Wednesday, November 07, 2007

Loan Losses Spike at BMO's & RBC's US Units

Dow Jones Newswires, 7 November 2007

The weak US banking environment is starting to gnaw away at Royal Bank of Canada's and Bank of Montreal's US units, BMO Capital Markets notes after reviewing regulatory statements. Analyst says 3Q income statements show a "relatively material spike in loan losses." BMO's Harris Bank losses 20% up QOQ, RY's Centura sees them double. While not a surprise, added to "choppy" spread, earnings likely down 15-25% from preceding quarter, analyst says. And that's before converting the total into Canadian dollars. News at Toronto-Dominion's Banknorth is "less worrying," analyst says. Loan loss provisions increased some time ago. Dollar headwind still a factor, though.
Dow Jones Newswires, 6 November 2007

Canadian banks likely to chalk up C$1.1B in 4Q from one-time gains on Visa restructuring, Scotia Capital estimates. Biggest winner is Canadian Imperial Bank of Commerce, estimated to snag C$430M, followed by Royal Bank of Canada at C$330M, Toronto-Dominion Bank at C$175M and Bank of Nova Scotia at C$125M. For CM at least, amount will be enough to offset expected write-downs from U.S. subprime mortgage exposure, officials say. In any case, Scotia Capital sees operating earnings before gains from Visa IPO up 3% YOY but 10% down QoQ.