Revenue from the Bank of Nova Scotia and the Bank of Montreal received some assistance from the economic reopening of Canada.
Banks on Tuesday reported third-quarter financial results, beating analysts’ earnings estimates for domestic personal and business loans and continued strength in the Canadian housing market. This helped offset slower rallies in lenders’ US and international businesses.
Canada’s vaccination campaign lags behind the United States for a few months, reviving activities such as restaurant dining and non-essential shopping across much of the country in June. Paul Gulberg, a Bloomberg intelligence analyst, said the strong domestic results of the band of Montreal and Scotiabank could reflect the “early shock” of the process from the initial stages of reopening.
“Canada is very polite,” he said in an interview. “It has moderate credit growth, and it’s not just about the mortgage business, it’s about consumer debt as well as business.”
Scotiabank’s Canadian business and personal banking segment grew 3.8% in business and government debt in the three months to July. Personal loans rose 0.7%. The domestic division of the Bank of Montreal reported a 1.9% increase in business loans in the second quarter and a 3.1% increase in consumer installments and other personal loans in the third quarter.
Two Toronto-based banks also made home loan gains as home prices continued to rise in Canada. Bank of Montreal’s national mortgage book grew 2.8% compared to the second quarter, while Scodiabank’s increased 3.6%.
The reopening of both lenders allowed banks to retreat from the most cautious stance taken by banks at the outset of the epidemic on the potential for debt loss.
Bank of Montreal begins to release capital reserves created to protect against default waves triggered by the epidemic, which reports C $ 70 million (US $ 55 million) in recovery for arrangements for potential debt losses. The company had a balance of C $ 60 million in the second fiscal quarter. Cdn had $ 380 million in Scotiabank debt loss arrangements, down from Cdn $ 496 million in the previous three months.
Low arrangements and resilience in lending helped the two banks beat analysts’ estimates for the quarter. Scotiabank’s profit, excluding some items, was $ 2.01 Cdn per share. Analysts expected Cdn $ 1.90. For the Bank of Montreal, adjusted earnings were Cdn $ 3.44, compared to analyst estimates of Cdn $ 2.94.
Shares of Bank of Montreal were up 1.1% at Cdn $ 130.18 in Toronto at 9:39 am, while Scodia Bank was up 0.2% at Cdn $ 80.37.
Meanwhile, the decisions of banks outside Canada did not show the same strength of their national units.
Scotiabank’s international unit made a profit of C $ 564 million when it focused on Latin America, with that resilience due to a C $ 939 million reduction in debt loss provisions compared to the previous year. Moreover, although the Bank of Montreal’s personal and business segment revenue more than doubled to Cdn $ 553 million, business and personal loans fell compared to the previous year.
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