It's raining dividends, hallelujah! Canadian banks set to post strong results

Asia's Tech News Daily

It's raining dividends, hallelujah! Canadian banks set to post strong results
© Reuters/Chris Helgren FILE PHOTO: A combination photo shows Canadian investment banks RBC CIBC BMO TD and Scotiabank in Toronto

By Nichola Saminather

TORONTO (Reuters) – Canada’s top six banks are expected to resume raising dividends and share buybacks after nearly a two-year hiatus and report strong quarterly earnings this week, which could boost the sector’s appeal to yield-hungry investors even as stocks trade close to all-time highs.

The market will also be looking for clues on the banks’ expected expense growth into next year as wage pressures intensify, and long-awaited improvements in net interest margins as interest rates rise.

The “big six” Canadian banks – Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia (Scotiabank), Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada – on average have a dividend yield of 3.3%, according to Reuters calculations.

That compares with the global sector median of 2.5%, according to Refinitiv data.

The dividend increases, which would be the first since the country’s financial regulator imposed a moratorium in March 2020 that was lifted earlier this month, could range from 10% for Scotiabank at the lower end to 34% at National Bank, Gabriel Dechaine, an analyst at National Bank Financial, wrote in a Nov. 22 note describing the coming hikes as a “dividend growth tsunami.”

It's raining dividends, hallelujah! Canadian banks set to post strong results
© Reuters/Mark Blinch FILE PHOTO: A Bay Street sign, the main street in the financial district is seen in Toronto

The banks are also expected to announce repurchases of about 2% of their outstanding shares on average.

“It’s going to be a significant (dividend) increase, and will help them reduce excess capital on their balance sheets,” said Steve Belisle, portfolio manager at Manulife Investment Management. “That flows through to better ROE (return on equity).”

Even without the higher dividends or buybacks, Canadian bank shares have rallied to record highs, driven in part by better-than-expected earnings due to the release of reserves set aside to cover loan losses that haven’t materialized.

LOAN GROWTH ACCELERATION

The Canadian banks will be reporting their fourth-quarter earnings, with Scotiabank kicking off the results on Tuesday.

Analysts expect adjusted earnings for the top six lenders to jump about 37% from the year-earlier period, helped by a pick-up in business and credit card lending, strong mortgage growth and continued reserve releases.

An acceleration in loan growth is expected, as savings built up during the COVID-19 pandemic have lifted consumers’ and businesses’ purchasing power even at higher prices, with the broader economic recovery adding fuel to the fire, said Philip Petursson, chief investment strategist at IG Wealth Management.

The one blot on the horizon may come in the form of non-interest expenses. They could be 1% higher than in the third quarter, with much of the anticipated rise driven by variable compensation, and up 4% in fiscal 2022 on rising labor costs and continued investments in technology, CIBC Capital Markets analysts wrote in a note.

Earnings from capital markets earnings could also decline, although higher-than-expected trading revenues could help offset lower investment banking fees, some analysts said.

Profits are expected to be 6.6% lower than in the third quarter, largely due to releases of reserves, which are difficult to estimate and have driven better-than-expected results in past periods, and could again lead to positive surprises, analysts said.

The banks’ improving revenue growth, strong capital positions and expectations for returns on equity to remain in the mid-teens for longer than expected are positives, National Bank’s Dechaine said.

Wealth and asset management units are also likely to have seen further growth, as consumers continued to deploy cash piles they’ve amassed during the pandemic, Petursson said.

“It’s really hard to see where the warts would be on the banks’ earnings,” he added.

(Reporting by Nichola Saminather; Editing by Denny Thomas and Paul Simao)

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

Stunning videos appear to show rockets raining down on the US embassy compound in Baghdad

© U.S. Army The C-RAM defense system uses high explosive incendiary rounds to engage enemy projectiles in midair. U.S. Army US officials blame “terror groups” for a rocket attack against ... Read more »

Pokémon Legends: Arceus leak seemingly reveals all Shiny variants for Pokémon in the game

© Provided by Dot Esports What appears to be a full data mine of Pokémon Legends: Arceus is currently being leaked online, which means fans are potentially getting an early ... Read more »

Want a Free N95 Mask? You Can Get One From the Government Soon

On Wednesday, the federal government opened up a website offering free COVID-19 test kits to all Americans. Now, the administration plans to distribute free N95 masks as well, following the ... Read more »

'Dangerous' Dairylea advert banned after 'encouraging children' to eat upside down

An advert in which two young girls are seen hanging upside down while eating Dairylea cheese triangles has been banned. The move was taken after a number of complaints with ... Read more »

Blackpool FC star, 24, ‘raped teen girl, 18, after inviting her to Netflix and chill'

A BLACKPOOL FC star allegedly raped a teenage girl after inviting her to 'Netflix and chill' at his home, a court heard today. Striker Beryly 'Bez' Lubala, 24, is accused ... Read more »

Pokémon Legends: Arceus interactive gameplay video lets you look around the Hisui region

© Provided by GamePur The official Pokémon YouTube account shared an interactive gameplay video of Pokémon Legends: Arceus on Wednesday that allows viewers to look around the Hisui region at ... Read more »

I'm a hairdresser & treated a girl for nits – she was covered in bites and all we could do was shave her hair off

A PROFESSIONAL hairdresser has revealed the horrific state of a client's hair after she found it full of lice. Rach shared the video on TikTok where it's gone viral, with ... Read more »

Kate Middleton takes inspiration from Victoria Beckham for daring smoky eye look

Kate Middleton has spent decades perfecting her beauty look, and as such rarely strays from her usual method of makeup application. Today, however, for her first 2022 Royal engagement with ... Read more »

London weather: Stunning sunrise makes sky over city look like it is on fire

A beautiful sunrise is hard to beat. And, we might be biased, but a beautiful sunrise over London is especially hard to beat. Dawn broke spectacularly across the capital this ... Read more »

5G and planes: the risk to flying examined

© David McNew/Getty Images United Airlines flight David McNew/Getty Images Airlines bosses say roll-out of 5G services near US airports risks flights “chaos” Ten of the biggest airlines in the ... Read more »

Vogue and Anna Wintour pay tribute to André Leon Talley following criticism

© Getty Images Vogue criticised over slow tribute to Andre Leon Talley – Getty Images Following the news that fashion icon André Leon Talley has died, fans have criticised Vogue ... Read more »

End of Covid pandemic ‘now in sight' despite strain on hospitals, NHS frontline consultant says

The end of the pandemic is “now in sight”, an NHS frontline consultant has claimed despite Covid-19 patient numbers and coronavirus related staff shortages continuing to impact hospitals. Dr Richard ... Read more »

Texas synagogue hostage-taker claimed to have planted bombs in NYC

© (photo credit: LUCA RAJNA/PROGETTI FOTOGRAFICI) FOR NEW YORK City, the financial capital of the world, cyberattacks have always posed a major threat. The British man who held Jews hostage ... Read more »

French movie star and Marvel actor dies after skiing accident

French actor Gaspard Ulliel, who is due to appear in Marvel’s new Moon Knight show later this year, has died after a skiing accident in France. © Associated Press Gaspard ... Read more »

Neo-Nazi terror offender ordered to read Jane Austen jailed after ‘unduly lenient' sentence quashed

A neo-Nazi terror offender who was ordered to read Jane Austen has been jailed after judges overturned his “unduly lenient” sentence. © Independent Breaking News Ben John, now 22, was ... Read more »

Jose Mourinho's reaction to pundit on TV questioning Spurs' decision to appoint him was gold

Tottenham Hotspur made the bold choice to sack Mauricio Pochettino in November 2019. The Argentine was an extremely popular figure in north London, having guided the club to the Champions ... Read more »

Polis selamatkan 4 wanita asing disyaki mangsa pemerdagangan

© Provided by Free Malaysia Today Polis menyoal siasat suspek dan mangsa selepas menyerbu sebuah pangsapuri di Genting Highlands pada Jumaat lalu. (Gambar Facebook IPD Bentong) PETALING JAYA: Polis menyelamatkan ... Read more »

'I understand...' - Tottenham table 'offer' to sign 'aggressive' ace as source shares news

Speaking to Football Insider, N17 club source and Tottenham Hotspur ‘insider’ John Wenham, who regularly breaks news on his Lilywhites Rose social media account, has shared his own update on ... Read more »

Biden names major Democratic donors as UK, Brazil envoys

© Provided by Associated Press FILE – In this Dec. 9, 2015, file photo U.S. Ambassador to France Jane D. Hartley, poses for the photographers prior to a dinner at ... Read more »

Harry Styles announces Wembley Stadium show and here's how you can get tickets

HARRY Styles has announced dates for his 2022 'Love On Tour' tour and here's how you can get tickets. The Watermelon Sugar hit maker has announced the series of dates ... Read more »

Kein Topliga-Team erhält mehr Penaltys zugesprochen als Manchester United

Diashow ein Cristiano Ronaldos Manchester United bekommt im Schnitt alle 299 Spielminuten einen Penalty zugesprochen. Es ist der Höchstwert in Europas Top-5-Ligen. Auch Messis PSG darf oft vom Punkt antreten. ... Read more »

Findet bei Olympia Spionage statt? Viele Nationen haben Angst

Diashow ein Gibt es bei Olympia Spionage? Aus Angst vor dieser stellen mehrere Länder ihren Athleten laut Presseberichten von sensiblen Daten befreite Mobiltelefone zur Verfügung. Der Schweizer Skispringer Gregor Deschwanden ... Read more »

In zehn Tagen geht die Super League wieder los: Gästefans dürfen in der Rückrunde wieder ins Stadion

In nur zehn Tagen gehts wieder los mit der Meisterschaft, wenn der FCZ am Samstag, 29. Januar um 18 Uhr Servette empfängt. Die grosse Frage ist: Wie wird der Rückrundenstart ... Read more »

Newcastle competing with PL club for Carlos deal

© PA Diego Carlos has been targeted by Newcastle Newcastle are competing with another Premier League club to secure the signing of Brazilian defender Diego Carlos from Sevilla. Newcastle are ... Read more »

Everton "tempted" by manager who'd bring "completely different vibe" alongside Dunc - journalist

Everton owner Farhad Moshiri is tempted to welcome Wayne Rooney back to Goodison Park and put him in charge alongside Duncan Ferguson, according to journalist Dean Jones. The Toffees sacked ... Read more »

Irish politicians agree ‘cross-party' approach in wake of Ashling Murphy murder

Irish politicians backed a cross-party approach to tackle male violence against women, in the wake of the murder of Ashling Murphy. The Dail returned with a sombre leaders’ questions which ... Read more »

England: Mike Brown lauds Jack Nowell as ‘best wing' ahead of Six Nations return

© PA Images Exeter Chiefs v Montpellier – Heineken Champions Cup – Sandy Park Former international Mike Brown has backed Jack Nowell to feature in the England back three in ... Read more »

Three things you need to know about Ireland's newest public holiday

Wednesday marked an integral day for the Irish calendar with a new public holiday being added to the mix. February 1st 2023 will mark the inaugural Imbolc or St Brigid’s ... Read more »

London backpacker in New Zealand shocked that travel buddy has never ever heard of England or the UK

A British backpacker has taken to Reddit to talk about how surprised he was when one of his colleagues admitted to never having heard of England. The shocked traveller had ... Read more »

Covid-19: What are the different rules in place across the UK?

Rules to tackle Covid-19 in England are to loosen after other nations in the UK already announced the lifting of some restrictions. Boris Johnson told MPs in the House of ... Read more »

Pope Francis makes plea for redemption for prison inmates

Pope Francis issued a plea on behalf of prison inmates, saying they should never be deprived of hope and always be given the opportunity to redeem themselves. In remarks at ... Read more »

'Chopping onions', 'That's me away' - Lots of Rangers fans react as player revelation emerges

© Provided by Transfer Tavern Rangers’ Jermain Defoe celebrates scoring their fifth goal v St Joseph’s Lots of Glasgow Rangers fans have been left reacting to a revelation that has ... Read more »

JetBlue pilot spots UFO ‘transforming' in mid-air 37,000 feet over Texas in ‘beyond spectacular' sight

A JETBLUE pilot has reportedly spotted what he said was a UFO “transforming” in the mid-air 37,000 feet over Texas. Footage which appears to have been taken from inside a ... Read more »

Son wants answers in Bronx explosion that killed 77-year-old mom: ‘I'm in shock'

A grieving son is searching for answers in the suspected gas explosion that decimated a Bronx home, killing his mother and injuring his aunt, along with seven others Tuesday. Martha ... Read more »

Hector Bellerin leaves Edu £18m transfer windfall and shows he remains a true Arsenal fan

We are at that stage of the season where you’ll flick on the TV or scroll through your phone and be welcomed by endless amounts of transfer news or postponement ... Read more »

'Moon Knight' star Gaspard Ulliel, the French actor in the upcoming Marvel series, has died following a skiing accident

© Provided by INSIDER Gaspard Ulliel attends the “Illusions Perdues” premiere at UGC Normandie on October 04, 2021 in Paris, France. Getty Images French actor Gaspard Ulliel has died following ... Read more »

A Bungalow's modern renovation

It’s a dilemma many families face — outgrowing a house, both in size and design, but not wanting to sell. This was the scenario couple Jane and Matt faced. The ... Read more »

Mikel Arteta hits back at Arsenal critics over Tottenham postponement

© PA Wire Mikel Arteta is hopeful Arsenal will play Liverpool on Thursday (John Walton/PA) – PA Wire Mikel Arteta has defended Arsenal’s decision to successfully apply for Sunday’s Premier ... Read more »

Conte must axe Spurs' £25m-rated "passenger" tonight, he's been shocking for months - opinion

© Provided by Football FanCast Spurs midfielder Giovani Lo Celso looks dejected vs Morecambe Tottenham Hotspur are back in Premier League action this evening as they travel to the Midlands ... Read more »

‘Could be the difference in a promotion challenge' – Oxford linked with audacious transfer for 57-cap England international: The verdict

© Provided by Football League World jermain defoe This article is part of Football League World’s ‘The Verdict’ series, which provides personal opinions from the FLW writers regarding the latest breaking ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic