Bank Profits 2010

Toronto Dominion Bank
Royal Bank
Bank of Montreal

TD Bank’s $1.3B profit beats estimates

(The Toronto Star, Mar 04 2010) TD Bank reported first-quarter results that almost doubled net income compared to the previous year, beating analyst estimates for profit and revenue.

The bank reported earnings of close to $1.3 billion in its latest quarter, compared to $653 million at the same time last year, citing strength in the company’s Canadian retail business, wholesale banking and solid performance from U.S. operations.

TD reported diluted earnings per share of $1.44 before adjustments, up from $1.12 the previous quarter and up from 75 cents from the same time the previous year. Analysts had estimated the bank would report diluted earnings of $1.35 per share.

“These results display the earnings power of our Canadian retail business,” said Ed Clark, president and chief executive officer, in a statement. “Wholesale Banking also had an impressive quarter and our U.S. operations continue to perform despite a challenging economic environment.”

At 11 a.m., TD shares were trading at $69.65, up $1.29 or 1.89 per cent. By that point Thursday’s low was reported at $69.28. At one point, shares were trading at $69.92, 8 cents below the bank’s 52-week high reported in August.

Earnings for the quarter were reported at close to $1.3 billion, up from about $1 billion reported the previous quarter.

TD stated revenue for the quarter was $5 billion, up about $900 million from the same time last year and also above analyst estimates compiled by Thomson Reuters.

TD became the third of Canada’s big banks to exceed Bay Street estimates, with only Royal Bank of Canada falling slightly short on Wednesday.

Bank of Nova Scotia will issue its numbers next week.

Royal Bank profit surges to $1.5B

(REUTERS The Canadian Press, April 30, 2009) Canada's largest bank racked up a $1.5-billion profit in its first-quarter, a 35 per cent gain from the same period a year earlier, but narrowly missed analyst expectations.

Royal Bank of Canada (TSX:RY) said Wednesday its net earnings amounted to $1 per share, up from 78 cents per share or $1.1 billion a year earlier.

Cash earnings per share, a measure used to compare earnings among the big banks, came in at $1.03 in the first quarter, slightly below a consensus analyst forecast of $1.04 per share gathered by Thomson Reuters.

Royal was the first of Canada's six biggest banks to miss expectations and its shares gave up $1.36 or about 2.3 per cent of their value Wednesday. They were still up from $56.07 a week ago, before the banks' earning season began.

CIBC (TSX:CM), National Bank (TSX:NA) and Bank of Montreal (TSX:BMO) all beat analyst estimates when they announced their results over the past week, starting Feb. 25.

Brad Smith, a banking analyst at CI Capital Markets, said the Royal's earnings were moderately disappointing and resulted from a revenue shortfall.

"It probably reflects deposit competition and perhaps to a lesser extent investment selection. They may have selected safer investments that yielded less as a result of their safety," Smith said.

But he was encouraged that credit provisioning was more than 40 per cent less than he had expected it to be.

"At the end of the day they left their allowance for future credit losses unchanged pretty much from the end of the last quarter. They're signalling in doing that, that they think credit losses are going to recede," Smith said.

RBC president and chief executive Gordon Nixon told an investor conference call that Royal Bank is seeing signs of improvement in market and economic conditions "and we are taking advantage of opportunities,"

"You can see from our results that we have made significant strides on the cost side. At the same time we are continuing to invest in our business for the long term," Nixon said.

As was widely expected, the bank left its common share dividend unchanged at 50 cents per share.

Royal's provision for credit losses — an amount set aside for bad loans — shrank 37 per cent in the quarter to $493 million from $786 million a year ago and $883 million in the prior quarter, but still remained high, Nixon said.

"While we continue to experience elevated provision for credit losses, reflecting the current economic conditions, we still expect credit quality in Canada to improve in the latter half of 2010."

The Canadian banking division's provision for credit losses remained about the same at $318 million — about two-thirds of the total — as provisions from business lending rose and provisions for credit card losses and personal loans fell.

Nixon said he does not expect new federal mortgage rules that require stricter conditions when Canadians apply for loans — intended to crack down on real-estate speculation and reduce the opportunity for homebuyers to take on too much debt — to have much impact on the bank.

"I do believe the proposed changes could head off potential speculative activity in the housing market," Nixon said.

"But from RBC's perspective, we already have a very conservative underwriting standard and we don't anticipate any significant changes in how we underwrite our loans or how we operate our business."

Economists from several of Canada's biggest banks advised Finance Minister Jim Flaherty last month to make minor adjustments to deal with the potential of very low interest rates creating an unsustainable rise in home prices.

New rules announced by Flaherty on Feb. 16 will increase the downpayment required for real-estate purchases for speculation. The amount that homeowners can borrow against their houses will also be reduced, effective April 19.

RBC's Canadian banking division accounted for about half of RBC's profit in the fiscal first quarter, with net income of $777 million, up $81 million or 12 per cent.

"Canadian banking performed extremely well and continued to underpin our earnings," with strong volume growth and gains in market share, Nixon said.

As it trimmed costs the bank shaved its 1.4 percentage points from its efficiency ratio — a measure of financial prudence that generally translates to higher profits when it is lower — to 45.7 per cent, with an eye to moving that into the low 40 per cent range in the medium term, Nixon added.

RBC's wealth management business accounted for $219 million in profit, up $91 million or 71 per cent from the same time last year while the profit at RBC Capital Markets more than doubled to $571 million.

On the negative side, Royal's international banking operation had a $57 million loss, but that was an improvement from a year-earlier loss of $100 million.

The provisions at RBC's international banking operations fell by $54 million to $175 million in specific credit provisions, while RBC Capital's provisions for credit losses fell to just $30 million _ down $190 million or 86 per cent.

BMO reports $657M profit for first quarter

(The Canadian Press, March 2, 2010) Bank of Montreal had a $657 million profit in its latest financial quarter as revenue increased by 24 per cent from a year earlier, with its Canadian operations providing much of the lift.

BMO’s overall revenue in the three months ended Jan. 31 increased by $583 million from the comparable period a year before, rising to $3.02 billion — in line with analyst estimates.

The bank said its first-quarter profit was up from $225 million a year earlier, while provisions for credit losses were reduced by $95 million to $333 million.

BMO’s earnings per share equalled $1.12 on a GAAP basis, compared with 39 cents a year earlier, or $1.13 per share on a cash basis. Both were up 73 cents from a year ago.

The bank says its quarterly dividend will remain at 70 cents per common share.

BMO’s core personal and commercial banking unit in Canada accounted for the bulk of the bank’s profit, rising 28 per cent from a year earlier to $403 million.

In contrast, net income from personal and commercial banking in the United States — where BMO’s Chicago-based Harris bank operates — fell by US$12 million or 43 per cent from a year before to US$16 million, about C$19 million.

The second-biggest big money-maker for the bank last quarter was BMO Capital Markets, which had $248 million in net income including $128 million from Canada and $88 million from the United States.

In contrast, BMO Capital Markets contributed $177 million in net income during the comparable period a year earlier, including $241 million from the United States offset by a $37 million loss in Canada and a $27 million loss elsewhere.

BMO’s Private Client Group contributed $113 million in net income, nearly double the $68 million reported a year before.

“This quarter’s strong performance demonstrates the earnings power of our core businesses and reinforces the confidence we have in our strategy,” Bill Downe, BMO’s president and chief executive officer, said in a statement.

“P&C Canada continues to set the pace for the company,” Downe added. “Revenue increased 12 per cent, driven by volume growth across most products and improved net interest margin.”