Briefing

TD only Big Six bank to fall short of analysts’ predictions this quarter

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A drop in its U.S. and Canadian retail businesses dragged down the bank’s earnings, which rose 24 per cent in total compared to the same quarter last year. Increased non-interest expenses and more money for potential loan losses also dampened profits. Meanwhile, National Bank joined other major Canadian lenders in beating analysts’ profit estimates: the country’s sixth-largest bank posted a 12 per cent increase in adjusted net income. (Financial Post)

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Talking point: The two banks wrap what was a generally strong first-quarter for the Big Six on the heels of the worst year for Canadian banks since the financial crisis. Across the board, their earnings were boosted by strong growth in their capital markets divisions. That’s largely a reflection of the strength of the financial markets at the time, and doesn’t necessarily signal longer-term improvements. Banks are under more pressure to invest in technology and at a time when credit risk is growing amid low interest rates and threats of an economic slowdown. Between the strong profits this season, banks earnings showed signs of headwinds: CIBC took a $339-million restructuring charge mainly to cover severance packages for the 2,200-plus employees it’s laying off, and three of the Big Six—TD, Scotiabank and BMO—have set aside more money for anticipated credit losses.