The Canadian Banks: As Strong As Ever

Strong earnings. Good growth. Shareholder friendly. There’s a lot to like about the Canadian banks these days.

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler, CFA, is Lead Advisor on Discovery Canada 2017. He is also the Chief Investment Advisor for Motley Fool Canada and is the lead advisor on its flagship Stock Advisor Canada product. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published August 29, 2013 11:36 am EDT

Three Canadian banks stepped into the earnings parade on Thursday, and all three managed to dazzle with their results. TD Bank (TSX:TD,NYSE:TD), Royal Bank of Canada (TSX:RY,NYSE:RY) and CIBC (TSX:CM) all announced better than expected earnings, and then some. Given the green being flashed by all 3 stocks, these results were not only dazzling, but enriching for shareholders.

Here’s a quick synopsis of all 3 releases:

TD Bank

TD announced core EPS of $1.65 which handily eclipsed the consensus estimate of $1.53. For shareholders however, the best bit of news was that the quarterly dividend was hiked by 5% — from $0.81 to $0.85. Solid Canadian retail banking results and strong loan growth in the U.S. helped contribute to the strong quarter. And given the dividend hike, management seemingly does not see an end to these trends.

Royal Bank

Like TD, strong Canadian banking helped Royal earn $1.48 per share in the 3^rd quarter. This compared nicely to the $1.37 that the market was expecting. A touch of weakness in the company’s Capital Markets division was the only blemish that analysts could point to. Better than expected results were widespread and far outweighed the Capital Markets blip. Royal too hiked its quarterly dividend by 6%.

CIBC

Last but not least, CIBC also checked in with a solid beat. The bank earned $2.29 per share in its 3^rd quarter. The consensus estimate was for $2.14. Like its peers, strong results were evident throughout the company, although the uncertainty surrounding the Aeroplan issue remains. This is an issue that is expected to be ironed out in the coming months. Although CIBC didn’t hike its dividend, an 8 million share buyback was announced. This was in-line with past buybacks and if carried out, at current levels, represents a >$600 million outlay.

Foolish Takeaway

The strong results continue to roll out of these Canadian institutions. And with dividend hikes being included with these strong results, it indicates that management foresees much of the same in the quarters to come. This is bad news for those of us that have avoided the banks because of our fears of a slowing housing market and the impact this could have. It’s great news however for shareholders.

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Fool contributor Iain Butler does not own shares of any companies mentioned at this time. The Motley Fool doesn’t own shares in any of the companies mentioned.