All of Canada’s Big Five banks delivered second-quarter profits that beat expectations, earning a collective $10.6 billion—up nearly 11% from a year ago.
Canada’s biggest banks also handily beat analyst estimates for adjusted profits, brushing off concern about the impact of a cooling real estate market amid tighter mortgage lending guidelines.
“The market is in various stages of worry about the outlook for the mortgage market in particular, but the results themselves seem to indicate that a lot of that worry is misplaced,” said Meny Grauman, an analyst with Cormark Securities in Toronto.
The banks generated strong earnings on both sides of the border. Further, international growth was a bright spot for the Canadian lenders—and a big contributor to the collective $10.6 billion in net income attributable to shareholders.
BMO on Wednesday said its U.S. personal and commercial banking division saw net income increase 46% to $348 million for the quarter. The Canadian Imperial Bank of Commerce saw an even bigger increase of 431%, helped by its acquisition of Chicago-based PrivateBancorp in June last year.
Profits at TD Bank’s U.S. retail arm rose 16%, while Royal Bank’s U.S. wealth management unit, which includes Los Angeles-based City National, saw a 25% jump. Scotiabank, which has focused its international expansion in Mexico, Peru, Chile and Colombia, saw net income at its international banking arm increase 14% to $675 million.
National Bank of Canada earned $547 million or $1.44 per diluted share for the quarter ended April 30, up from $484 million or $1.28 per diluted share in the same quarter last year.
“We’re seeing a lot of good contribution from their U.S. and international businesses,” said Robert Colangelo, senior vice-president of Canadian banking and financial institutions at ratings agency DBRS. “Those seem to be the platforms that are taking off.”