Toronto-Dominion Bank and Canadian Imperial Bank of Commerce posted profits that beat analysts' estimates, helped by gains from their investment-banking units. National Bank of Canada matched estimates after posting a 20 percent earnings gain.
Toronto-Dominion, the country's second-largest lender, said net income for the period ended Oct. 31 was little changed at C$1.6 billion ($1.61 billion), or C$1.66 a share. CIBC, the fifth-biggest bank, said profit rose 13 percent to C$852 million, or C$2.02 a share. National, the No. 6 bank, had net income of C$351 million, or C$1.97 a share.
The three banks benefited from higher trading revenue and fees from advising companies on takeovers and arranging stock sales, helping counter rising provisions for bad loans. Royal Bank of Canada and Bank of Montreal also beat estimates, fueled by gains in investment banking and trading.
"Investment banking and trading were modestly better than expectations and the trends are positive," Stephen Carlin, head of equities at Aegon Capital Management Inc. in Toronto, which manages C$8.5 billion, said in a phone interview. "There's a slightly better economic environment. When you look at how things were a year ago, they were pretty darned ugly."
Toronto-Dominion earned C$1.83 a share on an adjusted basis, topping the C$1.81 a share average estimate of 15 analysts surveyed by Bloomberg. CIBC said it had adjusted earnings of C$2.04 a share, beating the C$1.99 a share average estimate of 16 analysts. National said it earned C$1.93 a share, matching the average estimate of 15 analysts surveyed by Bloomberg.
Toronto-Dominion fell 1.3 percent to C$81.51 at 9:49 a.m. trading in Toronto. CIBC fell 0.2 percent to C$80.37 and National fell 0.5 percent to C$77.41.
Toronto-Dominion set aside C$565 million for bad loans, 66 percent more than a year ago, while CIBC had C$328 million in provisions, a 7.2 percent increase. National's provisions fell 8 percent to C$46 million.
"In Canada we've reached a point where our consumer debt is looking more precarious than the U.S., and mortgages are getting tighter," Michael Sprung, president of Sprung & Co. Investment Counsel Inc. in Toronto, said in an interview. "Going forward, there's some headwinds our banks are going to face."
Toronto-Dominion also agreed to buy Epoch Investment Partners of New York for $668 million in cash.
"It's going to add to our Canadian capabilities, as well as our U.S. wealth story, and this is a very high-quality franchise," Chief Financial Officer Colleen Johnston said in a telephone interview.
Toronto-Dominion said Canadian consumer banking profit climbed 6.9 percent to C$806 million while U.S. consumer lending rose 7.1 percent to C$316 million.
"I think we're seeing very good numbers in the U.S., with more to come in 2013," Johnston said. The bank reiterated its goal of earning $1.6 billion in U.S. consumer banking profit by the end of next year.
Profit from its investment-banking unit rose 10 percent to C$309 million, driven by a 54 percent increase in underwriting and advisory fees and higher trading income.
The Toronto-based bank reiterated its medium-term earnings per share goal of 7 percent to 10 percent growth.
Canadian Imperial benefited from a 58 percent increase in profit at its investment-banking unit and gains in wealth management, offsetting a drop in earnings from consumer lending.
Consumer lending and business banking earnings fell 4.7 percent to C$569 million from a year ago, as the Toronto-based bank reorganized its business to shift away from using mortgage brokers in favor of selling home loans and other financial products through branches.
CIBC's "decision to exit the mortgage broker network and its impact on fourth quarter domestic retail loan growth could lead the market to conclude that it's earnings growth could be one of the slowest of the group next year," John Aiken, an analyst with Barclays Plc in Toronto, said in a note.
Wealth management profit was C$84 million, up from C$70 million in the year-earlier period, while the lender's investment banking business had profit of C$193 million, up from C$122 million a year ago, on a 26 percent surge in underwriting and advisory fees and a 41 percent increase in trading.
National said personal and commercial banking profit rose 7 percent to C$168 million on higher revenue from lending and credit cards. The lender's Financial Markets business, which includes investment banking, rose 57 percent to C$124 million, on higher underwriting and advisory fees and trading revenues. Wealth management earnings fell 10 percent to C$45 million.
The Montreal-based lender increased its quarterly dividend to 83 cents a share.