Canada's banks beat expectations
By Andrea Hopkins
TORONTO (Reuters) - Four of Canada's largest banks reported stronger-than-expected results on Thursday even as they set aside more money to cover bad loans, sending shares for three of the four higher.
Toronto-Dominion Bank, Bank of Nova Scotia and National Bank of Canada all notched results that were slightly higher than analysts had expected, and their shares climbed in early afternoon trade.
Core earnings at Canadian Imperial Bank of Commerce also beat estimates, but its results were marred by a raft of writedowns and observers worried the nation's fifth-largest bank had lost momentum in its key retail operations.
Overall, analysts said the banks continued to outshine global competitors, with strong capital cushions and success in the kind of "plain vanilla" consumer and business banking the lenders are counting on to overcome rising loan problems.
"Each bank had their area of strength or weakness in the quarter, but overall I think the bar was set very low, based on expectations for sharp increases in provisions to loan losses," said Edward Jones analyst Craig Fehr.
The amount of money set aside to cover bad loans surged at all four banks -- as well as at the Bank of Montreal, which reported its results on Wednesday -- and the credit losses are expected to be a headwind for the rest of 2009 as consumers struggle to pay bills amid rising unemployment.
TD, National and CIBC all reported long lists of one-time charges on credit and market losses in the second quarter, which ended April 30.
While the writedowns were not unexpected, given market volatility early in the year, which reduced the value of investments and assets, Dundee Securities analyst John Aiken said the volume and size of the charges were a little surprising. Continued...