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Bank towers at Toronto's Bay Street (Fred Lum)
Bank towers at Toronto's Bay Street (Fred Lum)

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Shareholders in major banks enjoying higher dividends Add to ...

These are stories Report on Business is following Thursday, March 1, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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RBC, TD boost dividends Unlike their counterparts in other countries, shareholders of Canada's major banks are enjoying higher dividends.

While Bank of Montreal left its payout unchanged earlier this week, both Royal Bank of Canada and Toronto-Dominion Bank hiked theirs today.

Others have also boosted their dividends since the slump.

As The Globe and Mail's David Berman reported earlier this week, it's been a while since dividend hikes and share buybacks were unveiled in the United States, for example.

That could change this year, analysts at Credit Suisse say, noting that dividends and buybacks averaged just 23 per cent of earnings in 2011 in the U.S. financial sector. But for now, shareholders in the Canadian sector can count their pennies.

RBC today boosted its quarterly dividend by about 6 per cent, or 3 cents, to 57 cents, while TD hiked its by 4 cents, also 6 per cent, to 72 cents.

But the market outlook for the sector overall?

"Consumer and financial stocks have also outperformed in the U.S., a trend that could persist given the macro-economic backdrop," Robert Kavcic of BMO Nesbitt Burns said in a recent report.

"There is far more pent-up demand for homes and cars south of the border, and credit growth has turned positive after two years of deleveraging. In Canada, household debt is elevated, the post-recession surge in housing demand appears largely tapped out, and the bank sector faces a slower earnings growth environment."

TD profit slips TD may have increased its dividend, but its first-quarter profit slipped, The Globe and Mail's Tara Perkins reports.

TD said today it earned $1.48-billion or $1.55 a share, diluted, in the quarter, compared to $1.56 or $1.67 a year ear earlier. TD was hit by a weaker showing in its capital markets unit, and a litigation reserve.

"While we knew going into 2012 that our businesses would continue to grow in the face of a challenging environment, their performance has exceeded our expectations," said chief executive officer Ed Clark.

RBC posts lower profit RBC also posted lower first-quarter results, The Globe and Mail's Grant Robertson writes, also because of weaker earnings in its capital markets operation.

Profit slipped to $1.86-billion or $1.21 a share, from $1.95-billion or $1.27.

"Looking ahead through 2012, we believe that we are very well positioned to continue extending our lead in Canada and building client relationships in select U.S. and international markets, while maintaining our strong capital position and strict risk and cost discipline," said chief executive officer Gordon Nixon.

No 'credit event' in Greece, panel says An industry panel determined today that next week's planned swap of Greek debt doesn't constitute a "credit event," a key ruling in the ongoing euro zone debt crisis.

The decision by the International Swaps and Derivatives Association means billions in default insurance won't be paid to debt holders. It settles two complaints from parties wanting the insurance to be paid out on the basis that the European Central Bank is getting a better deal than others in the restructuring.

The ISDA, though, didn't close the door entirely, citing the findings of its EMEA determinations committee.

"The EMEA DC noted, however, that the situation in the Hellenic Republic is still evolving and today’s EMEA DC decisions do not affect the right or ability of market participants to submit further questions to the EMEA DC relating to the Hellenic Republic nor is it an expression of the EMEA DC’s view as to whether a credit event could occur at a later date, in each case, as further facts come to light," it said in its statement.

Standard & Poor's has decided that Greece is now in "selective default" because it changed the rules of the game retroactively via "collective action clauses," or CACs that force some bondholders into new payment terms. That remains an issue.

"As was largely expected, ISDA has made the announcement that a credit event has not occurred on the back of the ECB debt swap," said Mark Chandler and Ian Pollick of RBC Dominion Securities. "Recall, though, this is not the 'end all be all,' as there could be another ruling if CACs are used (which many are expecting to be a considered a credit event)."

Bombardier profit slides Shares of Canada's Bombardier Inc. tanked today as the company capped what it called "good financial results" for 2011 with a dip in fourth-quarter profit and revenue. The fourth quarter, though, was marked by a change in the its aerospace division's reporting period, shaving off a month's worth of results.

The plane and train manufacturer posted a fourth-quarter profit of $214-million (U.S.) or 12 cents a share, diluted, down from $295-million or 16 cents a year earlier. Revenue slipped to $4.3-billion from $5.6-billion.

Chief executive officer Pierre Beaudoin said Bombardier's aerospace unit "navigated through another demanding year" successfully, while the transportation business continued to see "steady" growth.

"With our two groups, we’re uniquely suited to weather today’s environment, with our unrivalled product portfolio and greater geographical reach," he said in a statement. "And we keep on investing and putting the pieces in place to be a very different company in five years."

The company also projected deliveries this year of about 180 business and 55 commercial aircraft, which UBS Securities Canada analyst Hilda Maraachlian described as "relatively flat" year over year, on an annualized basis. As she put it in a research note, the results marked a "Q4 beat but weak C2012 aero guidance."

Analyst glum on RIM A prominent industry analyst has cut his price target and profit estimates for Research In Motion Ltd. ahead of the BlackBerry maker's fourth-quarter results later this month, The Globe and Mail's Iain Marlow reports.

Jeffries analyst Peter Misek also warns there's a "greater than 50-per-cent chance" that RIM will negatively pre-announce the quarter and is now selling far fewer BlackBerrys than expected.

Mr. Misek's target price is now just $12.

RIM is scheduled to report fourth-quarter results March 29, the same day that Finance Minister Jim Flaherty brings down his budget. Let's see who can upset people more.

Big Deals In just eight months, the business of investment banking has gone from high-flying to just plain trying for bankers who make their living helping companies raise money or buy competitors, The Globe and Mail's Boyd Erman writes.

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