Canadian banks beat estimates on strong loans

Thu Mar 1, 2012 6:32pm EST
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By Cameron French

TORONTO (Reuters) - Strong mortgage lending helped drive quarterly profits above expectations at three of Canada's big banks, allowing the country's two biggest lenders to raise dividends and showing that Canadian consumers are still borrowing in droves.

Shares of top lenders Royal Bank of Canada and Toronto-Dominion Bank surged on the news of the higher lending, which follows warnings from federal officials that consumer debt levels are dangerously high.

National Bank of Canada, the country's sixth-largest bank, released its results after markets closed, and was the only one of the three to not raise its dividend.

"It seems to be that at today's low level of interest rates there's additional capacity for lending to households, and that the banks are looking to fill it," said Peter Routledge, an analyst at National Bank Financial.

Net income from continuing operations at RBC, Canada's largest bank, eased by 6 percent to C$1.88 billion ($1.91 billion), or C$1.23 a share, from C$2.00 billion, or C$1.31 a share, a year earlier.

The result excluded an additional C$21 million loss from RBC's U.S. retail unit, which it agreed to sell last year. That deal is expected to close on Friday.

Excluding other items, profit was C$1.25 a share, topping analysts' forecasts for a profit of C$1.13.

At TD Bank, net income was C$1.48 billion, or C$1.55 a share, down 5.1 percent from C$1.56 billion, or C$1.67 a share, a year earlier.   Continued...

A Royal Bank of Canada (RBC) sign is seen in downtown Toronto, March 3, 2011. REUTERS/Mark Blinch