Canada’s big three banks all beat quarterly estimates

Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce all topped profit estimates despite their exposure to the embattled oil and gas sector. Gross impaired loans to the oil and gas sector increased at all three lenders, but each saw strong results in other sectors.


CIBC reported a 3.5% increase in quarterly profit, helped by growth in its retail and business banking divisions. Net income for the bank was $941 million, compared with $911 million for the second quarter a year ago. CIBC reported diluted earnings per share of $2.35 per share, up $0.10 from Q2’15.

The bank set aside $284 million to cover bad loans in the quarter, 44% more than a year earlier on an adjusted basis. “This increase was primarily driven by higher losses in the oil and gas sector, and higher write-offs and bankruptcies in the card and personal lending portfolios,” CIBC said in its quarterly release.


Canada’s largest bank by market value said net income increased $126 million, or 5%, from last quarter “mainly reflecting higher earnings in Wealth Management, Insurance, Capital Markets and Personal & Commercial Banking,” the bank said in its quarterly release.

Royal Bank reported net income of $2.6 billion, up 3% from Q2’15, as well as diluted EPS of $1.66, down $0.02 from last year, but still beating analysts’ average estimate of $1.64 per share, reports BNN.

The bank reported total gross impaired loans of $3.7 billion, up $583 million, or 19%, from the first quarter of the year. This was “largely due to an increase in impaired oil & gas loans,” the bank said.


Toronto-Dominion Bank reported adjusted earnings of $2.3 billion, up 5% from the second quarter of last year.  Diluted EPS amounted to $1.07, compared with $0.97 last year.

TD reported adjusted net loss of $120 million, compared to a net loss of $139 million in the second quarter of last year. “Other Items” played a larger role in the banks financials this quarter due to “higher revenue from treasury and balance sheet management activities and positive tax items recognized during the current quarter, partially offset by higher provisions for incurred but not identified credit losses due to an increase in portfolio risk, credit deterioration in exposures impacted by low oil and gas prices, and volume growth within the Canadian Retail and Wholesale Banking loan portfolios,” the bank said.

Other major Canadian banks are also expected to set aside more funds to cover bad loans this quarter as the oil and gas industry struggles with its debt burden and low oil prices.

Bank of Montreal said bad loans to energy companies more than doubled in the second quarter and that it set aside more funds to cover losses.

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