Canadian banks’ third-quarter fiscal 2019 (ended Jul 31) earnings will get underway later this week. The quarter witnessed significant volatility amid trade war concerns and expectations of economic slowdown.
Nonetheless, modest loan growth on the back of relatively stable interest rates and higher demand will support banks’ net interest income and margins. Also, as yields declined slightly during the to-be-reported quarter, the banks witnessed a slight rise in mortgage loans.
Now coming to non-interest income sources, slump in trading owing to several woes that plagued the quarter will likely hurt Canadian banks’ trading income. Also, investment banking is not likely to be of much help.
Fears of global economic slowdown and increased volatility weighed on corporates’ plans to raise capital by issuing shares. Also, rise in interest rates is likely to lower companies’ involvement in debt issuance activities. Thus, underwriting fees are not expected to increase much. Likewise, decline in global M&A deal volume (due to volatile markets and increase in borrowing costs) in the quarter will likely hamper advisory fee growth.
On the cost front, as Canadian banks continues to invest in technology upgrades to improve efficiency, overall non-interest expenses will increase in the to-be-reported quarter. Also, restructuring efforts will increase costs.
Let’s take a look at the Canadian banks that are scheduled to announce results in the coming days.
Royal Bank of Canada (NYSE:RY) is set to report on Aug 21. The Zacks Consensus Estimate for earnings is pegged at $1.73, indicating 4.2% growth from the year-ago reported figure. Also, the consensus estimate for sales of $8.74 billion suggests 2.3% rise.
With a Zacks Rank #2 (Buy) and Earnings ESP of 0.00%, we can’t conclusively predict an earnings beat this time around.
(You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)
It has a decent earnings surprise history. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters.
Canadian Imperial Bank of Commerce (TSX:CM) , scheduled to announce results on Aug 22, is expected to witness decline in earnings and revenues in the to-be-reported quarter. The Zacks Consensus Estimate for earnings of $2.29 suggests year-over-year decline of 3.8%. The consensus estimate for sales of $3.45 billion indicates a decline of 2.1%.
Given its Zacks Rank #3 (Hold) and Earnings ESP of -0.04%, we cannot conclusively predict whether Canadian Imperial Bank will be able to beat the Zacks Consensus Estimate this time.
It has a decent earnings surprise history. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters.
The Bank of Nova Scotia (TSX:BNS) , scheduled to announce results on Aug 27, is expected to witness growth in earnings and revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for earnings of $1.37 suggests year-over-year growth of 0.7%. The consensus estimate for sales of $5.72 billion indicates a rise of 2.8%. With a Zacks Rank #2 and Earnings ESP of +0.97%, chances of Bank of Nova Scotia beating the Zacks Consensus Estimate are high.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Nonetheless, it doesn’t have a decent earnings surprise history. The company surpassed the Zacks Consensus Estimate in none of the trailing four quarters.
Bank of Montreal (TSX:BMO) is slated to report on Aug 27. The company is expected to witness an increase in earnings and revenues.
The Zacks Consensus Estimate for earnings of $1.86 indicates improvement of 2.2% from the year-ago reported figure. The consensus estimate for sales of $4.52 billion indicates a slight increase of 0.3%. With a Zacks Rank #2 and Earnings ESP of +0.27%, chances of Bank of Montreal beating the Zacks Consensus Estimate are high.
It has an impressive earnings surprise history. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
The Toronto-Dominion Bank (TSX:TD) is slated to announce results on Aug 29. The company is projected to record an increase in earnings and revenues.
The Zacks Consensus Estimate for earnings of $1.33 suggests improvement of 3.9% from the year-ago reported figure. The consensus estimate for sales of $7.70 billion indicates a rise of 1.6%. With a Zacks Rank #2 and Earnings ESP of +0.50%, chances of TD Bank beating the Zacks Consensus Estimate are high.
It has a decent earnings surprise history. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters.
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Canadian Imperial Bank of Commerce (CM): Free Stock Analysis Report
Bank Of Montreal (BMO): Free Stock Analysis Report
Bank of Nova Scotia (The) (BNS): Free Stock Analysis Report
Royal Bank Of Canada (RY): Free Stock Analysis Report
Toronto Dominion Bank (The) (TD): Free Stock Analysis Report
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