Canada's largest banks close the year on a high note despite rising credit provisions
Three of Canada’s largest banks – BMO Financial Group, TD Bank Group, and CIBC – have released their fourth-quarter and full-year results, wrapping up the 2024 financial reporting season.
The results showcased growth in some areas, tempered by rising credit provisions and mixed adjusted earnings.
Big gains for BMO
BMO Financial Group posted a fourth-quarter net income of $2.3 billion, up from $1.7 billion in the same period last year. However, adjusted net income fell to $1.5 billion from $2.2 billion in 2023, impacted by elevated provisions for credit losses (PCLs). The bank’s PCLs rose sharply to $1.5 billion, compared to $446 million in the same quarter last year.
For the full year, BMO reported net income of $7.3 billion, up from $4.4 billion in 2023, while adjusted net income fell to $7.4 billion from $8.7 billion. The Common Equity Tier 1 (CET1) ratio rose to 13.6%, and the bank increased its quarterly dividend by 5% year-over-year to $1.59 per share.
"Our overall results were impacted by elevated provisions for credit losses, and we expect quarterly provisions to moderate through 2025 as the business environment improves," said BMO chief executive officer Darryl White. “We are entering 2025 with a strong foundation and significant balance sheet capacity for growth.”
The bank also announced plans for a normal course issuer bid (NCIB) to repurchase up to 20 million common shares, pending regulatory approval.
TD: Growth despite hurdles
TD Bank Group reported a fourth-quarter net income of $3.6 billion, a 26.8% increase from the same quarter last year. Adjusted net income, however, declined by 8% year over year to $3.2 billion. Provisions for credit losses were a key factor, reflecting higher non-interest expenses and lower revenue in its US operations.
For the fiscal year, TD reported adjusted net income of $14.3 billion, slightly below the $15 billion recorded in 2023. Fourth-quarter Canadian Personal and Commercial Banking revenue reached a record $5.1 billion, driven by a 7% increase in loan and deposit volume and improved margins.
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“Despite a challenging quarter, we are pleased with the bank’s underlying fundamentals, which were reflected in our revenue growth,” said Bharat Masrani, group president and CEO of TD, noted. “A key development this quarter was the resolution of our US AML matters, bringing important clarity to our stakeholders. Remediation is our number one priority, and we continue to make meaningful progress in addressing the failures.”
The bank’s US retail operations posted adjusted net income of $941 million in Q4, down 12% year over year, reflecting higher PCLs and non-interest expenses.
CIBC sees record profits
CIBC recorded a full-year net income reaching $7.2 billion, up from $5 billion in 2023. Adjusted annual net income was $7.3 billion, a 12% increase year over year from $6.5 billion the previous year.
The bank’s fourth-quarter net income totalled $1.3 billion, despite a 23% drop in PCLs to $419 million from a year ago. CIBC said the decline was driven by improved credit migration and favourable model updates.
“Provision for credit losses on performing loans was down $61 million, due to a decrease resulting from model parameter updates and favourable credit migration mainly driven by paydowns, partially offset by an unfavourable change in our economic outlook,” the bank added. “Provision for credit losses on impaired loans was down $61 million, primarily due to lower provisions in U.S. Commercial Banking and Wealth Management, partially offset by higher provisions across all other strategic business units (SBUs).
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“Our bank delivered record financial performance in 2024 through the consistent execution of our client-focused strategy,” said Victor Dodig, CEO of CIBC. “We enter the new fiscal year focused on leveraging our platform to grow wealth management, commercial banking, and digital services.”
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