RBC, Scotiabank top estimates on loans, wealth management

Fri Dec 2, 2011 3:54pm EST
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By Cameron French

TORONTO (Reuters) - Royal Bank of Canada's (RY.TO: Quote) shares jumped nearly 4 percent on stronger-than-expected fourth-quarter earnings, while Bank of Nova Scotia (BNS.TO: Quote) came under pressure despite also topping analysts' estimates.

Strong loan growth and insurance profits drove RBC to a fourth-quarter profit of C$1.6 billion ($1.58 billion), up 43 percent from a year ago, despite a drop in capital markets-related income.

"A great quarter for Royal, much better than we thought," said Peter Routledge, an analyst at National Bank Financial.

Scotiabank earned C$1.24 billion, up 10.7 percent on the year, due largely to its acquisition of DundeeWealth, which boosted wealth management returns.

But like Toronto-Dominion Bank (TD.TO: Quote) and Canadian Imperial Bank of Commerce, (CM.TO: Quote) which topped estimates with quarterly results only to see their shares fall on Thursday, Scotiabank stock received a rough ride in early trading.

Routledge said the stock move underscores the uncertainty surrounding the banks, which despite record profits this year, are facing a cloudy future due to low interest rates, high consumer debt levels, and Europe's debt crisis.

"It's all macro right now," he said.

Both banks acknowledged the difficulties ahead, as Scotiabank said it expected earnings per share growth of 5-10 percent for 2012, below the 7-12 percent target range the bank had set for 2011.   Continued...