Canada’s big banks see combined profits slide

Every job that Canada created in 2016 was part-time, according to TD Economics. Canadian Press

TORONTO – Strength on the capital markets helped most of the country’s biggest banks report improved third-quarter results, but combined profits at the top five banks slipped to $7.63 billion.

A year ago, Canada’s big banks — Royal Bank, TD Bank, Scotiabank, CIBC (TSX:CM) and Bank of Montreal (TSX:BMO) — combined to earn $7.8 billion in the same period.

The decline was due to lower third-quarter earnings at Scotiabank (TSX:BNS) and TD Bank (TSX:TD).

Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, said weaker than expected performance by Scotiabank’s international banking operation was the biggest disappointment during the quarter.

Canada’s most international bank, which reported on Tuesday, earned $1.77 billion or $1.37 per share. That’s down from $2.05 billion or $1.69 per share in the same period last year, when earnings were boosted by the sale of Scotiabank’s headquarters.

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TD Bank was the only other bank to report lower profits for the three months ended July 31 compared with a year ago. TD was hit by losses related to its insurance business due to claims associated with the recent severe flooding in Alberta and the Toronto area.

A loss of $243 million at TD Insurance affected the bank’s overall results as it reported a profit of $1.53 billion or $1.58 per diluted share, compared with $1.7 billion or $1.78 per share in the year-earlier period.

Overall, Nakamoto said earnings reports from the big banks were strong, despite ongoing concerns about a lagging housing market.

“The banking sector continues to be very healthy and robust, and fears over residential housing market in Canada should dissipate,” he said.

Nakamoto said a focus on wealth management helped Royal Bank of Canada (TSX:RY) come out ahead of the pack, beating analyst expectations by the widest margin.

Canada’s largest bank by assets earned a record profit of $2.3 billion or $1.52 per share in the three months ended July 31. That’s up three per cent from $2.24 billion, or $1.47 per share, in the same period a year earlier.

“Those (banks) that had more wealth management did better than the others,” said Nakamoto. “But they all have pretty strong wealth management platforms.”

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Canadian Imperial Bank of Commerce (TSX:CM) earned $890 million or $2.16 per diluted share in the most recent period, up from $841 million or $2 a diluted share in the same period last year.

On Tuesday, the Bank of Montreal said it earned $1.14 billion or $1.68 cents per share for the quarter ended July 31, up from $970 million or $1.42 per share in the same year-earlier period.

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