Some say summer is the best season. Others, winter. For Canadian bankers? This year, it’s earnings season.
What happened: Four of Canada’s largest banks — RBC, BMO, Scotiabank, and National Bank — all reported higher third-quarter profits this week. Of those four, National Bank was the odd one out, as the lender that didn’t beat analyst expectations.
- RBC, Canada’s largest bank, reported a 21% increase in profits compared to the year before, while BMO reported a 25% leap and Scotiabank reported a 32% jump.
- BMO is increasing the size of its share buybacks, while National Bank announced it would buy 2% of outstanding shares.
Why it matters: Throughout previous quarters, banks had set aside more money for loan loss prevention due to uncertainty around the tariff impact on the Canadian economy. But, as the CEO of BMO noted, that uncertainty appears to be on the decline, and profits are higher as a result.
- Banks are now less concerned about bolstering their rainy-day funds. For example, RBC earmarked $881 million last quarter, versus expectations of $1 billion.
Yes, but: While bank CEOs have so far expressed tempered optimism, the tariff uncertainty continues to weigh on their decisions. Coupled with a year that’s seen a weakening economy and steadily higher unemployment, there is an undercurrent of caution as banks head into the rest of the year.—GS