Pedestrians walk past an RBC branch in Toronto, on May 15.Fred Lum/The Globe and Mail
Canada’s biggest banks report their fourth-quarter earnings this week, covering the three months that ended Oct. 31, as the cost of borrowing drops and swaths of fixed-rate loans come up for renewal.
Analysts anticipate that the large banks’ fourth quarter bank earnings will begin the transition out of a year marked by rising loan loss provisions, higher expenses and muted profits – estimating that earnings could grow between 4 per cent to 11 per cent on average.
Analysts also expect that the banks’ fourth quarter could be the final slump in a year of muted loan growth before falling interest rates are expected to spur housing demand next year. More than half of all Canadian mortgages are renewing in 2025 and 2026, and that changing landscape could thrust the country’s banking sector into a mortgage war.
“Although payment shock is declining, a significant proportion of mortgagors will still have higher mortgage payments – creating a strong incentive to shop around for the lowest available mortgage rate,” RBC Capital Markets analyst Darko Mihelic said in a note to clients.
Canadian Imperial Bank of Commerce, Royal Bank of Canada and National Bank of Canada posted profits that beat analyst estimates. Meanwhile, Toronto-Dominion Bank, Bank of Montreal and Bank of Nova Scotia posted earnings that missed analyst estimates.
Here’s a breakdown of the fourth-quarter earnings so far.
Bank of Nova Scotia
Scotiabank reported a fourth-quarter profit of $1.69 billion, up from $1.35 billion in the same period last year, as it set aside a smaller amount for bad loans compared with a year ago.Andrew Lahodynskyj/The Canadian Press
- Earnings Q4 2024: $1.69-billion ($1.22 per share)
- Earnings Q4 2023: $1.35-billion ($0.99 per share)
- Adjusted EPS: $1.57 per share
- Analysts’ expectations: $1.60 per share (adjusted)
- Dividend: $1.06 per share
Bank of Nova Scotia BNS-T reported higher fourth-quarter profit but missed analysts’ estimates as the lender boosted revenue and set aside fewer provisions for loans that could default.
Scotiabank earned $1.69-billion, or $1.22 per share, in the three months that ended Oct. 31, compared with $1.35-billion, or $0.99 per share, in the same quarter last year.
Adjusted to exclude certain items, including impairment charges related to Scotiabank’s investment in China-based Bank of X’ian Co Ltd. and severance provisions, the bank said it earned $1.57 per share. That fell below the $1.60 per share analysts expected, according to data from the London Stock Exchange Group.
Scotiabank is one year into its new strategic plan aimed at reallocating more money to its North American businesses, where it believes it has bigger opportunities for growth than in its Latin American operations, and growing its deposit base. In August, the lender completed the first step in its investment in Cleveland-based KeyCorp with the acquisition of a 4.9 per cent stake. Scotiabank is expected to close the acquisition in the first quarter of the 2025.
The bank kept its quarterly dividend unchanged at $1.06 per share.
In the quarter, Scotiabank set aside $1.03-billion in provisions for credit losses – the funds banks set aside to cover loans that may default. That was lower than analysts anticipated, but included $1.04-billion against loans that may not be repaid, based on models that use economic forecasting to predict future losses. The higher impaired loans were slightly offset by a $13-million recovery in performing loans.
In the same quarter last year, Scotiabank had a set aside of $1.26-billion in provisions, as the bank rebuilt its reserves from the recoveries it made during the COVID-19 pandemic.
Total revenue rose 3 per cent in the quarter, to $8.53-billion, while expenses decreased 4 per cent to $5.3-billion.
Royal Bank of Canada (RBC)
Royal Bank of Canada raised its dividend as it reported a fourth-quarter profit of $4.22 billion, up from $3.94 billion in the same quarter last year.Sean Kilpatrick/The Canadian Press
- Earnings Q4 2024: $4.2-billion ($2.91 per share)
- Earnings Q4 2023: $3.9-billion ($2.76 per share)
- Adjusted EPS: $3.07 per share
- Analysts’ expectations: $2.99 per share (adjusted)
- Dividend: $1.48 per share
Royal Bank of Canada RY-T reported higher fourth-quarter profits that beat analysts’ estimates as the lender pulls in higher revenue as it integrates its takeover of HSBC Bank Canada.
RBC earned $4.2-billion, or $2.91 per share, in the three months that ended Oct. 31, compared with $3.9-billion, or $2.76 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $3.07 per share. That edged out the $2.99 per share analysts expected, according to Refinitiv.
For the full fiscal year, RBC’s acquisition of HSBC Bank Canada increased net income by $453-million.
The bank increased its quarterly dividend by 4 per cent to $1.48 per share.
In the quarter, RBC set aside $840-million in provisions for credit losses. That was higher than analysts anticipated, and included $640-million against loans that are unlikely to be repaid, based on models that use economic forecasting to predict future losses.
In the same quarter last year, RBC set aside $733-million in provisions.
Total revenue rose 19 per cent in the quarter, to $15.07-billion, driven by net interest income from the HSBC Canada takeover and higher volumes in personal and commercial banking. But expenses climbed 12 per cent to $9.02-billion, which the bank said was driven by added costs from integrating HSBC Canada, as well as ongoing technology investments, higher operating expenses and staff-related costs.
National Bank of Canada
National Bank of Canada raised its dividend as it reported its fourth-quarter profit rose compared with a year ago.Paul Chiasson/The Canadian Press
- Earnings Q4 2024: $955-million ($2.66 per share)
- Earnings Q4 2023: $751-million ($2.09 per share)
- Adjusted EPS: $2.58 per share
- Analysts’ expectations: $2.57 per share (adjusted)
- Dividend: $1.14 per share
National Bank of Canada NA-T reported higher fourth-quarter profit that topped analysts’ estimates as a boost in revenue helped offset larger provisions for loans that could default.
National Bank earned $955-million, or $2.66 per share, in the three months that ended Oct. 31, compared with $751-million, or $2.09 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $2.58 per share. That narrowly beat the $2.57 per share analysts expected, according to data from the London Stock Exchange Group.
The bank raised its quarterly dividend by 4 cents to $1.14 per share.
In the quarter, National Bank set aside $162-million in provisions for credit losses. That was higher than analysts expected, and included $145-million against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.
In the same quarter last year, National Bank set aside $115-million in provisions.
Total revenue climbed 15 per cent in the quarter to $2.94-billion as expenses fell to $1.59-billion.
Bank of Montreal (BMO)
Bank of Montreal’s fourth-quarter profit dropped in 2024 and missed analysts’ estimates.Carlos Osorio/Reuters
- Earnings Q4 2024: $2.3-billion ($2.94 per share)
- Earnings Q4 2023: $1.71-billion ($2.19 per share)
- Adjusted EPS: $1.90 per share
- Analysts’ expectations: $2.41 per share (adjusted)
- Dividend: $1.59 per share
Bank of Montreal BMO-T fourth-quarter profit dropped and missed analysts’ estimates by a wide margin as the lender boosted provisions for loans that could default.
BMO earned $2.3-billion, or $2.94 per share, in the three months that ended Oct. 31, compared with $1.71-billion, or $2.19 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $1.90 per share. That fell below the $2.41 per share analysts expected, according to London Stock Exchange Group.
BMO has grappled with higher provisions this year, in particular in its U.S. commercial loan portfolio. The lender expanded its U.S. operations last year by scooping by California-based Bank of the West.
The bank raised its quarterly dividend by 3 per cent to $1.59 per share.
In the quarter, BMO set aside $1.52-billion in provisions for credit losses which was higher than analysts expected. Provisions included $1.1-billion against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.
In the same quarter last year, BMO set aside $408-million in provisions.
Canadian Imperial Bank of Commerce (CIBC)
CIBC reported higher fourth-quarter profit and raised its dividend.Christopher Katsarov/The Globe and Mail
- Earnings Q4 2024: $1.88-billion ($1.90 per share)
- Earnings Q4 2023: $1.49-billion ($1.53 per share)
- Adjusted EPS: $1.91 per share
- Analysts’ expectations: $1.79 per share (adjusted)
- Dividend: $0.97 per share
Canadian Imperial Bank of Commerce CM-T reported higher fourth-quarter profit and raised its dividend, driven by stronger profit margins on loans and lower provisions against defaults in its Canadian and U.S. retail banking businesses.
The country’s fifth-largest bank earned $1.88-billion in the quarter that ended Oct. 31, or $1.90 per share, compared with $1.49-billion, or $1.53 per share, in the same quarter last year.
On an adjusted basis, CIBC said it earned $1.91 per share, beating analysts’ consensus estimate of $1.79 per share, according to Bloomberg.
CIBC increased its quarterly dividend to 97 cents per share, a rise of 7 cents or nearly 8 per cent, compared to the prior quarter.
The bank’s quarterly results show early signs that the strain on Canadian consumers and businesses from inflation and high interest rates could be nearing peak levels, with the potential to ease next year as rates have started to fall.
The bank reported provisions for credit losses of $419-million, or 23 per cent less than in the same quarter a year earlier. That was also less than the $547-million that analysts expected, as CIBC set aside lower amounts to cover potential loan defaults on loans that are still being paid back, as well as those that are in arrears. Much of that decrease came from lower provisions on commercial loans in the U.S.
The bank’s revenue rose 13 per cent to $6.62-billion, compared with a year earlier.
Toronto-Dominion Bank (TD Bank)
The TD logo is photographed in Toronto, Wednesday Dec. 4, 2024.Christopher Katsarov/The Globe and Mail
- Earnings Q4 2024: $3.6-billion ($1.97 per share)
- Earnings Q4 2023: $2.87-billion ($1.48 per share)
- Adjusted EPS: $1.72 per share
- Analysts’ expectations: $1.82 per share (adjusted)
TD Bank TD-T posted higher fourth-quarter profit, but missed analysts’ estimates as the lender set aside higher-than-expected reserves for loans that could default, and weaker results in its U.S. business.
TD earned $3.6-billion, or $1.97 per share, in the three months that ended Oct. 31. That compared with $2.87-billion, or $1.48 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $1.72 per share. That fell below the $1.82 per share analysts expected, according to data from the London Stock Exchange Group.
In October, the bank pleaded guilty to conspiracy to commit money laundering and must pay a penalty of more than $3-billion and address strict requirements to resolve the issues.
In its fourth-quarter earnings results, Canada’s second-largest lender said that it is suspending its medium-term financial targets as it focuses on fixing its risk and controls infrastructure.
TD is suspending its previously set targets for 7 to 10 per cent growth in adjusted earnings per share, 16 per cent return on equity and positive operating leverage. The lender plans to update its medium-term targets in the second half of 2025.
The bank’s share price sank 7 per cent this year, weighed down by the uncertainty prompted by the investigation by U.S. regulators.
TD’s large U.S. footprint has been strapped with a cap on its assets, significantly restricting its growth in its top growth market. In its earnings results, the bank added that a TD entity has been disqualified from acting as an investment adviser or underwriter for investment companies in the U.S.
In the quarter, TD set aside $1.1-billion in provisions for credit losses. That was higher than analysts anticipated, and included $1.15-billion against loans that the bank believes may not be paid off, based on models that use economic forecasting to predict future losses.
In the same quarter last year, TD had set aside $878-million in provisions.