Royal Bank, CIBC, TD Bank miss analyst estimates

With credit markets on the mend and the economy humming again, three of Canada’s big banks posted results for the second quarter sharply up from a year ago but still fell below analyst expectations.

For the three months ended April 30, Royal Bank of Canada reported net income of $1.329-billion or 88 cents per share, compared to a loss of $50-million last year

or 7 cents a share, that included a $1 billion goodwill impairment charge for losses in the bank’s U.S. operations. Core cash earnings per share, which include the amortization of intangibles, came in at 94 cents. Analysts on average were expecting a per-share profit of $1.09, according to Thomson Reuters I/B/E/S.

Royal Bank said the strengthening of the Canadian dollar cut revenue by $534-million, net income by $82-million and per-share earnings by 6 cents. While provisions for credit losses, or the amount of money set aside to cover bad loans, fell 48 percent to $504 million from a year earlier, they rose $11 million, or 2 percent, from last quarter.

Canadian Imperial Bank of Commerce had a profit of $660-million or $1.59 a share compared with a loss of $51-million or 24 cents in the same period last year. Adjusted EPS of $1.46 a share missed consensus analyst expectations of $1.50 a share, according to a survey by Thomson Reuters.

It was the CIBC’s biggest profit since the fourth quarter of 2007.

“Core retail banking income of $492 million was slightly below our $500 million estimate driven by lower-than-expected revenues partially offset by lower expenses. Reported YoY retail revenue growth of 5% was hurt by lower treasury allocations and a stronger Canadian dollar compared to a year ago,” said Andre-Philippe Hardy analyst at RBC Capital Markets. Mr. Hardy added core capital markets earnings were also below his estimates as underwriting and advisory fees declined faster than forecast during the quarter.

Toronto Dominion Bank had a profit of $1.176-billion or $1.30 a share in the second quarter ended April 30, compared with$545 million, or 59 cents a share, in the same period a year earlier. Analysts on average were expected a per share profit of $1.38, according to Thomson Reuters I/B/E/S.

“Although difficult to determine what specific market expectations were, we believe that TD’s results on balance were not bad. While we were disappointed that TD was unable to meet our expectations, particularly against BMO’s results yesterday, we note that the miss does not appear to be as significant as Royal’s or CIBC’s.”

John Aiken, Barclays Capital.

On Wednesday, Bank of Montreal reported its highest quarterly profits ever, well ahead of analyst estimates.

With files from Reuters.

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