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The profits of Canada’s three largest banks in the last quarter more than doubled or more than quadrupled, indicating that the most serious economic losses caused by the epidemic may be in the rearview mirror, as Canada’s largest banks are returning to the market. cash.
Canada’s largest bank, Royal Bank of Canada, achieved a profit of 4 billion Canadian dollars in the three months to the end of April. This is an increase compared to the $1.5 billion profit made during the same period last year when the COVID-19 pandemic just started.
The second-largest bank, TD Bank, had a profit of US$3.7 billion in the quarter, which was only slightly behind the same period last year and increased by 144%.
CIBC’s percentage jump was even greater, with a quarterly profit of $1.6 billion, more than four times the same period last year.
Watch | Big banks are under fire for raising fees during the pandemic:
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Bank of Montreal was the first major bank to announce quarterly earnings on Wednesday. Announced that its profits had almost doubled Just over 1.3 billion US dollars. The last major bank, Scotiabank, will release a report on Monday, and analysts expect a similar surge in the bank.
Banks are a bit like canaries in Canadian economic coal mines, because if consumers and businesses they borrow money have trouble paying bills, these troubles will appear on the bank’s books. However, this week’s sharp increase in profits shows that, at least on the whole, consumers and businesses are not completely in trouble.
Part of the reason for the surge in profits can be attributed to banks being able to withdraw some of the funds they set aside to pay for loans they fear may go bad. These banks, known as loan loss reserves, left billions of dollars worth of cash on their balance sheets in case they had to write off loans that they feared would default due to the pandemic.
But in most cases, this has not happened yet. Official information Data show that in the year ending March 31, 2021, only more than 2,500 Canadian companies went bankrupt. Compared with the more than 3,500 cases without a pandemic a year ago, this is a drop of 30%.
Consumer bankruptcies are similar, with a decrease of 37% compared to before the pandemic.
This shows that generally Canadians are trying to maintain their debt ceiling, which allows banks to transfer some of the cash they have retained from liabilities to assets in the ledger.
In the same period last year, the Royal Bank’s loan loss reserve was $2.1 billion. They now have only $260 million left. At the same time, TD’s provision value a year ago was $3.2 billion. This quarter, the number actually became a net positive number, with $377 million in such loans being recovered.
At CIBC, loan loss reserves fell by 98%, from $1.4 billion last year to $32 million now.
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