A logo on Royal Bank Plaza is pictured on Bay Street in TorontoDARREN CALABRESE/The Globe and Mail
No one on Bay Street is allowed to gripe anymore. Hot markets are making for big profits.
The country's biggest banks reported third-quarter earnings over the past week, and in many cases, their capital markets arms posted blockbuster earnings.The numbers speak for themselves:
RBC Dominion Securities
Reported a record profit of $641-million, up $255-million or 66 per cent, from the year prior. The annual comparison may not be the best, because of a weak third quarter in 2013, but RBC's capital markets earnings still rose 26 per cent relative to the prior quarter. Trading revenues rebounded strongly last quarter, and the bank reported its highest underwriting and advisory fees in at least two years.
Scotia Capital
Wholesale net income of $408-million, with record results in investment banking. The bank's underwriting and advisory fees amounted to $217-million, driven by Scotiabank's decision to sell some of its CI Financial Corp. stake. However, the bank had a rough quarter in fixed-income trading, where revenues fell by 44 per cent.
BMO Nesbitt Burns
Strong quarter with $306-million in profit. Although the earnings do not exhibit much growth relative to the prior quarter, they still rose 14 per cent compared with the third quarter of 2013. BMO continues to have volatile fixed-income trading revenue, but investment and corporate banking reported strong revenues.
CIBC World Markets
The wholesale banking unit's profit jumped 32 per cent to $282-million, aided by strong underwriting activity. Underwriting and advisory fees jumped 53 per cent over the year prior, boosted by deals such as the PrairieSky Royalties initial public offering.
TD Securities
Posted a 46 per cent profit jump in wholesale banking over the year prior. This unit has been on a roll lately. Its profit for the first nine months of the fiscal year is 24 per cent higher than the same period a year ago. The most recent quarter saw rising revenues in multiple areas, but underwriting was especially strong because of deals such as the PrairieSky IPO.
National Bank Financial
Capital markets revenues popped 21 per cent over the year prior to $187-million. Underwriting fees and advisory mandates led the charge, and supercharged fixed-income trading revenues, which climbed 29 per cent over the year prior, also helped in a big way.
Keep in mind that all of these earnings come after both GMP Capital and Canaccord Genuity Group Inc. also benefitted from hot markets, sending their investment banking fees higher. Here's to hoping there isn't a nasty correction.
Tim Kiladze