[Dean2]

Reporting on Bank earnings started today with BNS and BMO. Like every earnings reporting period I expect to see large drops in the Bank shares, especially any that report lower than expected earnings or excessively high loan loss provisions. BMO is going to get hit hard based on their announced results, BNS is not great but not terrible. I expect Royal to be good as always.

Added

BNN just posted this.

Bank earnings begin: There’s always a ton to unpack in the quarterly earnings of Canada’s big banks, but one metric that I like to pay attention to is the amount of loans the banks have on their books that they’re worried might go pear-shaped. Known as ‘provisions for credit losses’ or loan-loss provisions more commonly, they’re a metric the banks reveal every quarter that show how much money they’re setting aside to potentially write off loans that are in danger of going bad. The loans themselves often end up turning out fine, and the banks end up moving those funds to the other side of their accounting ledger later on. But by tracking the size of that loan pile and whether or not it’s getting bigger or smaller, we can learn a lot about which way the banks think things are headed. On that metric, the news out of Scotiabank this morning was noteworthy, as the lender revealed its loan-loss provisions rose to $962 million last quarter. That’s up by 51 per cent from last year’s level and even higher than the $922 million that analysts were expecting. It’s down from $1.2 billion the previous quarter, however, so is perhaps a sign that things are trending in a more positive direction. The decline on a quarterly basis is the first time we’ve seen that after six quarters in a row of increase.


One-time items pile up at BMO: The overall numbers were a little weaker at BMO, which also reported quarterly numbers premarket on Tuesday. BMO’s loan-loss provisions also rose sharply to $627 million, up from $446 last quarter and $217 million the year before. It was also more than the $514 million that analysts were expecting. On the whole, the bank earned $2.56 per share on an adjusted basis, less than the $3.02 that analysts were expecting. Profits were dragged down by a number of one-time items, including a $371 million tax expense related to new CRA rules, an after-tax $1.4 billion loss due to interest rate changes between the announcement of its recent Bank of West acquisition and the deal’s closing, and a $417 million “special assessment” charge from U.S. banking regulator the FDIC. The FDIC has been recalculating what it charges to insure deposits after the tumult at regional banks like Silicon Valley and others last year, and said last year it would be announcing special assessments for 114 different banks as a result.