto's Financial District, is on April 10 2019.Fred Lum/The Globe and Mail
- Earnings Q1 2024: $1.29 billion ($1.73 per share)
- Earnings Q1 2023: $133-million ($0.14 per share)
- Adjusted EPS: $2.56 per share
- Analysts’ expectations: $3.02 per share (adjusted)
- Dividend: $1.51 per share
Bank of Montreal BMO-T first quarter profit missed analysts’ estimates on a slump in capital markets profit and an uptick in reserves for loans that could default.
Adjusted to exclude certain items, the bank said it earned $2.56 per share. That fell below the $3.02 per share analysts expected, according to Refinitiv.
In the quarter, BMO set aside $627-million in provisions for credit losses. That was higher than analysts anticipated, and included $154-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, BMO set aside $217-million in provisions.
“Against an uncertain economic outlook, we continued to demonstrate the strength and resilience of our diversified businesses and the benefit of strategic acquisitions,” BMO chief executive officer Darryl White said in a statement. “Although the environment has constrained revenue growth in market sensitive businesses in the near term, with the strength of our personal and commercial businesses and our sharp focus on positioning the bank effectively for long-term success by reducing expenses, optimizing our balance sheet and growing customer relationships, we are poised to create significant value for our shareholders.”
The bank kept its quarterly dividend unchanged at $1.51 cents per share.
Total revenue rose 50 per cent in the quarter to $7.7-billion as BMO integrates its acquisition of California-based Bank of the West. But expenses also rose 23 per cent to $5.9-billion, which the bank said was driven by acquisition costs, partially offset by the bank reaching its target of $800-million in deal-related cost synergies – savings the bank expected to achieve by streamlining its operations and technology platforms with Bank of the West.
Royal Bank of Canada (RBC)
An RBC branch in Halifax, on April 2, 2019.Andrew Vaughan/The Canadian Press
- Earnings Q1 2024: $3.6-billion ($2.50 per share)
- Earnings Q1 2023: $3.2-billion ($2.29 per share)
- Adjusted EPS: $2.85 per share
- Analysts’ expectations: $2.80 per share (adjusted)
- Dividend: $1.38 per share
Royal Bank of Canada RY-T reported first-quarter profit that beat analysts’ estimates even as the lender set aside more loan loss reserves and recorded higher expenses.
RBC earned $3.6-billion, or $2.50 per share, in the three months that ended Jan. 31. That compared with $3.2-billion, or $2.29 per share, in the same quarter last year.
Adjusted to exclude certain items, including transaction and integration costs related to its proposed takeover of HSBC Bank Canada, the bank said it earned $2.85 per share, down 6 per cent from the same quarter last year. That edged out the $2.80 per share analysts expected, according to Refinitiv.
“Underpinned by our balance sheet strength, prudent approach to risk management and diversified business model, we delivered solid, client-driven volume growth and a continued focus on expense control,” RBC chief executive officer Dave McKay said in a statement. “As we look towards the completion of our planned HSBC Canada acquisition, we remain focused on being a trusted adviser to clients through the delivery of new and differentiated banking experiences.”
The bank kept its quarterly dividend unchanged at $1.38 per share.
RBC’s pending takeover of British-based banking giant HSBC’s Canadian unit received approval from the Finance Minister in December, and is expected to close at the end of the first calendar quarter.
In the quarter, RBC set aside $813-million in provisions for credit losses. That was higher than analysts anticipated, and included $133-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, RBC had set aside $532-million in provisions.
Total revenue rose 1 per cent in the quarter to $13.5-billion on slimmer net interest margins – the difference between what banks earn on loans and pay on deposits. Expenses increased 10 per cent to $8.3-billion, in part driven by costs related to its HSBC Canada deal and higher salaries and benefits, partly offset by a staff reduction announced last year.
National Bank of Canada
A National Bank of Canada branch in Ottawa.Chris Wattie/Reuters
- Earnings Q1 2024: 922-million ($2.59 per share)
- Earnings Q1 2023: $876-million ($2.47 per share)
- Adjusted EPS: $2.59 per share
- Analysts’ expectations: $2.36 per share (adjusted)
- Dividend: $1.06 per share
National Bank of Canada NA-T reported higher first-quarter profit that beat analysts’ estimates as a revenue boost in Canadian banking and capital markets offset higher reserves for loans that could default.
National Bank earned $922-million, or $2.59 per share, in the three months that ended Jan. 31. That compared with $876-million, or $2.47 per share, in the same quarter last year.
On an adjusted basis, the bank said it earned $2.59 per share. That edged out the $2.36 per share analysts expected, according to Refinitiv.
“National Bank delivered strong performance and excellent return on equity for the first quarter of 2024, underpinned by sustained momentum and execution across our business segments,” National Bank chief executive officer Laurent Ferreira said in a statement. “These results reflect the earnings power of our diversified business mix and relevance of our defensive posture.”
The bank kept its quarterly dividend unchanged at $1 .06 per share.
In the quarter, National Bank set aside $120-million in provisions for credit losses. That was higher than analysts anticipated, and included $30-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, National Bank reserved $86-million.
Total revenue rose 6 per cent in the quarter to $2.71-billion, while expenses increased 4 per cent to $1.45-billion.
Canadian Imperial Bank of Commerce (CIBC)
A CIBC bank is pictured at Broadview/Danforth in Toronto on February 22, 2024.Laura Proctor/The Globe and Mail
- Earnings Q1 2024: $1.73-billion ($1.77 per share)
- Earnings Q1 2023: $433-million ($0.39 per share)
- Adjusted EPS: $1.81 per share
- Analysts’ expectations: $1.68 per share (adjusted)
- Dividend: $0.90 per share
Canadian Imperial Bank of Commerce CM-T reported first quarter profit that beat analysts’ estimates on stronger performance in Canadian banking, even as the lender posted higher provisions for loans that could default.
CIBC earned $1.73-billion, or $1.77 per share, in the three months that ended Jan. 31. That compared with $433-million, or $0.39 per share, in the same quarter last year when the bank’s earnings were weighed down by a large legal provision.
Adjusted to exclude certain items, including a charge stemming from a special assessment by the U.S. Federal Deposit Insurance Corp., the bank said it earned $1.81 per share, a 7-per-cent decrease from the same quarter a year prior. That topped the $1.68 per share analysts expected, according to data from the London Stock Exchange Group.
“These first-quarter results demonstrate our success in executing on our client-focused strategy which is delivering results for our stakeholders,” CIBC chief executive officer Victor Dodig said in a statement. “We have clear momentum in attracting and deepening client relationships, underpinned by continued expense discipline, a robust capital position, and strong credit quality, giving us a strong foundation as we continue to proactively manage our bank to further our progress and momentum in 2024.”
The bank kept its quarterly dividend unchanged at $0.90 per share.
In the quarter, CIBC set aside $585-million in provisions for credit losses. That was higher than analysts anticipated, and included $93-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, CIBC set aside $295-million in provisions.
Total revenue rose 5 per cent in the quarter, to $6.22-billion as expenses decreased 22 per cent to $3.47-billion. On an adjusted basis, excluding last year’s large legal provision, expenses increased 3 per cent on higher technology and staffing costs.
Toronto-Dominion Bank (TD Bank)
A person walks past a TD Bank sign in the financial district in Toronto on Tuesday, Sept. 20, 2022.Alex Lupul/The Canadian Press
- Earnings Q1 2024: $2.8-billion ($1.55 per share)
- Earnings Q1 2023: $1.58-billion ($0.82 per share)
- Adjusted EPS: $2.00 per share
- Analysts’ expectations: $1.89 per share (adjusted)
- Dividend: $1.02 per share
Toronto-Dominion Bank TD-T reported first-quarter profit that beat analysts’ estimates as the lender booked record revenue in its capital markets division, offsetting rising provisions for loans that could default.
TD earned $2.8-billion, or $1.55 per share, in the three months that ended Jan. 31. That compared with $1.58-billion, or $0.82 per share, in the same quarter last year.
Adjusted to exclude certain items, including costs related to the restructuring charges announced last quarter and its acquisition of New York-based investment bank Cowen, TD said it earned $2 per share. That topped the $1.89 per share analysts expected, according to data from the London Stock Exchange Group.
“TD had a good start to the year, with revenue growth reflecting higher fee-income from our markets-driven businesses, including the contribution from TD Cowen, and higher volumes and deposit margins in the Canadian personal and commercial bank,” TD chief executive officer Bharat Masrani said in a statement. “Expense growth moderated from last quarter as we made progress on our restructuring initiatives, delivering efficiencies across the bank.”
The bank kept its quarterly dividend unchanged at $1.02 per share.
TD booked $213-million in after-tax restructuring charges, adding to the $266-million it posted for the program last quarter. Last year, any of the banks trimmed expenses through measures including job cuts and real estate reductions. TD expects to post savings of about $400-million pretax in 2024.
The lender is targeting a 3-per-cent reduction in its work force through initiatives including employee severance and other personnel-related costs and reducing its real estate footprint.
In the quarter, TD set aside $1-billion in provisions for credit losses. That was higher than analysts anticipated, and included $67-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, TD had set aside $690-million in provisions.
Total revenue rose 12 per cent in the quarter to $13.7-billion as expenses decreased 1 per cent to $8-billion.
Editor’s note: A previous version of this article incorrectly stated Scotiabank's reported quarterly dividend. It is $1.06. This version has been updated.