Three of Canada’s largest banks reported second-quarter profits on Thursday that beat estimates despite reporting increases in bad loans to the energy sector that cut into the banks’ bottom lines.
Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce all reported significant increases in bad loans to oil and gas clients due to low crude prices.
On Wednesday, the Bank of Montreal said it would cut roughly 1,850 positions from its workforce as consumers shift more of their banking online. BMO said its net income for the second-quarter was $973 million during the quarter or $1.45 per share, down from $999 million or $1.49 per share, during the same period last year.
Here’s a look at the three banks’ earnings:
RBC boosts Q2 profit but sets aside more money for bad loans
Royal Bank (TSX:RY) boosted its second-quarter profit by three per cent to $2.57 billion, even as it set aside more money for bad loans.
The quarterly net income was up from $2.50 billion during the same quarter last year.
RBC’s earnings amounted to $1.66 per share, down from $1.68 per share a year ago.
Revenue for the three months ended April 30 was $9.53 billion, up from $8.83 billion during the same period last year.
The bank also boosted its provision for credit losses to $460 million, up $178 million or 63 per cent from a year ago.
TD grows Q2 profit on higher retail banking results
TD Bank reported a second-quarter profit of $2.05 billion, up from $1.86 billion a year ago as its retail banking operations on both sides of the border had stronger earnings.
The earnings amounted to $1.07 per share, up from 97 cents per share during the same period last year.
On an adjusted basis, TD had a quarterly profit of $2.28 billion or $1.20 per share, compared with $2.17 billion or $1.14 per share during the second quarter of 2015.
Revenue for the period ended April 30 was $8.26 billion, up from $7.76 billion a year ago.
The bank’s provision for credit losses was $584 million – up $209 million, or 56 per cent, from a year ago, but down $58 million, or nine per cent, from the previous quarter.
CIBC reports increased second-quarter earnings, boosts dividend
CIBC (TSX:CM) saw its second-quarter profit grow to $941 million, up 3.3 per cent from the same period last year despite an increase in provisions for soured loans to the oil and gas sector and writeoffs in its personal lending portfolios.
The profit amounted to $2.35 per share of net income, up from $2.25 or $911 million during the second quarter of 2015.
Adjusted income for the quarter ended April 30 was $962 million or $2.40 per share, compared with $924 million or $2.28 a year ago.
Quarterly revenue was $3.63 billion, up from $3.39 billion during the same period last year.
The bank also announced it is boosting its quarterly dividend by three cents to $1.21 per share, payable July 28.
The quarter included a number of ususual items including a $56-million after-tax increase in legal provisions, partly offset by a $47-million after-tax gain on the sale of a processing centre.
CIBC also increased its provisions for credit losses to $324 million from $197 million a year earlier, mainly because of higher losses in the oil and gas sector as well as the card and personal lending portfolios.
Barclays Capital analyst John Aiken says CIBC’s results were helped by a tax rate that was lower than forecast and its overall results were above expectations.
“While provisions came in higher than expected from a spike in energy provisions and consumer write-offs, CIBC did manage to earn through the headwinds and we do not believe that there will be an overly abundant amount of concern in the quarter as the bank’s energy reserve level stands above two per cent and consumer delinquencies appeared to have eased,” Aiken wrote in a research note.