Bank of Montreal and Scotiabank beat earnings expectations, anticipate recovery
Band Nicolas Saminather
TORONTO, February 23 (Reuters) – Bank of Montreal BMO.TO and Bank of Nova Scotia BNS.TO (Scotiabank) on Tuesday kicked off first-quarter results for Canadian lenders beating expectations as they set aside less capital than expected to cover bad debts.
Both banks also posted higher profits than a year earlier thanks to strong profit growth in capital markets and wealth management, which helped offset more moderate increases in their Canadian units and the decline in Scotiabank’s international operations.
Canada’s third and fourth largest lenders, who like the rest of the industry have so far avoided an increase in bad debt caused by a pandemic through a series of aid measures, were optimistic for the rest from 2021.
The Canadian economy “is expected to rebound strongly over the next few quarters, as vaccines become more widely available and restrictions are relaxed,” Bank of Montreal (BMO) said in a shareholder report.
As the US recovery has slowed, the passage of a supportive bill late last year “is likely to propel the expansion forward,” he said.
While many of Scotiabank’s Latin American markets saw the impact of the pandemic later than North America, it also cited a “favorable macroeconomic outlook” as a factor in reducing provisions for credit losses. , especially abroad.
A rebound in net interest margins (NMIs), of 6 basis points in Canada and 17 in the United States, after several quarters of stagnation, also helped BMO to exceed expectations. Scotiabank’s international banking NIM also rose 6 basis points, but its Canadian NIM remained stable.
Loan write-downs increased in some of Scotiabank’s overseas retail markets, most notably in Peru, where payment deferrals expired, offsetting year-over-year declines in Canada and elsewhere.
BMO also saw an increase in bad debts from a year ago, largely due to an increase in retail write-downs, although they improved from the prior quarter.
BMO reported adjusted earnings of C $ 3.06 per share compared to analyst expectations of C $ 2.05. Scotiabank’s was C $ 1.88, compared to estimates of C $ 1.57.
($ 1 = 1.2615 Canadian dollars)
(Reporting by Nichola Saminather in Toronto. Additional reporting by Noor Zainab Hussain and Sohini Podder. Editing by Krishna Chandra Eluri and Mark Potter)
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