Two of Canada’s biggest banks said Wednesday that their second-quarter profit was essentially cut in half, as the shock of COVID-19 forced both the Royal Bank of Canada and the Bank of Montreal to set aside massive piles of cash for possible loan losses.
RBC reported net income of $1.48 billion for the quarter ended April 30, which was down by almost $1.75 billion, or 54 per cent, from a year earlier. BMO, meanwhile, reported that net income fell approximately 54 per cent year-over-year for the same three months, to $689 million.
The driving force behind the drop in profit at the two Toronto-based banks was a surge in the amount of money they reserved in case of loans turning sour. As RBC noted, “the unprecedented challenges brought on by the COVID-19 pandemic led to increased provision for credit losses.”
Total provisions for credit losses at RBC were $2.83 billion for the second quarter, an increase of $2.4 billion from last year. Total provisions for credit losses for BMO’s second quarter were around $1.1 billion, well up from $176 million a year earlier, when the bank said it also realized a large recovery on a U.S. commercial loan.
“While COVID-19 has had a meaningful impact on the bank’s earnings in the current quarter, including increased provisions for expected future loan losses, lower revenues in our market sensitive businesses and higher deposit and loan balances, the bank’s operational performance remains solid and we are committed to supporting our customers and communities through the pandemic and into the future,” BMO said in its report to shareholders.
On a per-share basis and adjusted for certain items, such as acquisition-related costs at BMO, the earnings at the two banks were below what analysts had been expecting.
RBC’s adjusted diluted earnings per share were $1.03, down by 54 per cent year-over-year, and below the $1.54 consensus of banking analysts. BMO reported adjusted earnings per share of $1.04, which was down 55 per cent and below the $1.14 analyst consensus.
While the two banks took a hit in the second quarter, they both remained profitable overall, and some of their business lines fared better than others.
RBC’s personal and commercial banking business reported net income of $532 million, which was down 66 per cent from a year ago because of higher provisions for credit losses on loans that are still technically being paid back, and because of lower interest rates, among other things. Yet RBC’s insurance business booked net income of $180 million, which was up 17 per cent, due mostly to what the bank said was a “higher favourable investment-related experience” and new longevity reinsurance contracts.
“The miss versus our forecast was attributable to higher (provisions for credit losses) offset by a variety of factors,” National Bank Financial analyst Gabriel Dechaine said in a note on RBC.
At BMO, the bank’s capital-markets unit recorded a net loss of $74 million, as its loan-loss provisions surged and both trading and investment and corporate banking revenue fell. However, BMO’s U.S. personal and commercial banking business saw its earnings before provisions and taxes shoot up 12 per cent year-over-year, to US$454 million, as both revenue and loan growth were up.
“While (provisions for credit loss) were below Street expectations, the miss was driven by a net loss in BMO Capital Markets which included negative impacts on equity linked notes,” Eight Capital analyst Steve Theriault wrote in a note on Bank of Montreal.
• Email: gzochodne@nationalpost.com | Twitter: GeoffZochodne
https://news.google.com/__i/rss/rd/articles/CBMif2h0dHBzOi8vYnVzaW5lc3MuZmluYW5jaWFscG9zdC5jb20vbmV3cy9mcC1zdHJlZXQvcmJjLXByb2ZpdC1wbHVuZ2VzLTU0LWluLXVucHJlY2VkZW50ZWQtY2hhbGxlbmdlcy1vZi10aGUtY29yb25hdmlydXMtcGFuZGVtaWPSAYMBaHR0cHM6Ly9idXNpbmVzcy5maW5hbmNpYWxwb3N0LmNvbS9uZXdzL2ZwLXN0cmVldC9yYmMtcHJvZml0LXBsdW5nZXMtNTQtaW4tdW5wcmVjZWRlbnRlZC1jaGFsbGVuZ2VzLW9mLXRoZS1jb3JvbmF2aXJ1cy1wYW5kZW1pYy9hbXA?oc=5
2020-05-27 17:19:00Z
52780813021410
Tidak ada komentar:
Posting Komentar