After TD Bank and Royal Bank (RY) reported results, Scotia (BNS), CIBC, and Bank of Montreal (BMO) posted quarterly earnings last week. Despite weak results, the share price rebounded.
Scotia Bank posted Q3 earnings of $1.73, down from $2.10 last year. Its provision for credit losses, or PCL, increased, doubling from $412M last year to $819M. On the conference call, the bank said it aims to improve its loan-to-deposit ratio.
CIBC posted weak Q3 results due to an increase in PCL. It also took a tax charge and an acquisition-related amortization. PCL Roseto $736 million, up from $243 million last year. Losses from real estate mortgages are on the rise for all banks.
BMO stock bounced back, rising 3.45% last week. It posted an adjusted return on equity of 11.7%, compared with 13.7% previously. Its PCL nearly tripled from $136M to $492M. Its earnings rose by 22%, driven by record results in Canadian Personal and Commercial Banking.
Your Takeaway
Banks are bracing for losses from residential real estate. This will continue as long as interest rates are high. Expect the bank stocks to trade in a range for a while longer.
