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Canadian big bank’s earnings season has officially kicked off. Bank of Montreal (TSX:BMO) and Bank of Nova Scotia (TSX:BNS), also know as Scotiabank, were the first to report their financials for the fiscal first quarter of 2021 (Q1FY21).
Both the lenders reported higher profits as the economy slowly recovers from the pandemic with mass inoculation campaign.
BMO Financial Group higher profits were led by gains in its personal and commercial banking, BMO Wealth Management and BMO Capital Markets. While Scotiabank posted better net income on a year-over-year (YoY) basis due to smaller provision for bad loans and non-interest costs.
BMO profits soared to C$2.02 billion in this quarter, against C$1.59 billion in Q1 FY20. Earnings per share (EPS) were up to C$ 3.03 from C$ 2.37 in Q1 FY20.
Scotiabank posted net income of C$ 2.398 billion in Q1 FY21, up from C$ 2.326 billion a year ago.
Let us separately examine these two Canadian banks’ financial earnings:
Bank of Montreal (TSX: BMO)
BMO Financial Group Chief Darryl White stated that the company witnessed strong credit performance, representing both the robust loan portfolio and better risk management.
Its top line marginally improved to C$ 6.98 billion in Q1 FY21, up from C$ 6.75 billion in Q1 FY20.
The bank set aside C$156 million as provision for credit losses, down from C$ 193 million the previous year.
Its Canadian personal and commercial banking segment posted net income of C$ 737 million, a surge of 5 per cent YoY. The US division of the segment recorded net income of C$ 582 million, a massive jump of 66 per cent YoY.
Net income from BMO Wealth Management and Capital Markets surged by 23 per cent YoY to and 36 per cent YoY, respectively.
The bank’s quarterly dividend remained unchanged at C$ 1.06 per share.
BMO stock was up ~3 per cent pre-market on Tuesday morning at 8:42 am ET. The stock has returned 4 per cent year-to-date (YTD).
Image Source: Kalkine Group @2020
Bank of Nova Scotia (TSX: BNS)
Scotiabank’s Canadian Banking operations reported strong adjusted earnings of C$ 915 million, amplified by strong asset and deposit growth, robust fee income, improving credit developments and balanced margins.
The bank said its earnings have rebounded to pre-COVID levels.
Its return on equity slightly improved to 14.4 per cent in Q1 FY21 against 13.9 per cent in Q1FY20.
The lender’s global banking and markets posted impressive earnings of C$ 543 million, a surge of 20 per cent YoY. BNS Wealth Management posted adjusted earnings of C$ 425 million, an increase of 34 per cent YoY.
Total revenue was partially down by C$ 39 million in the Q1 FY21 on YoY basis. However, it was offset by lower provision for credit loss.
The bank announced quarterly dividend of C$ 0.90 per share.
BNS stock has advanced by 5 per cent YTD. It was up 0.66 per cent pre-market on Tuesday morning.
