Bank of Nova Scotia and Bank of Montreal, Canada's first two lenders to report third-quarter results, beat analysts' estimates after posting profit fueled by record results in Canadian banking.
Scotiabank said net income for the period ended July 31 fell 14 percent to C$1.77 billion ($1.68 billion), or C$1.37 a share, from C$2.05 billion, or C$1.69, a year earlier when the company had a C$614 million one-time gain from selling its Scotia Plaza building in Toronto. Bank of Montreal profit rose 17 percent to C$1.14 billion, or C$1.68 a share, from a year earlier, the Toronto-based lender said today in a statement.
Both banks produced profit bolstered by record consumer lending and wealth-management gains. Scotiabank's Canadian consumer-lending business was aided by its C$3.1 billion takeover of ING Groep NV's Canadian business in November, which added about 1.8 million customers. The lenders also set aside less money for bad loans.
"It's a steady-as-she-goes quarter," Bob Decker, a fund manager with Aurion Capital Management in Toronto, which manages about C$6 billion including bank shares. "It's a Goldilocks environment for bankers when loan-loss provisions are sustainably low like this and they can focus on costs and delivering services."
Scotiabank, Canada's third-largest lender by assets, set aside C$314 million for bad loans, down from C$402 million a year earlier. Bank of Montreal, the fourth-largest lender, reserved C$77 million in credit provisions, down from C$237 million a year ago.
Scotiabank fell 0.5 percent to C$58.40 at 9:33 a.m. in Toronto trading, while Bank of Montreal gained 0.2 percent to C$65.89.
Bank of Nova Scotia's excluding some items was C$1.32 a share, the Toronto-based lender said today in a statement, beating the C$1.31 average estimate of 13 analysts surveyed by Bloomberg. Revenue was little changed at C$5.52 billion. The lender raised its quarterly dividend 3.3 percent to 62 cents a share.
Profit from Scotiabank's Canadian consumer-lending business rose 13 percent to a record C$590 million, lifted by its ING acquisition, while earnings from international banking climbed 12 percent to C$494 million. Wealth-management and insurance profit rose 15 percent to C$327 million, while earnings from its global banking and markets business slipped 3 percent to C$386 million, Scotiabank said.
Bank of Montreal said its adjusted earnings, which exclude some items, were C$1.68 a share, beating the C$1.53 average estimate of 15 analysts surveyed by Bloomberg. The bank posted growth across all its major businesses, including record profit in Canadian banking and wealth management.
"Canadian retail businesses were particularly strong in the quarter with both personal and commercial banking Canada and traditional wealth earnings reaching new highs," Chief Executive Officer William Downe, 61, said in the statement.
Bank of Montreal's Canadian consumer-banking profit rose 8.3 percent to C$497 million on higher balances and fees, 10 percent loan growth and lower provisions for credit losses, the company said. Profit from its Chicago-based BMO Harris Bank rose 10 percent to C$153 million on lower provisions and cost- cutting.
Bank of Montreal has increased earnings from its U.S. unit since doubling deposits and branches through the July 2011 takeover of Wisconsin-based lender Marshall & Ilsley. The C$4.1 billion acquisition was Bank of Montreal's largest in its 195- year history.
Profit at the firm's private-client group, which includes insurance and mutual funds, doubled to C$218 million from a year earlier on an increase in assets under management.
The BMO Capital Markets investment-banking unit profit rose 12 percent to C$280 million, with increases in trading and fees from advising on stock sales.
National Bank of Canada reports results tomorrow, followed by Canadian Imperial Bank of Commerce, Royal Bank of Canada and Toronto-Dominion Bank on Aug. 29. The country's six biggest banks are expected to post average per-share profit growth of 3.3 percent excluding some items, according to Robert Sedran, an analyst with CIBC.