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Daily Pulse

Canada

Bank of Montreal opened fiscal first-quarter reporting season for Canada's Big Six banks Tuesday morning with a substantial profit beat, fueled by growth in all its major divisions and a sharp drop in loan loss provisions. BMO's net income for the three months ending Jan. 31 rose 27 per cent year over year to $2.02 billion. On an adjusted basis, the bank earned $3.06 per share; analysts, on average, were expecting $2.15 in quarterly profit excluding one-time items. The bank's U.S. operations posted the most substantial growth, as adjusted profit in that division surged 67 per cent year-over-year to US$459 million. BMO attributed the improvement to revenue gains, lower expenses, and a drop in funds that had been set aside for loans that could go bad. On that front, BMO's bank-wide provisions for potential loan losses fell to $156 million in the quarter from $432 million in its fiscal fourth quarter.

Bank of Nova Scotia managed to beat profit expectations in its fiscal first quarter despite suffering a significant decline in earnings from its international banking operations. The bank's net income for the three months ending Jan. 31 inched up to $2.39 billion from $2.33 billion a year earlier. On an adjusted basis, Scotia's profit rose three per cent to $1.88 per share; analysts, on average were expecting $1.57. Scotia – which is often billed as Canada's most international bank – was held back by that title in the latest quarter as the bank's adjusted profit from overseas operations tumbled 35 per cent year-over-year to $398 million. Scotia listed a range of factors, including higher credit-loss provisions and an extra month of results from its Mexican unit a year earlier, as contributing to the division's profit erosion. However, the bank's total profit benefitted from improved overall credit quality in the latest quarter as provisions for bank-wide loans that could go bad fell to $764 million from $1.13 billion in the fiscal fourth quarter.

United-States

This link will open in a new tab. Home Depot’s fourth-quarter earnings surged past investors’ expectations on Tuesday, as consumers continued to invest in their homes due to the pandemic and strength of the real estate market. Home Depot Chief Financial Officer Richard McPhail said the retailer is not sure how long the pandemic will last and how that may influence consumer spending. He said if demand from the second half of last year continues, it would lead to slightly positive same-store sales growth and an operating margin of at least 14% this year. Here’s what the company reported for the quarter ended Jan. 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv: Earnings per share: $2.65 vs. $2.62 expected; Revenue: $32.26 billion vs. $30.73 billion expected.

Europe

This link will open in a new tab. HSBC on Tuesday reported full-year earnings for 2020 that beat expectations and announced a dividend payout for the first time since the Covid-19 pandemic. Europe’s largest bank by assets, which makes most of its revenues in Asia, said its reported profit before tax for 2020 fell 34% from a year ago to $8.78 billion. That beat analyst expectations of $8.33 billion, according to estimates compiled by HSBC. Reported revenue was $50.43 billion for the year, down 10% from 2019. HSBC’s board announced an interim dividend of 15 cents per share – its first payout since the third quarter of 2019.

Asia

Taiwan has upgraded its growth forecast for 2021, predicting the economy this year could expand at the fastest rate in seven years – thanks to global semiconductor demand boosting exports from the island. Its economy is forecast to grow by 4.64% in 2021 from a year ago – making it the quickest expansion since 2014, This link will open in a new tab. according to data from the Taiwanese statistics bureau. Taiwan’s projected growth for 2021 is an upgrade of the previous forecast for a 3.83% expansion, and an acceleration from the revised growth of 3.11% for the whole of 2020, the bureau said on Saturday. The North Asia economy was the fastest-growing in Asia last year, when the This link will open in a new tab. Covid-19 pandemic hit activity in many countries and territories. This link will open in a new tab. Taiwan also grew faster than China for the first time in 30 years.

The author

Michel Doucet

Michel Doucet

Vice-President and Portfolio Manager
After obtaining a Bachelor's degree from the Faculty of Social Sciences at the Université du Québec in Montréal and his Master’s degree, Michel Doucet began his career as a junior economist at the National Bank head office in Montreal. In 1992 he joined the institutional equities and fixed income group at Lévesque Beaubien Geoffrion as an economist and market analyst. Over the years, he has led various projects related to the North American and international economies as well as Canadian public finances. In 1996, the team of institutional economists to which he belongs was ranked first in Canada by Brendan Wood International. In August 1997, Mr. Doucet joined the personal services division of Lévesque Beaubien Geoffrion where he served as an economist, fixed income market analyst and vice president. In 2004, he joined the Desjardins Securities full service team as Vice President. He now occupies the roles of fixed income strategist, economist and portfolio manager. He manages the Securities Portfolio Advisory Group, advisor marketing and distribution of financial planning and insurance.