Banks have mixed Q2 results
Geoffrey Blain
Issue date: 6/9/09 Section: Business
In the last week of May, all of Canada's Big Six banks announced their second quarter results with some surprising and some disappointing results.
All the banks tried to shed light on the positive aspects of their business - specifically growth in the personal banking divisions - as a sign that the mediocre performances are merely a result of unavoidable exposure to fluctuating security devices in their institutional portfolios.
Analysts and economists had eagerly been anticipating the announcements because the performance of the banks provide some very in-depth insight into the state of the Canadian economy and can provide some clear evidence as to when a recovery can be expected. It was widely anticipated that the banks would make improvements relative to the results of the first three months of 2009 and Q4 of 2008.
Canadian Imperial Bank of Commerce (CIBC) reported a net loss of $51 million, or 24 cents a share, a vast improvement from the $1.1 billion loss that was recorded for the same period last year. CIBC cited exposure to toxic credit investments for the loss, reporting a writedown of $475 million on derivatives and other securities that have greatly fallen in value since the credit crunch began.
Royal Bank of Canada, Canada's largest bank, announced results similar to CIBC, reporting a net loss of $50 million, or seven cents a share, as the bank took a goodwill charge which had been previously announced.
"The environment remains challenging, but our company is strong and we are taking advantage of opportunities in the marketplace," said RBC chief executive Gord Nixon.
However, not all the banks found themselves in the red.
Bank of Nova Scotia released its results, a net income of $872 million, or 81 cents a share. Although beating market expectations, Scotiabank's profit decreased 11 per cent from the same period last year. Sticking to the trend, Scotia allowed for poorly performing loans by writing down $60 million for what it called a "sectoral allowance" regarding the bank's exposure to auto loans that went bad.
All the banks tried to shed light on the positive aspects of their business - specifically growth in the personal banking divisions - as a sign that the mediocre performances are merely a result of unavoidable exposure to fluctuating security devices in their institutional portfolios.
Analysts and economists had eagerly been anticipating the announcements because the performance of the banks provide some very in-depth insight into the state of the Canadian economy and can provide some clear evidence as to when a recovery can be expected. It was widely anticipated that the banks would make improvements relative to the results of the first three months of 2009 and Q4 of 2008.
Canadian Imperial Bank of Commerce (CIBC) reported a net loss of $51 million, or 24 cents a share, a vast improvement from the $1.1 billion loss that was recorded for the same period last year. CIBC cited exposure to toxic credit investments for the loss, reporting a writedown of $475 million on derivatives and other securities that have greatly fallen in value since the credit crunch began.
Royal Bank of Canada, Canada's largest bank, announced results similar to CIBC, reporting a net loss of $50 million, or seven cents a share, as the bank took a goodwill charge which had been previously announced.
"The environment remains challenging, but our company is strong and we are taking advantage of opportunities in the marketplace," said RBC chief executive Gord Nixon.
However, not all the banks found themselves in the red.
Bank of Nova Scotia released its results, a net income of $872 million, or 81 cents a share. Although beating market expectations, Scotiabank's profit decreased 11 per cent from the same period last year. Sticking to the trend, Scotia allowed for poorly performing loans by writing down $60 million for what it called a "sectoral allowance" regarding the bank's exposure to auto loans that went bad.
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