In this analysis, we will be looking at some of the major lenders in the country and what their reports reveal about the mortgage industry.
The Royal Bank of Canada (RBC) reported a strong second quarter with net income of $3.2 billion. The bank saw an increase in their loan portfolio due to growth in their Canadian mortgage and commercial lending businesses. RBC also indicated that their mortgage portfolio is performing well, with an unchanged delinquency rate from the previous quarter.
Toronto Dominion Bank (TD) also reported a good quarter with net income rising 5% to $2.7 billion. TD noted that their loan portfolio has grown by 4% from last quarter due to strong consumer and commercial loan activity. Furthermore, their mortgage portfolio had grown 6% as a result of higher volumes and favourable pricing.
Bank of Nova Scotia (Scotiabank) reported a 6% drop in net income compared to the previous quarter due to one-time costs related to currency fluctuations. Nonetheless, Scotiabank reported strong loan portfolios due to a 10% increase from the prior quarter, mainly attributed to loan growth in Canada and across its international operations. Their mortgage portfolio also grew 5% to $138 billion.
Following the release of their second quarter earnings, Canadian Imperial Bank of Commerce (CIBC) saw a rise in net income of 21%, driven by strong domestic loan growth particularly in mortgages. This resulted in a total loan portfolio of $288 billion, which is up 8% from its prior quarter.
Finally, National Bank of Canada (NBC) reported a decrease in net income in the second quarter due to market volatility and higher administrative costs. Nonetheless, NBC reported an 8% rise in its total loan volume from the prior quarter due in large part to its strong mortgage loan portfolio.
Overall, the second quarter of 2018 was a strong one for the Canadian banking industry. Most of the major lenders reported higher loan volumes and strong performance in their mortgage portfolios. RBC and TD reported good net incomes as well as a strong loan portfolio growth due to both consumer and commercial loan activity. Meanwhile, Scotiabank saw a decrease in net income, but a strong loan portfolio growth due to loan growth in its Canadian and international operations. CIBC reported a rise in net income due to domestic loan growth in mortgages. Finally, NBC reported a decrease in net income but a strong mortgage loan portfolio.
This analysis of the second quarter bank earnings paints a positive picture of the Canadian mortgage industry. All the major lenders saw increased loan volumes, especially in the form of mortgages, and reported strong overall performance. As we move forward into the third quarter of 2018, it is likely that these trends will continue as banks look to capitalize on the low interest rate environment and boost their loan portfolios.
This article was contributed on Jul 20, 2023