Canadian Banking Sector Reports Fiscal 2Q15 Earnings

Canadian Banking SectorCanadian Banks are reporting their earnings for the quarter ended April 30, 2015. (Note that all numbers in this article are in Canadian dollars.)

Bank of Montreal (NYSE/BMO)

Net income for the quarter is at $1.0 billion, translating to earnings per share (EPS) of $1.49—a seven percent decrease year-over year. Adjusted net income, which excludes items such as a $106 million restructuring charge, has increased to $1.15 billion. This implies an adjusted EPS of $1.71, a five percent increase year-over-year. (Source: BMO Financial Group, May 27, 2015.)

The results were driven by strong performance in capital-markets, wealth management, and personal and commercial banking in the U.S. BMO is also raising its quarterly dividend by two cents to $0.82.

Canadian Imperial Bank of Commerce (NYSE/CM)

The Canadian Imperial Bank of Commerce (CIBC) reported a net income of $911 million, or earnings of $2.25 per share. This is almost triple the $306 million or $0.73 EPS for the same quarter last year. Last year, the bank took $543 million in impairment charges in its Caribbean banking subsidiary. (Source: CIBC, May 28, 2015.)

Performance of retail and business banking, wealth management, and wholesale banking all improved from the year-ago period. CIBC also increased its dividend by three cents to $1.09.

Royal Bank of Canada (NYSE/RY)

The Royal Bank of Canada (RBC) reported net income of $2.5 billion for the quarter, a $301 million, or 14% increase year-over year. EPS increased by the same percentage to $1.68. (Source: Royal Bank of Canada, May 28, 2015.)

Among the bank’s departments, capital markets saw the biggest jump in income. Net income in capital markets increased $118 million or 23% to $625 million. On the other hand, RBC’s insurance arm struggled. Net income is down by $31.0 million or 20% year-over-year—mainly due to changes in Canadian tax laws.

The Toronto-Dominion Bank (NYSE/TD)

Like its competitor BMO, TD Bank’s results are negatively affected by restructuring charges. Reported net income is at $1.86 billion or an EPS of $0.97. This shows a 6.7% decrease from $1.99 billion or $1.04 EPS from the same period last year. However, after excluding one-time items such as a $337 million restructuring charge, adjusted net income is at $2.17 billion with adjusted EPS at $1.14—nearly a 10% increase year-over-year. (Source: TD Bank Group, May 28, 2015.)

Among TD’s operations, Canadian retail generated a net income of $1.4 billion this quarter, a solid eight percent increase over the same quarter last year. Wholesale banking enjoyed the fastest growth due to higher fee-based and trading-related revenue; jumping up 19% to $246 million in net income.