Their collective performance over the last three years of a dismal recession acted like a giant lifebuoy, keeping the Canadian economy from sinking further into quicksand while the rest of the world called out repeatedly for help, each time more loudly and shrilly.
Canada’s banking system has been the envy of the world -- solid, consistent and dependable, whereas banks in her neighbour to the south have been the targets of opprobrium and scorn as government has deemed some of them "too big to fail". And now, with recent earnings news, some of Canada’s biggest banks are enjoying their time in the spotlight and taking a well-deserved bow.
On Thursday, Toronto-Dominion (T.TD) reported fourth-quarter earnings rose 58% to $1.57 billion. Excluding one-time items, the bank earned $1.77 a share, much higher than the $1.53 a share that analysts expected.
Early Friday afternoon, TD stock soared $1.24 per share, or 1.7%, to $73.14.
CIBC (T:CM) also beat the street, turning in quarterly profit of $794 million, or 59% better than the prior-year quarter, due mainly to wholesale banking income. Excluding one-time items, the bank earned $1.87 a share.
What used to be known as "the Commerce" saw its stock dip 89 cents to $71.11, perhaps due in part to the "buy-on-the-rumour-sell-on-the-fact" mentality.
Friday, the earnings parade was joined by Canada’s biggest bank. Royal Bank of Canada (T.RY) trumpeted quarterly net earnings of $1.6 billion, or about 19 cents per share -- 19% stronger than the prior-year quarter, a jump it attributed to record results in Canadian Banking, Wealth Management and Insurance and growth in our corporate and investment banking businesses.
Over the course of the fiscal year, earnings topped $6.5 billion, towering over the $918 million in fiscal 2010. RBC stock triumphed $1.25 per share, or 2.7%, to $48.28 early Friday.
Not to be outdone, the Bank of Nova Scotia (T.BNS) achieved record net income of $5.2 billion for 2011, meeting or exceeding its four key financial and operational targets. Earnings per share (EPS) (diluted) were $4.62, compared to $3.91 in 2010. Return on equity (ROE) was 18.8%.
Scotiabank CEO Rich Waugh chalks a lot of this success up to "our straightforward and diversified business model combined with solid execution of our strategy (which) has enabled us to weather what was an increasingly volatile economic environment over the last year."
Scotiabank shares faded a bit in price, by 87 cents each, to $49.37 in the early afternoon Friday.
While due diligence is always urged, investors should take a hard look at bank stocks, especially in this country, given their role in buoying this country’s economy.
