- Canada’s banking sector has faired significantly well through the pandemic over the past year.
- The big six banks of the country posted robust results in the latest quarter, and continue to note declines in their provisions for credit losses (PCL).
- Some market experts have predicted that the country’s major banks are likely to note a dividend spike in the third fiscal quarter this year.
Despite some bumps here and there, Canada’s banking sector has faired significantly well through the pandemic over the past year. The big six banks of the country posted robust results in the latest quarter, and continue to note declines in their provisions for credit losses (PCL).
While the fear around the Delta COVID-19 variant rises, speculations are still rife about a dividend spike for all the major Canadian banks in the third fiscal quarter this year.
Let’s explore some of these top Canadian banks to understand their recent performance and financial health.
- Royal Bank of Canada (TSX: RY)
Royal Bank of Canada, known to be one of the top lenders nationwide, saw its stock close at a value of C$ 126.54 on Tuesday, July 26. At this point, RY stock was about 39 per cent above its 52-week low of C$ 90.75 (recorded on October 29, 2020).
The lender’s net income soared by 171 per cent year-over-year (YoY), which was a jump of about C$ 2.5 billion, to C$ 4 billion in Q2 FY21.
Its PCL on performing loans amounted to C$ 260 million in this quarter, which was much less than that of C$ 2,121 million in Q2 FY20, when provisions were higher due to the pandemic.
The bank is scheduled to pay its next quarterly dividend of C$ 1.08 apiece on August 24, 2021.
Royal Bank of Canada holds a return on equity (ROE) of 17.3 per cent and return of assets (ROA) of 0.87 per cent. Its price-to-earnings (P/E) ratio was 12.7 and price-to-book (P/B) ratio stood at 2.08, as per TMX.
- Toronto-Dominion Bank (TSX: TD)
The Toronto-Dominion Bank held a market cap of about C$ 150 billion, with a closing stock price of C$ 83.09.
The Canadian bank posted a net income of C$ 3.7 billion in Q2 FY21, which was up by as much as 144 per cent YoY.
Its revenue for the retail division in Canada climbed to C$ 6.1 billion in the latest quarter
TD, which is scheduled to pay a quarterly dividend of C$ 0.79 on July 31, holds a P/E ratio of 10.6.
- Bank of Nova Scotia (TSX: BNS)
Stocks of Bank of Nova Scotia closed at a value of C$ 77.89 apiece on July 27.
BNS, aka Scotiabank, posted a net income of C$ 2.45 billion in Q2 FY21, which was significantly up against that of C$ 1.3 billion in the year before.
Its bottom line, like in the case of its peers, was inflated to a certain extent by the notable decline in its PCL, which dropped to C$ 496 million in Q2 FY21 from C$ 1.8 billion in Q2 FY20.
Scotiabank's shareholders are set to be paid a quarter-based dividend of C$ 0.9 apiece on July 28.
Its P/E ratio is 12.4, P/B ratio is 1.4 and ROE is 12.15 per cent.
- Bank of Montreal (TSX: BMO)
The Bank of Montreal posted a market cap of about C$ 81 billion on the TMX platform, and its stock price closed at C$ 125.4 apiece on July 27.
The Canadian lender’s Q2 FY21 earnings report showed a net income of C$ 1,303 million. Its PCL stood at C$ 60 million in this quarter, which was much improved from that of C$ 1,118 million in Q2 FY20.
The bank is set to pay a quarterly dividend of C$ 1.06 apiece, which remained unchanged in Q2 FY21, on August 26.
BMO’s ROE stood at 12.02 per cent and P/E ratio was about 13, as per TMX.
- Canadian Imperial Bank of Commerce (TSX: CM)
The Canadian Imperial Bank of Commerce witnessed its stock close at a value of C$ 144.5 on July 27.
Commonly known as CIBC, the bank reported a Q2 FY21 net income of C$ 1,651 million, up from that of C$ 392 million in Q2 FY20 by a notable 321 per cent YoY.
CIBC’s PCL shrank by 98 per cent YoY in this quarter to settle at C$ 32 million.
Canadian Imperial, like its peers in the country, is scheduled to pay an unaltered dividend of C$ 1.46 apiece on July 28.
The bank posted an ROE of 14.17 per cent and a P/E ratio of about 12, as per TMX.