Two of Canada's biggest banks surprised analysts Tuesday with strongerthanexpected third-quarter earnings and dividend boosts.
But the earnings increase at the Bank of Montreal was largely due to gains at its U.S. operations and a decline in provision for credit losses, while at Scotiabank, the sale of its Toronto headquarters accounted for the biggest part of doubledigit growth.
The first two Canadian banks to report earnings - the rest release results today - have also been able to beat expectations because analysts aren't looking for much growth in the current global economic climate.
While Canadian banks have outperformed their peers during this period of uncertainty, investors should brace themselves for relatively slow growth ahead, as the global economy continues to lurch along, said Craig Fehr, Canadian markets specialist at Edward Jones.
"What you see is they beat the numbers, [but] expectations were relatively subdued," he said.
"If you look at yearonyear growth, it's around the lowest levels that we have seen from them in some time."
BMO raised its quarterly dividend for the first time since 2007 - a bump of two cents to 72 cents per share - as it posted a 37 per cent increase in profits. Scotiabank lifted its dividend by two cents to 57 cents per share while its profits grew by 57 per cent - helped by a $614million after-tax gain from the sale of its downtown Toronto headquarters, Scotia Plaza. Scotia also lifted its dividend in March.
Net income at BMO was $970 million or $1.42 per share, an increase from $708 million, or $1.09 per share, a year earlier.
On an adjusted basis, earnings of $1.01 billion, or $1.49 per share, beat analyst expectations by 10 cents a share.
The results were largely boosted by a 34 per cent jump at its U.S. operations, as well as from a $129million decline in adjusted provisions for credit losses to $116 million. Revenue increased to $3.88 billion from $3.32 billion.
At Scotiabank, net income came in at $2.05 billion, or $1.69 per share, up from $1.3 billion, or $1.10 per share, a year ago. Scotiabank's adjusted income was $1.22 per share, while analysts had expected earnings of $1.19 per share. Revenue increased to $5.51 billion from $4.3 billion.
BMO shares gained 23 cents to close at $57.93 Tuesday on the Toronto Stock Exchange, while Scotiabank's shares lost early momentum to move down four cents to $52.90.
