Banks top profit forecasts despite charges
By Jeffrey Hodgson
TORONTO (Reuters) - Three of Canada's largest banks reported quarterly profits on Thursday that were hit hard by market-related charges, but their shares rallied as underlying results excluding one-time items beat street expectations.
Royal Bank of Canada, the country's biggest lender, posted a 15 percent drop in quarterly profit as writedowns related to seized-up credit markets and other items cut earnings by C$646 million ($517 million).
Canadian Imperial Bank of Commerce said it returned to profit in its first quarter, even as it was hit by C$1.36 a share in losses, including a C$708 million loss tied to structured credit activities.
National Bank of Canada said its first-quarter profit fell 73 percent as it took charges of C$184 million related to the asset-backed commercial paper market, another victim of the global credit crunch.
"These were pretty messy quarters for them. There is some positivity that can be gleaned from this, and it's kind of a runoff of what we saw from TD yesterday, which is the banking franchises are still operating pretty well," said Craig Fehr, a financial services analyst at Edward Jones.
Toronto-Dominion Bank kicked off Canada's bank reporting season on Wednesday with stronger-than-expected results that boosted its stock and shares of other banks.
The World Economic Forum last year ranked Canada's banking system as the world's soundest. Conservative lending practices have helped it avoid the massive writedowns and losses that have driven many U.S. and European banks into insolvency.
"Market conditions continue to create opportunities for RBC given what has happened to a number of competitors around the world. We will continue to capitalize on our growing global reputation for strength and stability," Royal Chief Executive Gordon Nixon said during a conference call. Continued...