Canada’s biggest banks – TD Bank, RBC, and Canadian Imperial Bank of Commerce reported stronger-than-expected results in their capital-markets divisions.
The trend mirrored developments in the US, where major banks, including JPMorgan Chase, Goldman Sachs, and Bank of America, saw higher revenue from trading and dealmaking.
TD Bank reported first-quarter earnings that exceeded analyst expectations, driven by gains in wealth management and capital markets. The bank earned $2.02 per share on an adjusted basis, surpassing the $1.95 average estimate. Wealth management and insurance earnings totaled $680 million, higher than the $578 million average estimate from three analysts surveyed by Bloomberg.
Royal Bank of Canada (RBC) also reported a 48% increase in net income for its wealth-management division, reaching $980 million. The bank attributed this to “market appreciation and net sales.” RBC’s adjusted earnings per share for the quarter were $3.62, exceeding the $3.26 analyst estimate.
TD chief financial officer Kelvin Tran said the bank’s wealth-management unit gained customers and fee-generating assets while benefiting from active markets.
“Market growth is helpful to the fees that we generate,” Tran said. He added that the bank’s direct-investing business saw increased trading volume due to market volatility, which also contributed to gains in capital markets.
Canadian banks increased provisions for credit losses this quarter amid economic uncertainty related to potential US tariffs. TD set aside $1.21 billion, slightly above the $1.19 billion analyst estimate. Bank of Nova Scotia, Bank of Montreal, and RBC each recorded over $1 billion in provisions, while National Bank of Canada and CIBC allocated $254 million and $573 million, respectively.
RBC analyst Darko Mihelic noted that TD’s results were viewed favourably, stating that “TD has a lot of moving parts, so stronger than expected numbers are likely to be greeted positively in our view.”
TD is undergoing a transition after agreeing to a $3.1 billion settlement with US authorities over anti-money laundering failures at its American branches. The bank is reducing its US balance sheet to comply with regulatory limits on its American retail assets and is increasing spending on compliance measures. It recorded $927 million in restructuring costs for its US balance sheet in the first quarter, or $696 million after taxes.
Earlier in February, TD sold its 10.1% stake in Charles Schwab Corp., generating $13.9 billion after taxes and fees. New CEO Raymond Chun said the bank plans to invest in its Canadian operations and capital-markets business. The bank also announced an $8-billion share buyback, receiving regulatory approval for the plan on Monday.
