Canada banking oasis

Le titre est assez révélateur, quand le fédéral fait plus de 45 milliards de déficits, les banques canadiennes font plus de 20 milliards de profits.

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Extrait de:  Canada banking oasis, John Greenwood and Barbara Shecter, Financial Post · Thursday, Mar. 3, 2011

Banks in the United States and Europe are getting hit by bonus taxes and a welter of new regulation but here in Canada where policy makers see less need to penalize the sector, the Royal Bank of Canada and Toronto Dominion Bank on Thursday trounced earnings expectations with combined first quarter profit of $3.4-billion, driving their shares higher.

TD also boosted its dividend, the first of the big five to do so since the onset of the financial crisis and a major endorsement for the stability of the sector.

“The numbers were excellent,” said Paul Gardner, a portfolio manager at Toronto-based Avenue Investment Management, which has about $250-million in assets. “It’s the Canadian economy and the Canadian banking business that really drove this.”

The results followed the trend set by Canadian Imperial Bank of Commerce and National Bank of Canada, which kicked off the earnings season with similarly high earnings.

Analysts said the quarter shows that Canadian banks are finally getting their mojo back after the financial crisis and its painful aftermath.

Shares in RBC closed at $59.92, up $2.98, the biggest one-day jump in a year and a half. TD shares ended the session at $83.60, up $3.10, the biggest rise in nearly two years.

Thanks to limited:

1)      competition,

2)      a strong currency,

3)      and low corporate taxes.

Players in this country have a major advantage over their foreign peers, Mr. Gardner said.

Je comprends, il n’y a pas un imbécile dans le monde qui a donné autant de privilèges à des banques.

Comment on peut maintenir des oligopoles en 2011 ?

M. Flaherty ne m’a jamais répondu, combien les banques paient en lobbying pour maintenir de tels privilèges.

N’oubliez pas, les banques deviennent riches grâce aux dettes, et le Canada faits piètre figure, 1.1 trillions pour l’ensemble du Canada (fédéral, provincial et municipal) et mon pauvre peuple qui s’est endetté de plus 1.5 trillions de dettes, ils sont complètement dans le nirvana, nos banques canadiennes.

Et je ne compte pas toutes les petites magouilles des paradis fiscaux.

He who owns shares in both banks and said Royal and TD are now starting to parlay their domestic strength into greater success in their foreign expansion strategies.

Royal Bank of Canada, the country’s biggest lender by market capitalization, had net income for the first quarter of $1.84-billion, up 23% from last year. TD, the country’s second biggest bank had a profit of $1.54-billion, up from $1.3-billion amid record performance from retail banking in both Canada and the United States.

The results come on the heels of warnings from HSBC and other international banks that tougher capital rules and new regulations will depress profitability in the financial sector for years to come.

The main highlight for RBC was the domestic banking operation which reported a profit of $882-million, up $105-million on strong loan growth and lower provisions for credit losses.

The wholesale business also performed well, generating net income of $613-million, up 7% on strong underwriting and loan syndication fees.

Return on equity was a whopping 20.3%, compared to just 12.3% a year earlier.

Speaking to shareholders at RBC’s annual meeting in Toronto, Gord Nixon, the chief executive, said the bank has made significant headway in fixing its struggling U.S. retail operation, swapping in an almost completely new set of senior managers and exiting unprofitable businesses.

The results of that restructuring are “starting to show,” said Mr. Nixon, who cautioned that Royal has yet to get to a point where it can make a decision about whether to hold onto the U..S bank or sell it.

TD boasted record performance at its retail banking operations in both Canada and the United States.

For the three months ended Jan. 31, TD posted a profit of $1.54-billion, up from $1.3-billion.

Ed Clark, the chief executive, said he was encouraged “to see more signs that the economy is recovering, even though interest rates remain low and regulatory uncertainty continues to persist.”

On a conference call with analysts, Mr. Clark said optimism “on the ground” is providing growth for TD’s core retail franchises in spite of macro-economic concerns such as European debt and a slow recovery in the United States.

Based on its recent strong performance, TD hiked its quarterly dividend by 5¢, or 8%, to 66¢.

TD’s domestic banking operation had net income of $905-million, up 26% on strong growth in real estate lending and lower provisions for credit losses. The U.S. business had earnings of US$319-million, up 85% from the corresponding period last year on rising loan and deposit growth.

John Aiken, a banking analyst at Barclays Capital, said although a dividend increase was anticipated by the market, TD paid out significantly more than the 2¢ increase he had been expecting.

In a note to clients on Thursday, Mr. Aiken said the U.S. banking results represented a “distinct positive” in the quarter, and noted that the operations were able to “earn through” continuing challenges from the deterioration in the U.S. housing market.

“We believe that TD’s results represent one of the strongest to date, which is very impressive given TD’s lower relative exposure to capital markets,” the analyst wrote, adding that he expected the performance would be “well rewarded by the market. “

First quarter earnings season kicked off last week with Canadian Imperial Bank of Commerce and National Bank of Canada both topping analyst estimates, followed by Bank of Montreal which was about in line. Last up is Bank of Nova Scotia, set for March 8.