With CIBC reporting earnings today, the profit parade at the big banks continued, showing once again that our banks should form the core portion of any portfolio. Here’s how they fared compared to the same period last year [FD: I own shares in TD and BNS]:

  1. Bank of Montreal (TSX: BMO) – $1.38 vs. $1.07
  2. Royal Bank (TSX: RY) – 90¢ vs. 74¢
  3. TD Bank (TSX: TD) – $1.09 vs. 58¢
  4. Scotia Bank (TSX: BNS) – 93¢ vs. 77¢
  5. CIBC (TSX: CM) – $1.86 vs. $(5.77)

Dividends: Royal Bank increased its dividends by 4¢ or 11% to 40¢ per share and now yields 3.08%. TD Bank also raised its quarterly dividend by 4¢ to 48¢ and now yields 3%. BMO (yield – 3.71%), Scotia Bank (yield – 3.3%) and CIBC (yield – 3.48%) maintained their dividends.

Links to earnings reports: BMO, Royal Bank, TD Bank, Scotia Bank, CIBC.

See also: Bank earnings for the previous quarter.

This article has 6 comments

  1. Hey CanCap,

    I’ve been wondering… Is there any way to find out which CDN banks have exposure (and how much exposure) to the impending US MBS meltdown?

    Is is going to be as bad in Canada?

  2. Howdy Scott, check out http://financialsector.blogspot.com for some analysts take on the banks’ credit quality after the just released earnings reports.

  3. Carol, thanks. Lots of information there. I don’t see what I’m looking for in ‘impaired loans’ and ‘loan loss provisions’; I would imagine those are direct loans. I’m looking for the part of the icebergs underwater, in MBS and derivatives.

  4. I own shares of BMO, mainly because that’s where I do most of my banking and owning shares of them takes a small bit of the sting out of those times when you get service charged… It’s purely a psychological thing.
    However, for the purposes of receiving investment income, I bought MCAP (Symbol MKP), a non-bank mortgage lender. The share price has been flat since I bought in, but the yield is up at 8% as opposed to the big banks which are all below 4%. I have no idea if they’re going to grow much going forward – living under the shadow of the big banks – but I figured I’d just give it a twirl anyways. The best thing that could happen to their stock is if one of the banks bought them – like what happened to VFC.

  5. Canadian Capitalist

    Scott: You may have to research the Canadian Banks yourself using their annual and quarterly reports. I own and follow TD and BNS and they are at a high point in the credit cycle and I imagine that loan loss provisions are at multi-year lows at the other banks as well. Canadian Banks probably have a low exposure to the MBS market, as the US operations are still relatively small. The major worry though is that if the US sneezes, Canada might catch a cold.

    Phil: Thanks for the heads up about MCAP. I was not aware of the name and might be worth checking out.

  6. Hi CanCap,
    Yeah, I try to diversify when I can, so I hold some of the big 5 banks, but I also like to hold some of the innovative little guys too. I have that same sort of philosophy with a lot of sectors – but I’m still only 38 yrs old, so I have the luxury to wait to see who gets bought by whom in the future. So I just place my bets now – or a different analogy is like planting “seeds” everywhere to see what eventually grows. I find investing in small and micro caps exciting in that way.