Canadian Banks Storm Back as Markets Boom, Energy Woes Recede

(Bloomberg) -- Profit at Canada's six biggest banks soared 25 percent to a record C$11 billion ($8.2 billion) collectively in fiscal first quarter, as they left the oil rout behind and benefited from buoyant capital markets to reap gains in trading and wealth management.

All six lenders topped analysts' estimates for profit in the quarter ended Jan. 31, with Bank of Montreal and Canadian Imperial Bank of Commerce showing the biggest beats of their peers. Here's how each bank fared for net income versus a year earlier, when banks were hampered by souring energy loans, lackluster growth amid a sluggish Canadian economy.

Other highlights from the quarter:

* Trading revenue jumped 25 percent to a collective C$3.35 billion from a year earlier. Fixed income was highlighted by executives as a key bright spot, continuing a trend seen among U.S. banks. Royal Bank of Canada remains the biggest trading shop, with its C$1.03 billion revenue accounting for nearly a third of all trading by the Canadian lenders.

* Better conditions for deal-making and financings also helped capital markets, with investment-banking fees rising 39 percent to C$1.21 billion from a year earlier. Royal Bank's RBC Capital Markets also clinched the lion's share of this revenue.

* Canadian banking is still the biggest business for the nation's lenders and the area investors scrutinize most when weighing quality of earnings. After making adjustments for one-time gains such as selling property or businesses, National Bank of Canada showed the biggest jump in domestic banking with an 18 percent increase from a year ago. Bank of Montreal's Canadian banking rose 8.7 percent, compared with an 8 percent improvement at Royal Bank and a 7 percent rise at Bank of Nova Scotia. CIBC had 3 percent higher profit on this measure and Toronto-Dominion Bank rose 2.3 percent.

* Toronto-Dominion eclipsed Royal Bank -- again -- as the country's largest lender, with C$1.19 trillion in total assets versus Royal Bank's C$1.16 trillion of assets. The two have traded the top spot since Toronto-Dominion first surpassed Royal Bank in December 2013. And, for the record, TD and RBC are now the fifth and sixth biggest banks in North America -- ahead of Goldman Sachs Group Inc.

* Toronto-Dominion investors received the biggest reward in terms of payouts with the bank announcing a 9.1 percent dividend increase. Still, it's worth noting TD's recent practice of dishing out one big annual hike instead of the twice-a-year increases by most other banks. RBC's increase was 4.8 percent, followed by Scotiabank at 2.7 percent and a 2.4 percent bump by CIBC, whose raise was the ninth in 10 quarters.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net.

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net, David Scanlan at dscanlan@bloomberg.net, Jacqueline Thorpe, Steven Crabill