Six Canadian Banks earn almost $35 billion over last fiscal year

- In a year that has seen a weak economy, slumping development in the energy sector and consumers cautious and debt-ridden, five of the six main Canadian banks had fiscal year earnings better than last year with Scotibank being the single exception.

Three of the six banks also increased their dividends. Total earnings of the six for the fiscal year was almost $35 billion. The Royal Bank was the top earner with $10 billion in profit compared to $9 billion last year.

One of the ways the banks increased their profits was by curbing expenses. This often involves trimming staff and running the operations with fewer workers. TD cut 1,594 jobs this year. Scotiabank dropped 1,140 staff since last July.but this did not increase the profits for this year which dropped to $7.21 billion from$7.30 billion last year. Royal Bank also cut 528 full time jobs but did it mostly by not replacing retirees rather than laying off existing staff.

Some of the increase in profits has nothing to do with the Canadian economy but rather that some Canadian banks have large U.S. operations, and with the low Canadian dollar, U.S. earnings are worth more in Canadian dollars. Some Canadian banks have expanded to such a degree into the U.S. that in the case of TD, it has more branches in the U.S. than Canada. TD had the second highest earnings with $8.02 billion this year as compared to $7.88 last year.

Loan volumes have been rising and deposits growing. The banks also saved money by not passing along the full half percentage point in the loan rate that the Bank of Canada introduced earlier this year. The banks lowered their rate by only 0.30 percent, keeping the other 0.20 per cent for themselves or 40 percent of the total drop in the rate. What many consumers no doubt noticed is bank fees are continuing to increase as well.

Still, banks face problems in the west. particularly in Alberta where there have been many layoffs. The Royal Bank has added eight energy sector companies to its watch list. Equifax, the credit monitoring agency, says loan delinquencies were rising in every province with a large energy component. The economic outlook for 2016 is not that robust and forecasts have been trending downward,

The banks also face pressure to introduce new digital technology to compete with competition from giants such as Apple and Google. Janice Fukakusa, CFO of RBC, said: "We're continuing to invest in our digital channels … and also to invest in automating and simplifying our processes." David Beattie, a bank analyst at Moody's Investor Services, said"They're getting to the point where they're really doing some substantive changes to the way they run their businesses,Digitization is doing that anyway, but the pressure of low interest rates and spread compression and low revenue growth is just making it all that more critical."

The Royal Bank(RBC), with the largest profits, showed an increase in profits of 11,3 percent from last year. In the fourth quarter of this year ending on October 31, it earned $2.59 billion, also up by 11 percent from 2014. The RBC profit per common share was $1.74 in the fourth quarter above estimates by analysts. For the full year it was $6.73. The stock pays a dividend of 79 cents per share, an amount unchanged. Dave McKay, president and CEO of RBC, said: "We had record earnings of $10 billion in 2015, reflecting the strength of our diversified business model and our ability to execute our growth strategy in a changing environment," RBC operations in the U.S. and the Caribbean were profitable this year whereas last year they suffered losses. Not surprisingly there are signs that all will not be well in Alberta. Mark Hughes, risk officer for the RBC, said:"We've noticed a slight — and I would stress the word slight — upward trend in auto and credit card delinquencies in Alberta and while they haven't translated into writeoffs, we are monitoring the performances of these portfolios,"

The Toronto-Dominion Bank(TD) saw its profits increase by 5.3 percent in the fourth quarter to $1.84 billion even though it had heavy restructuring costs. The bank claims its Canadian retail operations experienced growth in loans, deposits, and insurance earnings. At the same time, credit performance was also strong. TD's U.S. banking operations had a net income of $486 million, which was 14 percent above that of last year. In part this was due to the weak loonie. The TD president and CEO, Bharat Masrani, said; "Results for the year reflect good earnings performance from all businesses, driven by good organic growth, strong credit quality, favourable currency translation and positive operating leverage."

Although CIBC profits showed a drop in profits for the fourth quarter, it also reduced its workforce — but by just 124 positions in the fourth quarter. For the entire fiscal year ending Oct. 31, CIBC performed better than in 2014. The bank had $3.59 billion of net income and $7.92 billion of revenue, up from $3.22 billion of net income and $7.5 billion of revenue last year. Victor Dudig, CEO and president said:"In 2015, all three of our strategic business units delivered strong performance,Looking to 2016, I am confident that our client-focused strategy and our investment in innovation and process improvements will add long-term value for our shareholders."

CIBC increased that dividend, paid quarterly, from $1.13 to $1.15.