Williams Equity Research • 39 Comments
Wed, Feb. 24, 10:40 AM
- Royal Bank of Canada (RY -5.2%) posted a sizable earnings miss behind declines in investment banking and insurance profits.
- Energy, naturally, is also an issue, and the bank set aside $410M for bad loans, up 52% from one year ago. Impaired loans to oil and gas companies rose to $310M from $156M in FQ4 and just $5M one year ago.
- Bank of Montreal (BMO -3.3%), Scotiabank (BNS -3.9%), CIBC (CM -4%), TD Bank (TD -3.5%)
Dec. 1, 2015, 1:12 PM
- The Canadian banking sector is mostly known for being roughed up this year thanks to concerns over a bubbly housing market and the crash in natural resources prices, but it's enjoyed a decent bounce since late August.
- The move continues today following FQ4 results from Scotiabank and Bank of Montreal. After adjusting for some items, Scotiabank missed estimates, says Barclays' John Aiken, and he also questions the quality of BMO's beat, noting gains tied to an asset sale and recovery from a legal settlement.
- Bank of Montreal also tossed in a dividend hike and new buyback plan.
- BMO is higher by 1.5% on the session, and BNS by 0.1%. Reporting later this week: TD Bank (TD +1.2%), Royal Bank (RY +1.2%), and CIBC (CM +1.1%).
- Previously: BMO adds buyback to dividend hike and earnings beat (Dec. 1)
- Previously: Bank of Nova Scotia beats by C$0.03, misses on revenue (Dec. 1)
May 29, 2015, 2:25 PM
- The last of Canada's big six lenders to report FQ2 results, Bank of Nova Scotia (BNS +1.2%) beat estimates (as did the others), helped by strong action in capital markets. The bank also announced a 24M share buyback.
- “These results were on balance better than I would have expected a few weeks ago, however they’re not strong enough to really serve as much of a catalyst for the stocks,” says Edward Jones' Jim Shanahan. "The stocks are trading cheaper, but given a weaker loan growth outlook and weaker return profiles, that’s probably warranted.”
- RBC Capital is impressed enough with Scotiabank's results to upgrade to Outperform from Sector Perform.
- Checking the scorecard this week: BNS is up 1.2%, while CIBC (NYSE:CM) is down 1.8%, Royal Bank of Canada (NYSE:RY) is down 2.7%, Bank of Montreal (NYSE:BMO) down 3.9%, and TD Bank (NYSE:TD) 4.3%.
- YTD, Scotiabank also leads with just a marginal decline, while the other four lenders are down anywhere from about 8%-13%.
Jan. 30, 2015, 9:42 AM
- Citing the effect on business from falling oil prices and noting the Bank of Canada's worry over growth, Barclays downgrades TD Bank (TD -2.8%), RBC (RY -3.2%), BMO (BMO -3.3%), and Laurentian Bank (OTCPK:LRCDF) - all to Underweight from Equal Weight.
- Not downgraded, but also continuing to feel the chill in Canada's economy are Scotiabank (BNS -3.7%) and CIBC (CM -3.1%).
- Previously: Canadian GDP unexpectedly slips in November (Jan. 30)
Jan. 22, 2015, 7:26 AM
- Royal Bank of Canada (NYSE:RY) agrees to buy Beverly Hills-based City National Corporation (NYSE:CYN) - a private and commercial bank serving high net worth and commercial clients - in a deal valued at about $5.4B, or $93.80 per share. City National owners will receive $47.25 in cash and 0.7489 of a share of RBC for each share of CYN they own.
- RBC CEO Dave McKay: "In line with RBC's strategic goals, we believe this combination creates a powerful expansion platform for focused long-term growth in the country which we view as our second home market."
- Following the deal, RBC will combine its U.S. wealth management operation with City National, and the merged unit will be led by City National CEO Russell Goldsmith.
- The deal is expected to be accretive to EPS in the latter part of year 3 and accretive to earnings in year two.
- Closing is expected in Q4.
- CYN +5.7% premarket to $78.83
Dec. 10, 2014, 2:48 PM
- One of the Canadian banks' more reliable and profitable sectors for lending business is the stumbling oil industry, and another is the bubbly property sector.
- A check of last week's earnings reports finds the big Canadian banks do up to 20% of their lending to the resource sector, and borrowing plans are no doubt falling alongside the price of oil.
- The trouble in those areas come just as the banking sector looks to have put its Caribbean write-downs behind it. Scotiabank (BNS -2.9%) - which opened its first Caribbean branch in 1889 - said it would book a $451M charge , and CIBC (CM -2.4%) earlier this year expensed $543M related to the region. RBC (RY -3%) expects its remaining Caribbean operations to be profitable in 2015 after the sale of its Jamaican unit.
- Bank of Montreal (BMO -2.5%), TD Bank (TD -1.4%)
Dec. 2, 2014, 10:38 AM
- Bank of Montreal (BMO -2.1%) boosted the dividend and set a 15M share buyback, but missed estimates thanks to weak action in capital markets, with profit of $191M down 12% year-over-year thanks to a 21% decline in trading revenue to $186M. Underwriting and advisory fees, however, climbed 6.4% to $166M.
- "We are inclined to view the quarter as a neutral, given that BMO did beat our estimates in Canada [retail banking] and U.S. [retail banking], but EPS was below consensus."
- Royal Bank of Canada (RY -2.6%), Bank of Nova Scotia (BNS -1.4%), CIBC (CM -0.5%), TD Bank (TD -0.7%).
- Previously: BMO misses estimates, boosts dividend, sets buyback
Dec. 3, 2013, 11:29 AM
- The headlines for Bank of Montreal's (BMO -4.7%) results say "beat," but RBC calls it a big miss after stripping out a $0.19 tax security gain. This would put EPS at C$1.45 vs. expectations for C$1.58.
- KBW's Brian Klock agrees, and in fact strips out even more due to securities gains. He sees an operating number closer to $1.41, or a $0.17 miss. Particularly notable, says Klock, was a 10 basis point decline in net interest margin, and the big decline in U.S. banking profit (-28%).
- TD Bank (TD -1.5%), Scotiabank (BNS -1.9%), CIBC (CM -1.7%), RBC (RY -1.7%).
Feb. 16, 2012, 2:59 PM
Financial stocks (XLF +1.3%) rally to the head of the pack among S&P sectors after an early slump following Moody’s warning that it could make severe cuts to the ratings of big banks. Hopeful news out of Greece and strong U.S. data are taking priority; and hey, that's just one guy's opinion. BAC +4%, C +2.9%, JPM +1.5%, GS +1.2%, MS +0.8%, RY +0.3%.| Feb. 16, 2012, 2:59 PM
Nov. 29, 2011, 2:36 PM