Net income for Canadian corporations was down sharply in Q1

By James Langton | June 9, 2020 | Last updated on June 9, 2020
2 min read
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Canadian corporate profits dropped in the first quarter, but the real impact of the Covid-19 outbreak has yet to register in the data, Statistics Canada says.

According to the latest StatsCan data, Canadian corporations reported net income before taxes of $74.3 billion in the first quarter. This represented a drop of nearly 40%, down by $46.5 billion, from the fourth quarter of 2019.

Compared with the first quarter of 2019, net income for Canadian corporations was down 28%.

The decrease in corporate profits was primarily driven by the non-financial sector, StatsCan said, as profits for these companies fell by $35.3 billion from the fourth quarter to $49.4 billion.

“Oil and gas extraction and support activities led the decline, reporting a net loss before taxes of $17.2 billion,” amid lower oil prices, it said.

The financial sector also saw net income decrease by $11.2 billion to $24.9 billion.

While profits dropped in Q1, StatsCan noted that the pandemic had little impact on first-quarter results as provincial shutdowns were imposed only in the last two weeks of March.

“However, these data will provide a valuable benchmark on how Covid-19 has affected the financial health of all areas of the economy, ranging from the banking sector and the housing market, to manufacturing and retail trade,” it said.

In a separate release, StatsCan said that issuance of debt securities by Canadian corporations and governments surged to $97 billion in the first quarter, led by the banks and the federal government.

“The Government of Canada’s economic response plan to support enterprises and households impacted by the Covid-19 pandemic resulted in an increased need for borrowing in March,” it said.

In addition to the net issuance activity, currency moves helped drive an overall $190 billion increase in outstanding debt to $4.6 trillion during the first quarter.

The banks issued a net $66.2 billion of debt in the first quarter, primarily covered bonds ($57.1 billion), “in response to Bank of Canada actions and measures to support the Canadian financial system and overall market liquidity conditions during the Covid-19 pandemic,” StatsCan said.

Conversely, non-financials recorded $0.7 billion in net debt retirement, as bond redemptions exceeded new borrowing in the quarter.

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James Langton

James is a senior reporter for and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.