"BMO's quarter was good overall and it appears the Bank of the West acquisition will support incremental growth (in 2024 and 2025)," Canaccord Genuity analyst Scott Chan said. Meanwhile, Scotiabank's newly appointed Chief Executive Officer Scott Thomson took a "cautiously optimistic stance" on the operating environment for this year, expecting to benefit from resilient employment and proactive monetary policies that are having the desired impact on inflation. Scotiabank's net income, excluding one-off items, was C$1.85 per share for the quarter compared with C$2.15 a year earlier, missing analysts' expectation of C$2.03.
"It (BNS) was a low-quality quarter...the outlook is a bit more murky as well, especially near-term from the margin side and from a strategy perspective too with the new CEO," Chan said.
Canada's central bank has over the past 11 months lifted interest rates at a record pace to 4.5% in efforts to tame inflation, clouding the outlook for banks which typically thrive in strong economic backdrops. High inflation and elevated rates are likely to stunt GDP growth in both U.S. and Canada, slowing the economy in the near term, BMO Chief Executive Darryl White said in a call with analysts.
Provision for credit losses at BMO was C$217 million ($158
million) for the quarter, compared with a recovery of C$99
million a year earlier.
Scotiabank booked provisions of C$638 million, up from C$222
million a year earlier.
Profits at BMO and Scotiabank were also weighed down by the
Canadian government's 'Canada Recovery Dividend' (CRD). The
one-time 15% tax on domestically-generated profits over C$1
billion in the past two years was imposed last year on the
country's banks and insurers.
BMO recorded C$371 million related to CRD and Scotiabank disclosed a hit of C$579 million.
($1 = 1.3581 Canadian dollars)
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Provisions on the rise as economic outlook darkens ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Manya Saini, Mehnaz Yasmin and Nivedita Balu in
Bengaluru; Editing by Shailesh Kuber, Sriraj Kalluvila and
Krishna Chandra Eluri)
