Canada banks surprise with dividends and big profits

Thu Aug 30, 2012 11:13am EDT
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By Cameron French

TORONTO (Reuters) - Three of Canada's top banks raised their dividends after reporting stronger-than-expected third-quarter profits on Thursday, as Canadians continued their robust borrowing habits despite high debt levels and fears of a housing slowdown.

The dividend increases by Royal Bank of Canada (RY.TO: Quote), Toronto-Dominion Bank (TD.TO: Quote) and Canadian Imperial Bank of Commerce (CM.TO: Quote) come on the heels of similar moves by Bank of Montreal (BMO.TO: Quote) and Bank of Nova Scotia (BNS.TO: Quote) earlier this week, meaning Canada's top five banks have all lifted payouts this quarter.

Analysts had expected at least two dividend increases, but few expected more than three.

RBC, the country's largest bank, unexpectedly lifted its payout by 5 percent to 60 Canadian cents.

That came on the back of a 73 percent rise in net profit that, along with a 42 percent profit gain at CIBC, had some observers shaking their heads, given the results came in what's considered a challenging profit environment.

"These headlines are just out of sight," said John Kinsey, a portfolio manager at Caldwell Securities in Toronto.

Excluding one-time items and discontinued operations, RBC's profit rose a more modest 18 percent to C$2.0 billion against a weak quarter a year earlier, while adjusted profit was C$1.31 a share, topping analysts' estimates of C$1.18 a share.

TD, Canada's No.2 bank, posted a 14 percent rise in net income to C$1.7 billion, and an adjusted profit of C$1.91 a share, ahead of estimates of C$1.84 a share.   Continued...