First-quarter bank earnings

Making money is just what these blue chip stocks do so well.

They say that, as go the bank earnings, so eventually goes the rest of the market. If that’s the case right now, the future of the rest of the market looks good, because the Big Six are steaming right along.

To build a sort of crescendo, let’s start with the Big Six member with the smallest market cap, and move our way up to the biggest.

National Bank of Canada (TSX:NA) (market cap $7.2 billion) was able to boost its earnings by 12% in the first quarter of fiscal 2014. This aggressive ‘little’ bank made $1.09 per share, up from $0.97 per share. In terms of real money, NA made $384 milllion in the most recent 91 days.

Canadian Imperial Bank of Commerce (TSX:CM) (market cap $37.0 billion) made an impressive 53% more in the latest quarter. Earnings per diluted share were $2.88 versus $1.88 last year. In aggregate CIBC made a reported net income of $1.177 billion. CIBC also announced a quarterly dividend increase of $0.02 per common share to $0.98 per share.

Bank of Montreal (TSX:BMO) (market cap $47.0 billion) made $1.061 billion or $1.61 per share, a 7% increase over $$1.50 per share.

Bank of Nova Scotia (TSX:BNS) (market cap $76.5 billion) reported income of $1.605 billion or $1.32 per share from $1.24, a 7% increase. BNS also hiked its dividend by $0.02 per quarter to $2.56 annually.

Toronto-Dominion Bank (TSX:TD) (market cap $92.2 billion) split its stock after releasing results of $2.04 billion or $10.7 per share, up 15% over $0.93 per share, and raised its quarterly dividend by $0.04 per share to $3.56 annually.

Royal Bank of Canada (TSX:RY) (market cap $103.7 billion) earned $2.092 billion or 41.34 per share, up 3% over $1.34 per share, and raised its payout by $0.16 annually to $2.84 per share.



Ah, what’s a billion among friends?

We remember, not too long ago, that one of the Big Six banks made a profit of a cool $1 billion in one fiscal year. How times have changed: it’s not unusual for a single bank to make $1 billion or more in just one quarter of a year.

Take the most recent quarter, the first of fiscal 2014.

Royal made $2.092 billion in 91 days (counting the days they were closed as well as open), or just shy of $23 million bucks per day. And they’re not alone.

TD also made over $2 billion, Bank of Nova Scotia $1.605 billion, and Bank of Montreal $1.605 billion. CIBC hauled in $1.177 billion. Only National Bank didn’t make the billion-dollar club; five of the Big Six did. Total haul: $8.359 billion in one quarter.

Keep using those debit cards, kids. My dividends thank you!

Meanwhile, the march for the banks to earn more fees (and pass them on to us in terms of higher dividends and stock prices continues. You’ve no doubt heard (including here in this newsletter) about how individuals can now take a photo of a cheque with their smart phone, send the photo to the bank, and get credit for the deposit. No need to visit a branch or an ATM.

Mid March CIBC announced the launch of the same technology for Canadian businesses, where Canadian businesses can now conveniently deposit multiple cheques to their account, in a single transaction, without ever leaving their office.


Money Reporter, MPL Communications Inc.
133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846

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