Canadian stocks remain highly volatile this year due to several macro factors such as high inflation and the possibilities of tightening monetary policy. The recent Russian invasion of Ukraine has heightened the broader market volatility further, as investors continue to assess the impact of the ongoing geopolitical tensions on the global economy.
Investors’ focus on bank earnings
Despite all these uncertainties, investors continue to carefully watch the latest corporate earnings — especially from the banking sector — to get an idea about upcoming economic growth trends. Four of the top Canadian banks Bank of Nova Scotia (TSX: BNS)(NYSE: BNS), Bank of Montreal (TSX: BMO)(NYSE: BMO), Laurentian Bank of Canada (TSX: LB), and Toronto-Dominion Bank (TSX: TD)(NYSE: TD) will release their latest quarterly results this week. Let’s find out what Street analysts are expecting from their latest earnings.
Bank of Nova Scotia’s earnings
Scotiabank will release its results for the first quarter of the fiscal year 2022 on Tuesday. Despite weakness in its top line in recent quarters, the bank posted solid earnings growth in 2021. For the fiscal year, Scotiabank’s adjusted earnings rose by 46.8% from a year ago to $7.87 per share — also exceeding its pre-pandemic earnings levels.
Analysts expect the bank to report $7.85 billion in revenue in the January quarter, which could help it post $2.05 earnings per share with about 9% YoY (year-over-year) growth. Its better-than-expected results could help Scotiabank stock inch up, as it currently trades with only 2.4% year-to-date gains.
Bank of Montreal’s earnings
Bank of Montreal will also announce its Q1 2022 results on March 1. In recent quarters, BMO has primarily focused on improving its operating leveraged and efficiency ratio with the help of a recovery in its U.S. market operations. These steps helped the bank register a strong 68.1% growth in its fiscal year 2021 to $12.96 per share.
In the quarter ended in January 2022, analysts expect its revenue to rise by nearly 3% YoY to US$ 6.64 billion. The ongoing economic recovery is also expected to help Bank of Montreal grow its earnings positively by more than 7% YoY in Q1 to around $3.28 per share. Year to date, BMO stock has risen by 6.7%.
Laurentian Bank of Canada’s earnings
Laurentian Bank of Canada is set to announce its first-quarter results on Wednesday morning. After COVID-19-related headwinds took its earnings down by more than 30% in its fiscal year 2020, the Montréal-based bank saw a sharp financial recovery in 2021, as its earnings for the year jumped by nearly 56%.
Street analysts expect the positive growth trend in Laurentian Bank’s top line to continue in Q1 2022. According to the latest estimates, the bank could report a nearly 3% YoY rise in its first-quarter total revenue to $254 million. Its continued focus on increasing cost discipline and structural cost optimization could also help Laurentian Bank register strong double-digit growth in its quarterly earnings to $1.20 per share. After rising by 29% last year, LB stock is now trading with 6.1% year-to-date gains.
Toronto-Dominion Bank’s earnings
On Thursday, March 3, one of the largest Canadian banks, Toronto-Dominion Bank, will announce its January quarter results. It was among the top-performing banking sector stocks in 2021, as it yielded solid 35% positive returns. TD Bank has been beating analysts’ earnings estimates for the last six quarters in a row, as the reopening economies led a sharp recovery in its financials in the last fiscal year.
Street analysts expect TD Bank’s total revenue in Q1 2022 to be around $10.84 billion without any notable YoY change. Nonetheless, its earnings for the quarter are expected to rise by around 12% YoY to $2.04 per share, as it might continue to benefit from improved credit conditions, higher volumes, and retail segment growth.
