Big 6 banks shine in Q1 amid challenges

Canada's major banks post strong Q1 earnings, with CIBC and TD leading amidst economic vigilance

Big 6 banks shine in Q1 amid challenges

Canada's “Big 6” banks have unveiled their first-quarter earnings, capturing the attention of industry experts and analysts.

A report by BNN Bloomberg has provided a comprehensive review of these financial milestones, highlighting the successes and challenges faced by each institution.

CIBC emerged as a standout, reporting a first-quarter profit of $1.73bn, with revenues climbing to $6.22bn from $5.93bn the previous year. The bank's earnings per share on an adjusted basis reached $1.81, surpassing analyst expectations.

Ebrahim Poonawala of Bank of America Securities commended CIBC for its successful quarter and notable improvement in loan portfolio quality, especially in the US commercial real estate sector.

TD Bank Group also exceeded expectations by announcing a profit of $2.82bn. This was a significant increase from the previous year's $1.58bn. With earnings per share hitting $2, TD Bank outperformed the analysts' forecast.

This success came despite facing regulatory scrutiny in the US CEO Bharat Masrani emphasized the bank's commitment to addressing anti-money-laundering practices. He also highlighted efforts to enhance its risk control environment.

Royal Bank of Canada and National Bank of Canada both reported earnings that beat per-share estimates, with RBC's profit rising to $3.58bn from $3.13bn the previous year. Poonawala expressed optimism about RBC's future, particularly due to its acquisition of HSBC Canada.

National Bank, meanwhile, saw its first-quarter profit increase to $922m, driving its shares to an all-time high.

Bank of Montreal reported first-quarter earnings that fell short of expectations, with adjusted earnings per share at $2.56, below the anticipated $3.02. However, Poonawala remains bullish on BMO, citing its US market exposure as a key growth driver.

Scotiabank reported strong revenue growth, particularly from its Latin America divisions, surpassing first-quarter expectations with a net income of $2.20bn. Jerome Hass of Lightwater Partners noted the bank's performance as impressive but considered it more of a catch-up to its peers.

Despite the generally positive results, all “Big 6” banks increased their loan-loss provisions, signaling caution about the economic health of their clients. The collective provisioning exceeded $4bn, a move that Hass views as modest and unlikely to alter investor perspectives significantly.

Hass also mentioned that the quarter's results, while encouraging, may not be sufficient to attract foreign investors looking for opportunities in Canada's banking sector.