Banks Reduce Risks and Raise Revenues

Published: May 27th 2010
in Economics » Local

Bank of Canada
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The three main big banks in Canada published their results for the second quarter, sharply up from a year ago.


CIBC presented a net income of $660 million for the second quarter, ending on April 30, 2010. This was compared to a net loss of $51 million for the same period last year. It was the CIBC's biggest profit since the fourth quarter of 2007.


Credit quality continued to improve during the second quarter. Provision for credit losses of $334 million was down from $365 million in the prior quarter, representing the lowest level of provisions since the second quarter of 2009. The decline was primarily due to lower bankruptcies and write-offs in credit cards.


"In summary, CIBC's core businesses performed well this quarter," says Gerry McCaughey, CIBC President and Chief Executive Officer. "Revenue growth in our retail business was its highest level in more than two years, credit quality continued to improve in line with the economic recovery in Canada, and we reduced risk in our structured credit run-off portfolio. Our capital position also remained strong."


Toronto Dominion Bank’s second quarter financial highlights, compared with the second quarter a year ago reported diluted earnings per share at $1.30, compared with $0.59 and a profit of $1.176-billion. This change was compared to $545 million.


"We're continuing to build on our momentum with a strong second quarter that saw a second consecutive record profit for TD Canada Trust and double-digit growth rates for all of our businesses," said Ed Clark, TD's President and Chief Executive Officer. "Wholesale Banking earnings are normalizing as we have expected, and our U.S. operations delivered improving results despite an economic picture that remains less robust than what we're seeing in Canada. We also saw the lowest level of loan losses in six quarters across the board."


Royal Bank of Canada today reported net income of $1,329 million for the second quarter ending on April 30, 2010. Last year, it reported a net loss of $50 million largely reflecting a goodwill impairment charge of $1 billion. Excluding the goodwill impairment charge, net income was up $379 million, or 40 per cent from last year driven by strong results across most businesses, continued stabilization of credit quality, effective cost management and a general improvement in market and economic conditions. The strengthening of the Canadian dollar had a significant impact on the financial results compared to last year, reducing revenue by $534 million, net income by $82 million and EPS by $.06, most notably in the Capital Markets and Wealth Management segments.


Total PCL of $504 million decreased $470 million or 48% from a year ago and increased $11 million or 2% from last quarter. There was a general provision of $27 million in the current quarter related to our U.S. banking commercial and retail portfolios. Credit quality has generally improved from the prior year and quarter reflecting stabilization of asset quality and improvements in economic conditions.

Related articles: (banks, revenues, CIBC, Royal, TD)
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