Latest News

The Canadian Press - ONLINE EDITION

Three Canadian banks surprise analysts with better lending results

By: David Friend, The Canadian Press

Posted: 02/28/2013 10:01 AM | Comments: 0 | Last Modified: 02/28/2013 10:19 AM

Enlarge Image

Pedestrians walk in Toronto's financial district on Oct. 29, 2012. THE CANADIAN PRESS/Nathan Denette

Related Items

Articles

TORONTO - Three of Canada's biggest banks delivered first-quarter results on Thursday that outshone analyst expectations, helped by improvement in their lending operations.

Both Royal Bank (TSX:RY) and TD Bank (TSX:TD) boosted their quarterly dividend payments, leaving CIBC (TSX:CM) as the unexpected lone wolf to keep its payouts at their current level. But aside from the disappointment, the results from the banks included more positive surprises than negative ones.

Royal Bank said that net income rose 12 per cent to $2.07 billion, or $1.36 per share, in the period. Adjusted earnings amounted to $1.38 per share, beating analyst estimates by six cents, according to a survey by Thomson Reuters.

TD Bank's earnings grew 21 per cent to $1.79 billion, or $1.86 per share. Adjusted profits were $1.92 billion or $2 per share, eight cents above a consensus estimates.

CIBC delivered the weakest overall results with profits falling more than four per cent to $798 million, or $1.91 per share, affected by a $148 million loss booked in its structured credit business. The bank said when filtering out those costs, adjusted earnings rose to $868 million or $2.15 per share, seven cents above the consensus estimate.

Concerns the banking sector is headed towards more challenging times didn't appear to be quite as evident as some analysts had anticipated before the quarterly reports began earlier this week.

The banks demonstrated that their personal and commercial loans businesses are still solid, even as expectations point to consumer lending growth slowing in the coming quarters amid persistent economic weakness.

"The results that have come out of the domestic businesses have just been much better than my expectations," said Tom Lewandowski, a financial services analyst with Edward Jones in St. Louis.

"I've held the contention that as you see slower growth (the banks are) going to have to reposition your balance sheet into lower yield securities. If business growth continues to keep up with what we've seen here in the first quarter, that ... may be less of a concern."

On the dividend front, Royal Bank will rise five per cent to 63 cents per share. TD's payout will rise by four cents to 81 cents per share. CIBC will keep its dividend unchanged, despite expectations from analysts to the contrary.

CIBC president and chief executive Gerry McCaughey defended the bank's decision to holding steady on the dividend when asked by an analyst on the earnings conference call.

"I wouldn't read too much into our not raising the dividend this quarter," he said.

"On the capital front, we're also in the middle of a (stock) buyback program that's going at an accelerated pace. As I said before, to the extent that you have a buyback, it does allow you to raise your dividend more rapidly and stay within your payout ratio."

He said the bank is still considering "the exact mix" of its buyback program, which would determine what happens to dividend increases in the coming quarters.

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories? Please use the form below and let us know.

* Required

In which story did you find the error? *
Please post the headline of the story or the title of the video with the error.
What was the error? *
Please post exactly what was wrong with the story.
What should we have written?
Please indicate your source for the correct information.
Who else should we interview to improve this story?
Please include any contact information you may have.
Can we contact you in the future for advice on stories about this topic?
Yes

No
First Name: *
Last Name: *
E–mail Address: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Phone: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Colour:
Are you blue? If you can see this, leave it blank and get some CSS support.
Enter the words that you see: * This is to prevent our forms from being filled out automatically.
You have failed to correctly identify the words in the box above. Please try again.

More Latest News

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.