Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Executives from both banks said it is still too soon to gauge the potential impact from the coronavirus outbreak or from rail blockades by protesters opposing the Coastal GasLink natural gas pipeline.

Nathan Denette/The Canadian Press

Lively capital markets pushed first-quarter profits higher at Bank of Nova Scotia and Bank of Montreal, despite uncharacteristic weakness in both banks’ international divisions.

Scotiabank’s results were complicated by costs and accounting gains related to a series of acquisitions and sales of businesses, as well as multiple one-time items the bank had already announced prior to the quarter. Profit edged 3.5 per cent higher at the country’s third-largest bank, despite lost revenue from businesses the bank has sold.

Divested businesses were the main reason that Scotiabank’s international arm, which is concentrated in Mexico, Peru, Chile and Colombia, suffered a 28-per-cent drop in profit, to $518-million – or a decrease of 17 per cent after adjusting for special items. That snapped a streak of 18 straight quarters of rising profit from the division, which has undergone a dramatic transformation under chief executive officer Brian Porter.

Story continues below advertisement

The bank has also been contending with unrest in Chile, political uncertainty in Peru and slow economic growth in Mexico, but the outlook for the region appears to be improving.

“As we continue to see improvement in the outlook for both Mexico and Chile, we expect international banking to have stronger results for the balance of the year,” Mr. Porter said on a conference call.

For the fiscal first quarter, which ended Jan. 31, Scotiabank reported profit of $2.33-billion, or $1.84 a share, compared with $2.25-billion, or $1.71 a share a year ago.

After adjusting to exclude one-time items, Scotiabank said it earned $1.83 a share. Analysts expected adjusted earnings per share of $1.74, according to data firm Refinitiv.

Profit from Scotiabank’s global banking and markets division rose 11 per cent to $372-million, and was up 35 per cent year over year excluding one-time items.

BMO’s capital markets arm boosted profit by 39 per cent to $356-million. Last week, Royal Bank of Canada reported even stronger capital markets profits, as banks benefit from good trading conditions and a favourable comparison to a tough first quarter last year.

However, loans gone sour were a drag on both companies’ results in the quarter. Scotiabank set aside an extra $155-million to cover anticipated losses after making the models it uses to predict bad loans more pessimistic, and BMO’s expected losses spiked $212-million higher, mostly due to lending to the transportation and oil and gas sectors.

Story continues below advertisement

BMO’s provisions for credit losses – the money banks set aside to cover loans gone bad – reached $349-million, after dipping to unusually low levels last year, including one larger provision on a loan to a long-time client in the construction industry. But Pat Cronin, the bank’s chief risk officer, told analysts the rise in losses is “an anomaly.”

“We do expect the loss rate to step down" in the coming quarters, chief financial officer Tom Flynn said in an interview.

Executives from both banks said it is still too soon to gauge the potential impact from the coronavirus outbreak or from rail blockades by protesters opposing the Coastal GasLink natural gas pipeline.

BMO earned $1.59-billion, or $2.37 per share, compared with $1.51-billion, or $2.28 a share, a year earlier.

After adjusting to exclude certain items, BMO said it earned $2.41 a share, ahead of the $2.37 a share analysts expected.

BMO’s core Canadian retail banking division posted strong results, with profit up 8 per cent to $700-million, thanks in part to a 15-per-cent bump in domestic commercial lending. BMO has been piling on new commercial loans, grabbing market share from its peers in Canada and the U.S.

Story continues below advertisement

Yet as BMO expands outside its historic stronghold in the U.S. Midwest, analysts are concerned that the bank may be taking new risks to bulk up in commercial lending, which increased by 13 per cent in the U.S. during the quarter. David Casper, the bank’s U.S. CEO, said that most new loans are in familiar sectors, and many of them are secured by assets.

“I feel really good about the growth and would never apologize for it," Mr. Casper said. “You’re right to be skeptical. We’re going to prove you wrong."

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies