Canada’s Big Banks Poised For Solid Fiscal Year

Canada's Big Banks Poised For Solid Fiscal Year

In just under a year's time, the country's biggest banks have been able to resume revenue growth, even when comparing to pre-coronavirus figures.

Earlier this week, Canada's six largest lenders reported positive net incomes as results have far-exceeded expectations. Government stimulus programs have helped consumers in continuing their mortgage payments. The BOC's interest rate decreases kept an already steady housing market persistently afloat.

“In Canada, there was very good coordination from the beginning between the financial system, the central bank, the regulators and the government more broadly,” Canadian Imperial Bank of Commerce Chief Financial Officer Hratch Panossian explained earlier today. “We’ve managed to mitigate some of the impact of the ongoing pandemic and the challenging time that we’re going through.”

The banks played an integral role in helping clients fend off delinquency with loan payment deferral programs. They also stockpiled record sums of cash at the beginning of the pandemic to safeguard their interests against the possibility of sweeping loan losses. That initial foresight helped pave the way to gains in profit and surpassing expectations in the first fiscal quarter as banks expressed significantly less precaution for expected credit losses than the previous quarter.

Solid capital markets propelled earnings at Royal Bank of Canada and National Bank of Canada, who have focused more on investment banking and trading projects of late. The country's powerful housing market has assisted both Dominion Bank and CIBC, as they've been concentrating on strengthening their mortgage-lending. Bank of Nova Scotia looked to progress in the performance of their international division which focused on Latin America.

Bank of Montreal's success was steered by  cost control and improvements in its American ventures, which are likely to persist successfully the rest of the fiscal year due to an elevated pace of vaccination.

Gabriel Dechaine believes that the banks who best control costs as well as which regions recover the quickest should perform at their best.