Big 5 banks beat Q2 expectations with strong international growth

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.

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“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.

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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.”

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Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.