The four banks have already declared their fourth quarter results have pocketed $ 5.2 billion profit. Each beat forecasts, but the crisis of Europe is the elephant in the room. Generally, loans, mortgages and investments are doing very well. By cons, interest rates and competition squeezing margins for everyone, except the Royal Bank.
Services on Canadian soil are in excellent health, These are personal loans for consumption and mortgages, he said. There is also talk of wholesale banking, where the bank lends to an intermediary that provides services to its clients. So far, the banking system has weathered the crisis of 2008 remains robust, says Durand. For example, return on shareholders equity of CIBC Is returned to 20.6%. That’s why we say that Canadian banks are the best funded in the world.
The bomb European
If one sees no sign of recession in the quarterly figures, the European crisis of debt is a serious threat, If Europe is exploding, no Canadian bank will escape, ahead there. Some, like the Royal, are more exposed. I wonder if RBC would not have to raise money on the market just to boost confidence. Indeed, the exhibition of the Royal to Europe amounted to $ 43 billion on its balance sheet for the fourth quarter. Moreover, low interest rates make loans less profitable. the prices of mortgages retreat, said Peter Routledge. Loans that have been signed four years ago are maturing and need to renew with lower rates. It is important for banks [who collect less revenue interest.
The buoy International
Two institutions, which are more aggressive abroad, however, can compensate with this additional source of growth. First, the TD Relies on the success of its U.S. network of branches. She has more momentum in the U.S. because it faces less competition, says analyst with National Bank Financial. It has more room to maneuver, even if interest rates are also very low.
Denis Durand said that, for its part, the Scotia benefits from its expansion in Latin America. The growth of these countries did not experience any significant decrease. We can expect good profits from the sector. Precisely, the International reported $ 373 million profit in the Scotia. In the fourth quarter, against $ 480 million for the Canadian banking. The international is growing faster, said Peter Routledge. I anticipate that this division will be the largest in five years.
Bank profits
Royale: $ 1.11 per share, against expectations of 97 cents;
CIBC: $ 1.80 per share, against expectations of $ 1.80;
TD: $ 1.77 per share, against expectations of $ 1.54;
Scotia: $ 1.10 per share, against expectations of $ 1.08.
