Scotiabank, Canada’s third largest lender, reported record profit of $ 2.05 billion, or $ 1.69 a share, on a gain from selling its Toronto headquarters. Excluding one-time items, the bank earned a better than expected $ 1.22 a share.
Scotiabank also raised its dividend.
He was commenting at a labour convention on a study that shows companies are sitting on $ 526 billion in cash. The report, originally released in January by the Canadian Labour Congress, did not include the banks because they have to maintain large piles of cash to offset their liabilities, the union explained.
Last week was not the first time Carney has called on companies to step up and fill the void that will be left as debt-laden households and governments rein in their spending and pay down their loans.
“I don’t know where they’re getting their numbers from. They’re only telling part of the story. Companies are investing in capital. They are expanding. It’s true they’re holding more cash but there’s some really good reasons,” said Jayson Myers, head of Canadian Manufacturers and Exporters.
“There’s a lot of uncertainty around the world,” said Dan Kelly, president of the Canadian Federation of Independent Business. “Companies are understandably a little bit cautious about making investments. I don’t think a pronouncement from the governor of the Bank of Canada is going to change the behaviour of big business or entrepreneurs.”
Canada’s banks have outperformed rivals in other developed countries many since the financial crisis of 2008-09 partly because Canada’s economy remains relatively strong, banks are well regulated and Canada avoided the worst of the housing crisis in the U.S.
“The strength of the banks comes from the strength of the economy. And the Canadian economy is very sound,” said Laurence Booth, a professor with the University of Toronto’s Rotman School of Management.
The increase reflects “our strong capital position and our confidence in our continued ability to generate sustained earnings growth,” Bank of Montreal’s chief executive officer Bill Downe said in a statement.
Royal Bank of Canada, the country’s largest lender, Toronto-Dominion, the No. 2 lender, and Canadian Imperial Bank of Commerce, the fifth-biggest bank, all report Aug. 30.