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Canada's Big 6 banks post profit growth in fiscal Q3

Canada's six largest banks saw their fiscal third-quarter profits increase from the year-ago period, with net income hitting C$12.06 billion, up from the year-ago figure of C$11.63 billion, while normalized EPS rose by a median of 6.2%.

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National Bank of Canada reported the sharpest EPS increase of the group, at 8.5%. The bank's C$1.66 EPS also topped the C$1.59 consensus estimate. The bank's personal and commercial segment saw net income jump 11% year over year, while its wealth management, financial markets, U.S. specialty finance and other segments also posted net income increases.

Toronto-Dominion Bank and Bank of Nova Scotia followed suit, reporting profit growth of 7.8% and 6.8%, respectively. TD Bank's third-quarter EPS of C$1.79 narrowly missed the Street estimate of C$1.80, but Scotiabank posted a 3-cent beat with EPS of C$1.88. In a release, TD Bank President and CEO Bharat Masrani said all business segments posted earnings and revenue growth, but he warned of a "less supportive" macroeconomic environment ahead. Meanwhile, Scotiabank President and CEO Brian Porter remained positive on the bank's business outlook on an earnings call while noting emerging economic risks.

Bank of Montreal and Canadian Imperial Bank of Commerce saw modest profit growth in the quarter. BMO's EPS ticked 0.8% higher to C$2.38, missing the consensus estimate of C$2.49, while CIBC reported a 0.6% rise in EPS to C$3.10, topping the consensus estimate by four cents.

During an earnings call, BMO CEO William White was confident the company's diversified business lines and earnings strength would help it weather an uncertain economic environment, noting that the bank's core personal and commercial businesses, which account for 66% of its income, still produce solid profit.

Royal Bank of Canada, the country's largest bank, saw its EPS grow 5.6% to C$2.26, missing the analyst estimate of C$2.30. RBC credited its personal and commercial banking, wealth management and insurance divisions for the profit growth, noting capital markets and investor and treasury services were drags on earnings because of market conditions.

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All six banks recorded double-digit increases in loan-loss provisions, led by BMO, which recorded a 64.5% jump in its loan-loss provision to C$306 million. During the bank's earnings call, White said the increase was due to the bank boosting allowances for performing loans.

Scotiabank recorded a 32.5% increase in loan-loss provisions, which grew to C$713 million on an adjusted basis, while RBC saw a 26.9% increase to C$429 million. Scotiabank Executive Vice President and CFO Rajagopal Viswanathan said on an earnings call that the increase was primarily due to higher retail provisions stemming from changes in the bank's portfolio mix.

CIBC reported a 20.7% increase in loan-loss provisions, which rose to C$291 million. Senior Executive Vice President and Chief Risk Officer Laura Dottori-Attanasio expects "some movements" in the company's loan portfolios due to the economic cycle, and said on a call that asset quality remains well positioned, save for certain gas producers in the bank's energy loan portfolio.

TD Bank saw 16.8% growth in its loss provisions, which hit C$655 million, while National Bank of Canada saw the slowest increase among its peers, a 13.2% rise to C$86 million.

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All six banks saw balance sheet growth during the quarter.

BMO was the only large Canadian bank to record double-digit net loan growth, tallying an 11.20% year-over-year increase. RBC recorded nearly 9% growth, and Scotiabank followed with 7.1% growth. TD Bank saw 6.3% growth in its loan book, while National Bank of Canada saw a near-6% increase. CIBC recorded the slowest net loan growth, at 5.2%.

National Bank of Canada and Scotiabank posted the greatest growth in deposits. The smallest bank among the Big 6 led the way with a 13.2% increase, while Scotiabank landed at second place with 11.5%. BMO grew its deposits by nearly 10%, and TD Bank and RBC saw customer deposits grow in the 6% range. CIBC trailed the pack, growing deposits by 4.8%.