This quarter, the first bank got it right when it comes to signalling how the earnings season for Canada's big banks would play out, as a beat from Bank of Montreal presaged a stronger than expected performance for a majority of Canadian banks.
The lead bank in any given earnings season of late has a mixed record as a bellwether (see this previous post) but this quarter, better-than-expected results released last week by Bank of Montreal correctly forshadowed what was to come from the rest of the big six banks.
In the end, after BMO beat expectations, three more banks did as well. Only one, Royal Bank of Canada, fell short of analysts' expectations. National Bank of Canada came in right on estimates.
That good batting average, along with a run in the broader markets, helped the Standard & Poor's Canadian banks index rise 7.6 per cent through bank earnings season.
In order of reporting date, here is the final rundown.
Bank of Montreal beat by 4 per cent.
National Bank of Canada was in line with estimates.
Royal Bank of Canada fell short by 2 per cent. (That makes five of the last six quarters that RBC has missed expectations.)
Bank of Nova Scotia beat by 2.2 per cent.
Canadian Imperial Bank of Commerce beat by 5.9 per cent.
Toronto-Dominion Bank topped estimates by 5.9 per cent.
(The numbers come from Bloomberg, which computes beats and misses by tracking the analysts' estimates and then setting them against a reported earnings number that backs out non-recurring items to try to make the number comparable. The result is expressed as a percentage above or below the consensus estimate. For argument's sake we called a variance of less than 1 per cent from expectations a result that "met" expectations.)