Six biggest banks hit record $19.51B profit as Scotiabank posts $4.05B in earnings

David Friend, THE CANADIAN PRESS

TORONTO - Canada's six biggest banks managed to turn out a record $19.51 billion profit in fiscal 2007, despite a tumultuous finish to the year that caused many of them to report multi-million dollar writedowns related to the credit crisis.

Scotiabank was the last to report on Thursday, posting a six per cent rise in profits for the fourth quarter as its full-year earnings hit a record $4.05 billion.

The results helped the Big Six rise above the previous record of $19 billion set last year, while still posting a combined $2.02 billion in charges related to securities hit by the U.S. subprime market meltdown.

Only TD Bank (TSX:TD) managed to escape the charges, while National Bank (TSX:NA) and CIBC (TSX:CM) were hit the hardest, posting more than $1 billion in combined writedowns at the end of October.

National Bank also reported its first annual loss in 15 years.

Scotiabank was relatively unscathed in comparison, reporting last month that it would post writedowns worth $190 million - or $135 million after tax - related to non-bank asset-backed commercial paper and structured credit instruments.

On Thursday, the Scotiabank said quarterly earnings for the period ended Oct. 31 were $954 million, worth 95 cents per share. That was an increase from $897 million or 89 cents per share a year ago.

Earnings per share fell short of analyst expectations, which put estimates at $1 in earnings per share, according to a poll by Thomson Financial.

But the bank closed up 21 cents to $52.36 on the Toronto Stock Exchange after spending the majority of the day in the red.

Scotiabank also said its quarterly dividend will rise two cents to 47 cents, payable in January.

Revenue increased to $3.1 billion from $2.9 billion in the comparable quarter.

The bank also took a $200-million pretax gain on the sale of its interest in Visa Inc., which is restructuring for its initial public offering.

CEO Rick Waugh said the record full-year results were achieved by continuing a strategy of diversifying across geographies and three growth platforms.

He also said that the bank expects a "continually challenging operating environment" throughout most of next year.

"We expect a weaker U.S. dollar and certain market conditions to continue to provide headwinds," Waugh said in a conference call.

"Our capital is strong, our credit portfolios are in good shape and . . . we have only nominal exposure to those current areas of investor and market concern."

All major business lines delivered strong earnings, led by domestic banking with growth of 21 per cent, international banking with 17 per cent and the Scotia Capital brokerage with six per cent.

Other highlights of the quarter:

-CIBC (TSX:CM) said profit rose to $884 million while disclosing that its total charges from the credit crunch could soar higher than its already revealed $978-million writedown.

-Royal Bank of Canada (TSX:RY) profits decelerated to their slowest growth rate in two years, up about five per cent to $1.32 billion, as the bank posted a credit market writedown of $357 million.

-TD Bank Financial Group profit climbed 44 per cent to $1.09 billion as it dodged the credit market crisis. The bank has backed out of the high-risk investment vehicles before the markets were splashed with the fallout last summer.

-National Bank posted its first quarterly loss in 15 years, worth $175 million, as it reported a $575-million writedown on represented 25 per cent of its ABCP holdings.

-Bank of Montreal (TSX:BMO) profit slid by 35 per cent to $452 million pulled down by a $211 million credit market writedown .

© The Canadian Press, 2007