Overall, Canadian banks and insurance companies had a strong quarter, building on this year’s strong performance, despite the complex macroeconomic landscape. RBC, CIBC, Manulife, Sun Life, National Bank of Canada, and Great-West Lifeco exceeded analyst EPS estimates for the quarter. Conversely, TD, BMO, Scotiabank, and Power Corp of Canada reported earnings falling short of expectations. 5 out of 6 banks raised their quarterly dividends, Scotiabank being the only one that did not.

Revenue growth was driven by strategic moves like RBC’s acquisition of HSBC Bank Canada and National Bank’s planned purchase of Canadian Western Bank. Insurers such as Manulife and Great-West Lifeco saw gains from international markets and wealth management growth.

Elevated credit provisions reflected economic pressures, including rising unemployment and weaker loan demand. However, banks like BMO and CIBC anticipate credit stabilization in 2025. Regulatory and expense challenges weighed on TD and Scotiabank.

Innovation remained a priority, with insurers investing in AI and digital tools to enhance customer experience and efficiency. Despite headwinds, the sector is well positioned for sustained growth given the bank’s relatively strong balance sheets overall.

Portfolio Holdings

Royal Bank of Canada (RY)

YTD Total Return: 38.66%

• EPS: $3.070 reported vs Bloomberg estimate of $3.027
• Revenue: $15.074B reported vs Bloomberg estimate of $14.789B

“In 2024, RBC relentlessly pursued our ambition to stay ahead of evolving client expectations and create unparalleled value. As our results exemplify, our premium franchises delivered diversified revenue growth, underpinned by a strong balance sheet and prudent risk management. One of our year’s defining moments was the acquisition of HSBC Bank Canada, which marked a pivotal milestone in our client driven growth story and strengthened our position as a competitive global financial institution. We also elevated a new generation of leaders across the bank to continue delivering trusted advice and experiences to rival the best in any industry. As we enter 2025 from a position of strength, I’m fully confident in Team RBC’s ability to continue going above-and-beyond to support those we serve, each and every day.” – Dave McKay, President and CEO.

RBC reported strong financial performance, with profits of $4.22 billion, a 7% increase year-over-year, and $16.2 billion for the year. Adjusted quarterly profits surged 18%, driven by the acquisition of HSBC Canada and robust growth in wealth and asset management. Despite economic challenges such as rising unemployment and subdued loan growth, RBC’s diversified operations helped offset these pressures. The bank increased its dividend by 4% but scaled back share buybacks, citing volatility around monetary policy and elections. Provisions for bad loans rose 17% to $840 million, with credit losses expected to peak next year. RBC exceeded analyst estimates with adjusted earnings of $3.07 per share.

Toronto-Dominion Bank/The (TD)

YTD Total Return: -9.60%

• EPS: $1.720 reported vs Bloomberg estimate of $1.833
• Revenue: $12.552B reported vs Bloomberg estimate of $12.557B

“Despite a challenging quarter, we are pleased with the Bank’s underlying fundamentals, which were reflected in our revenue growth. This quarter, we delivered higher fee income in our markets-related businesses, volume growth in Canada, and stable deposits in the US. A key development this quarter was the resolution of our U.S. 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.” – Bharat Masrani, President and CEO.

Toronto-Dominion Bank (TD) reported earnings of $1.72 per share, missing analyst expectations of $1.83 due to weak performance in its U.S. banking operations and capital markets division. U.S. retail net income dropped 32% to $863 million, and adjusted capital markets income of $299 million fell short of estimates.

The bank is reassessing its business priorities after a historic $3.1 billion U.S. money-laundering settlement, suspending medium-term financial targets. TD faces ongoing challenges, including a cap on its American assets, while CEO Bharat Masrani prepares to step down, to be succeeded by Raymond Chun.

Provisions for credit losses were $1.11 billion, aligning with forecasts. TD’s valuation remains under pressure due to U.S. regulatory constraints, compounded by higher catastrophe-loss claims in its insurance division.

Bank of Montreal (BMO)

YTD Total Return: 15.46%

• EPS: $1.900 reported vs Bloomberg estimate of $2.385
• Revenue: $8.368B reported vs Bloomberg estimate of $8.392B

“In 2024, BMO delivered good pre-provision pre-tax earnings growth across all operating groups and we met our commitment to positive operating leverage in each of the last three quarters and for the full year. 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 Darryl White, CEO.

BMO Financial Group reported profit of $2.30 billion, driven by the reversal of a 2022 lawsuit verdict. The bank increased its quarterly dividend to $1.59 per share, up from $1.55. Revenue rose to $8.37 billion, while provisions for credit losses increased to $1.52 billion, reflecting ongoing economic challenges.

Adjusted earnings fell to $1.90 per share, missing analyst expectations, and declining from a year earlier. CEO Darryl White noted that elevated credit provisions impacted results but expects improvement through 2025.

Bank of Nova Scotia/The (BNS)

YTD Total Return: 31.41%

• EPS: $1.570 reported vs Bloomberg estimate of $1.598
• Revenue: $8.526B reported vs Bloomberg estimate of $8.615B

“2024 was a foundational year for Scotiabank as we launched and made early progress against our new strategy. The Bank delivered solid revenue growth and positive full year operating leverage, while redeploying capital to our priority markets across the North American corridor,” – Scott Thomson, President and CEO.

Scotiabank missed earnings estimates, reporting adjusted earnings of $1.57 per share, below the $1.60 expected, due to higher-than-expected expenses, taxes, and a one-time $379 million impairment related to its investment in Bank of Xi’an in China. The bank’s shares dropped as much as 4.9% intraday, their largest decline in over a year.

Non-interest expenses surged to $5.3 billion, driven by performance-based compensation, technology, and advertising costs. Net income in the capital markets unit declined 2.7%, but other segments saw growth: Canadian banking rose 34%, international operations increased 14%, and wealth management grew 28%.

Provisions for loan losses totaled $1.03 billion, slightly below forecasts, though credit challenges persist. CEO Scott Thomson remains optimistic, reaffirming 2025 earnings growth guidance of 5%-7% and emphasizing efforts to refocus on North America.

Canadian Imperial Bank of Commerce (CM)

YTD Total Return: 52.22%

• EPS: $1.910 reported vs Bloomberg estimate of $1.788
• Revenue: $6.617B reported vs Bloomberg estimate of $6.447B

“Our bank delivered record financial performance in 2024 through the consistent execution of our client-focused strategy across business lines and across borders, driving growth for our bank through client relationships and delivering value for all of our stakeholders,” said Victor Dodig, President and CEO.

CIBC reported profits of $1.88 billion, up from $1.49 billion a year earlier, and raised its quarterly dividend to 97 cents per share from 90 cents. Adjusted earnings were $1.91 per share, exceeding analyst expectations of $1.79, with revenue climbing to $6.62 billion from $5.85 billion.

Provisions for credit losses fell to $419 million from $541 million, contributing to the improved results. CEO Victor Dodig credited the bank’s client-focused strategy for record 2024 financial performance.

Key segments posted strong gains, including Canadian personal and business banking (+$106M), commercial banking and wealth management (+$26M), and U.S. operations (+$152M). Capital markets earnings rose to $428 million. The “corporate and other” segment narrowed its net loss to $7 million.

Manulife Financial Corp (MFC)

YTD Total Return: 62.95%

• EPS: $1.000 reported vs Bloomberg estimate of $0.937
• Revenue: $14.586B reported

“We continued to drive momentum and delivered strong results in the third quarter, evident in record total company core earnings, substantial top-line growth across our operating segments and steady growth in our book value per share. In Global WAM, we generated a 37% increase in core earnings year-over-year, and our core EBITDA margin further improved to 27.8% driven by strong AUMA growth and higher operating leverage. We remain focused on executing against our strategic priorities and delivering on our financial targets to bring a strong close to 2024, and I am optimistic in our ability to continue generating value to our shareholders.” – Roy Gori, President and CEO.

Manulife Financial Corp. reported a 4% increase in adjusted third-quarter profit, reaching $1.83 billion, driven by significant growth in Asia and advancements in artificial intelligence (AI). Asia’s net income surged to $606 million from $63 million a year ago, with core earnings up 17%, fueled by higher sales, particularly in Hong Kong.

The company has integrated AI into its operations, including a pilot in Singapore using generative AI sales scripts, boosting repurchase rates by 5%. In North America, AI tools reduced call times by 12% for 15% of contact center agents. Manulife has launched 11 AI use cases, with 29 more in progress.

Efforts to improve efficiency included a 2.5% workforce reduction in its global wealth team, incurring a $20 million restructuring charge. CEO Roy Gori emphasized the firm’s resilience across diverse geographies despite macroeconomic volatility.

Sun Life Financial Inc (SLF)

YTD Total Return: 33.71%

• EPS: $1.760 reported vs Bloomberg estimate of $1.690
• Revenue: $15.333B reported

“Sun Life had a strong quarter with more than $1 billion in both underlying and reported net income, showcasing the strength and diversity of our businesses. These results reflect our leadership positions in asset management and insurance, driven by strong insurance growth, and a return on equity of close to 18 percent. Our results demonstrate our resolve to deliver on our Purpose to help Clients achieve lifetime financial security and live healthier lives.” – Kevin Strain, President and CEO.

Sun Life Financial Inc. reported a strong Q3 2024, with an 11% increase in EPS, surpassing its financial objectives. The company announced a dividend increase and share buybacks, reflecting its strong capital generation. AUM reached a record $1.5 trillion. The company also reported significant growth in individual protection sales in Asia, up 19% year-over-year, and became the largest dental benefits provider in the U.S. Sun Life’s commitment to innovation was highlighted by the launch of My Retirement Income in Canada and digital enhancements, including a generative AI chatbot. Record underlying net income of over $1 billion was reported, up 9% year over year.

National Bank of Canada (NA)

YTD Total Return: 37.68%

• EPS: $2.580 reported vs Bloomberg estimate of $2.568
• Revenue: $2.989B reported vs Bloomberg estimate of $2.939B

“Through disciplined execution, strong organic growth and resilient credit performance, we met all of our medium-term financial objectives in 2024. Looking ahead to 2025 in what will remain a complex environment, we will continue to leverage our diversified business model and disciplined approach to credit, capital and costs as we pursue our growth path.” – Laurent Ferreira, President and CEO.

National Bank of Canada reported profit growth, earning $955 million, up from $751 million a year earlier. Revenue rose to $2.99 billion from $2.56 billion, while provisions for credit losses increased to $162 million. The bank announced a dividend increase to $1.14 per share and highlighted the anticipated completion of its $5-billion acquisition of Canadian Western Bank (CWB) in 2025 as a transformative growth opportunity. CEO Laurent Ferreira emphasized the complementary nature of the two banks. Key business segments saw year-over-year growth, including personal and commercial banking (+$56M), wealth management (+$64M), and financial markets (+$22M). Analysts noted strong performance despite rising credit impairments.

Power Corp of Canada (POW)

YTD Total Return: 31.26%

• EPS: $0.840 reported vs Bloomberg estimate of $1.139
• Revenue: $7.657B reported

Power Corporation of Canada reported third-quarter 2024 net earnings from continuing operations of $371 million ($0.58 per share), down from $997 million ($1.50 per share) in Q3 2023. Adjusted net earnings were $542 million ($0.84 per share), compared to $1,006 million ($1.52 per share) a year earlier. Adjusted net asset value per share rose to $57.92, up from $53.53 at year-end 2023, while book value per share increased to $34.00.

Subsidiary performance highlights include Great-West Lifeco’s adjusted net earnings of $1.06 billion (+12% YoY) and IGM Financial’s record assets under management and advisement of $264.9 billion (+16.5% YoY). Groupe Bruxelles Lambert reported net asset value of €16.3 billion, while Sagard and Power Sustainable raised $1.9 billion in new commitments in 2024. Power Corporation repurchased 8 million shares for $309 million this year, signaling confidence in its long-term growth strategy.

Great-West Lifeco Inc (GWO)

YTD Total Return: 17.18%

• EPS: $1.140 reported vs Bloomberg estimate of $1.081
• Revenue: $5.292B reported

“We continue to execute on our focused strategies to deliver sustainable and profitable growth for our shareholders. In our fifth consecutive quarter of record base earnings, we’re delivering at the top end of our medium-term financial objectives,” said Paul Mahon, President and CEO.

Great-West Lifeco Inc. reported record base earnings for the fifth consecutive quarter, with significant growth in the U.S. segment, surpassing early 2024 objectives. The company has made strategic acquisitions and partnerships, such as with Primerica Life Insurance in Canada and the acquisition of Plan Management Corporation by Empower in the U.S., to expand its market presence and drive growth in wealth and retirement business segments. It also highlighted resilience against recent hurricanes in the U.S., indicating strong risk management and reinsurance strategies. Additionally, Great-West Lifeco announced plans to increase dividends by the end of the year, reflecting its strong capital levels and earnings growth. The company has surpassed $3 trillion in assets under administration, marking a significant milestone and supporting double-digit base earnings growth.

 

Source: Bloomberg as at November 29, 2024. EPS and Revenue data in CAD. YTD performance as at December 5, 2024.

Source: Getty Images Credit: Sean Gladwell

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