TORONTO Aug 28 Toronto-Dominion Bank
and Canadian Imperial Bank of Commerce reported higher
third-quarter earnings on Thursday, extending a trend of buoyant
capital markets boosting investment banking and trading profits
at the country's big lenders.
Both banks posted earnings per share above estimates, though
CIBC shares fell 2.5 percent, even as TD's stock outperformed
its Canadian peers.
"It's a quality beat (for TD) in my book. I think if you had
to do a comparison between the two, it was just a little bit
stronger results out of TD. CIBC (had a) little bit of weakness
in retail and business banking," said Tom Lewandowski, a
financial services analyst for Edward Jones, who rates TD a
"buy" and CIBC a "hold."
TD, Canada's second-largest lender, said net income rose to
C$2.1 billion ($1.93 billion) in the quarter ended July 31, from
C$1.52 billion a year earlier.
Excluding special items, earnings were C$1.15 a share.
Analysts expected C$1.09 per share, according to Thomson Reuters
TD's stock slipped 0.4 percent to C$57.59 in Toronto, less
than the broader 0.8 percent drop among financial service
Profits at TD's Canadian retail arm jumped 54 percent to
C$1.4 billion from a year earlier, when its insurance operation
was hit with heavy claims from floods in Ontario and Alberta.
The division also benefited from the purchase of part of the
lucrative Aeroplan Visa credit card portfolio from CIBC.
The pace of lending growth in Canada has slowed, something
the bank has anticipated for a number of years and viewed as
healthy, but is unlikely to slip further in the near term, said
Colleen Johnston, TD Bank's chief financial officer.
Wholesale banking income, which includes the trading,
investment banking and advisory businesses, rose 46 percent to
C$216 million, boosted by "robust" capital markets and trading
activity, the bank said.
CIBC WHOLESALE BANKING PROFIT JUMPS
Strong capital market earnings also lifted results at CIBC.
Canada's 5th largest lender said net income rose to C$921
million from C$878 million a year earlier.
Adjusted earnings per share were C$2.23. Analysts looked for
C$2.21 per share. Even so, its stock fell 2.7 percent to
Net income at its wholesale banking unit rose 32 percent to
C$282 million. It benefited from increased financial markets
activity, including fees from the initial public offering of
PrairieSky Royalty Ltd.
Profit at its wealth management arm rose 19 percent to C$121
million, with assets under management boosted by mutual fund
sales and a jump in Canadian and U.S. stock markets to record
But profit at CIBC's retail and business banking arm slipped
4 percent to C$589 million, hurt by a drop in credit card
revenue from the Aeroplan Visa credit card.
Lewandowski of Edward Jones said going forward, Canadian
banks were likely to invest more in their wealth management and
wholesale banking arms to offset slower lending growth at their
core retail banking operations.
While this would offer upside if financial markets continue
to strengthen, it also makes them more vulnerable to downturns.
"Higher earnings volatility going forward is probably the
name of the game for a lot of these Canadian banks," he said.
(Editing by Jeffrey Benkoe)