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A survey of responses from 8,337 retail banking customers over August and September by J.D. Power found America’s favourite bank is Canada’s second-largest lender. (Bloomberg)

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Talking point: For over a decade, TD has touted itself as “America’s most convenient bank.” It services over nine million customers through 1,250 locations in the United States, offering its U.S. customers digital banking “while excelling at branch service and online banking satisfaction,” J.D. Power said in a statement. Those qualities saw it beat out American competitors like JPMorgan, Capital One, Wells Fargo and Bank of America for the first time since the survey was launched in 2017. TD didn’t make it in the top 10 banks in the study’s previous years. Last month, it was designated a globally systemically important bank.

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Scotiabank raised dividends by three cents to 90 cents per share and saw two per cent overall profit growth, driven by a $262-million rise in international banking profit from 2018. BMO reported one per cent profit growth, did not adjust its dividend rate and put aside $306 million for credit losses, up from $186 million in 2018. (The Logic)

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Talking point: Scotiabank has the biggest overseas presence of the big six banks, and has recently focused on international expansion in four Latin American countries—Mexico, Chile, Colombia and Peru—including a $2.9-billion majority stake purchase of Banco Bilbao Vizcaya Argentaria in Chile, and a $130-million controlling stake acquisition in the Banco Cencosud in Peru. This focus seems to have paid off—international banking earnings are up 90 per cent from a year ago. Meanwhile, the bank is selling operations in nine Caribbean countries, and is engaged in a standoff with the prime minister of Antigua and Barbuda over the sale in the country. Meanwhile, BMO has focused on the U.S. for international growth: earnings in this division saw 1.1 per cent growth—that’s the slowest since the fourth quarter of 2017, and is largely driven by increased loan loss provisions. BMO CEO Darryl White also cited escalating trade tensions as a factor in the tepid results.

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Louis Vachon, the bank’s CEO, said it can’t find enough projects in Canada to meet its lending targets in renewable energy. Instead, the bank is financing projects in U.S. and Europe, Vachon said at the bank’s annual meeting. It has no plans to reduce lending to the oil and gas sector. (Globe and Mail)

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Talking point: The National Bank has had mixed results in financing green initiatives, which could help explain its conversatism on the file. It expects to lose money on a $10 million loan owed by Téo Taxi, a Montreal-based electric vehicle company that went bankrupt in 2018, after the company fumbled the development and roll-out of its core technology (the bank’s chances of getting their loan back could change if Pierre Karl Péladeau if successful in reviving Téo). “We have to lend based on the technology that is there,” Vachon told shareholders at the meeting. However, the bank may feel more pressure to make bold decisions on green financing  in the coming months and years, as investors and governments increasingly urge lenders banks to disclose, and grow, their sustainable financing.

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David Rozon, associate vice-president of technology banking for Ontario, is going to Scotiabank. Brent Layton, a managing director whose remit includes technology and sustainability banking, will join CIBC. (Globe and Mail)

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Talking point: National Bank’s technology division has lost a number of top employees in recent months as rivals are showing a greater interest in the tech sector. National Bank is still a key player when it comes to tech financing: the company co-led an equity raise by Shopify in 2019 and was a lead underwriter for Lightspeed’s IPO earlier this year. Competition in the space is heating up with BMO and CIBC in particular looking to sign more deals with tech companies. In August 2018, CIBC poached Eric Laflamme from National Bank to lead the Quebec region of its innovation banking division. The banks’ increasing interest in startup financing is bringing them head to head with Silicon Valley Bank, which got a license to operate in Canada in March. Earlier this month, CIBC got a US$55-million credit facility for Lightspeed, taking over a US$15-million credit facility that Silicon Valley Bank had been providing.

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Canada’s sixth-largest bank had $552 million in profit this year compared to $550 million in 2017. Earnings at its financial markets arm declined 17 per cent.  Meanwhile, Laurentian Bank will cut 10 per cent of its staff after profits dropped 33 per cent to $40.3 million in its first quarter. (Globe and Mail)

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Talking point: While the earnings of the big banks have been boosted by their presence in international markets—BMO and Scotiabank both reported growth overseas yesterday—the smaller financial institutions have been hurt by uncertain financial and capital markets.

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A group of Democratic and Republican senators plan to table a bill Thursday that would bar banks from processing “significant” transactions for foreign telecommunications firms that produce 5G technology and engage in industrial espionage. (Reuters)

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Talking point: The bill is directed at Huawei, if not exclusively. In a statement, Senator Chuck Schumer said, “It is time for the Trump administration to take swift and forceful action to block Huawei from accessing the U.S. financial system.” The law would restrict some international transactions with Huawei, since most payments are processed through U.S. banks. The bill comes as Washington tries to influence allies to ban the Chinese telecom from operating in their 5G networks. So far, it’s had mixed success: New Zealand and Australia have issued bans against the company, while the U.K. plans to allow the firm in parts of its networks; Canada’s decision, meanwhile, could still be months away.

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The bank lowered its overnight rate target by 50 basis points, from 1.75 per cent to 1.25 per cent. (The Logic)

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Talking point: The cut comes one day after the U.S. Federal Reserve reduced its rate by the same amount and G7 finance ministers and central bankers promised coordinated action to address the economic impact of COVID-19. This is Canada’s first rate cut since 2015, and is designed to reduce the “material negative shock” of the virus. However, the long-term economic impacts on the Canadian economy remain to be seen. Firms are adding COVID-19 risk to their earnings disclosures. Companies including GM Canada and Tim Hortons parent firm Restaurant Brands International are limiting corporate travel. Ottawa-based Shopify cancelled its upcoming conference, as has Toronto-based Vena Solutions, which was planning a 500-person conference in May.

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Users would be able to carry out transactions through the proposed payment platform in either the private Libra currency or in the digital equivalents of sovereign money, like the U.S. dollar or the euro. Facebook is also pushing back the release of its Calibra wallet from June to October, and may restrict the product to markets whose local currencies it supports. The social media giant said it is still committed to Libra; the non-profitLibra Association, which governs the project, said its goals and basic design principles have not changed. (The Information, Bloomberg)

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Talking point: Central banks and lawmakers have expressed concerns that if coins issued by private tech companies become popular, they could undermine countries’ sovereignty and governments’ ability to influence the economy through monetary policy. Calibra head David Marcus has denied that Libra is meant to replace national currencies. Accepting digital versions of dollars and euros is one way Libra can try to minimize that threat. But it could reduce consumer demand for the coin, since its promised benefits—cheaper money transfers across borders and easier transactions in countries with less developed financial systems—will apply to all the tokens it includes.

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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.