CommunityLend blog

Irrespective of the way that the capital markets react to this week’s earnings announcements from most of Canada’s largest banks, the core message from each of their announcements will be clear – banking in Canada continues to be a highly profitable business, this, despite the significant issues around sub-prime investment exposure and a worsening economy.

Looking specifically at the BMO and Scotiabank announcements of Tuesday August 26^th highlights this message.

While BMO did report a third quarter profit that missed analyst projections, they also reported one of their best quarters ever on the domestic core banking.  According to today’s Globe and Mail reporting on the announcement, “Profit in the core Canadian consumer banking division, which comprises the largest portion of the company, fell 3.2 per cent from a year ago to $343-million. But the bank said the results in this unit represented “one of our best-ever quarters,” as the profit was up more than 3 per cent from the prior quarter. Expenses were up nearly 7 per cent from a year ago as the bank opened and expanded branches.  

The Scotiabank announcement contained similar news.  Again from the Globe and Mail reporting on the announcement, “Highlights in Scotiabank’s results included a record quarter from its domestic retail banking unit, an area that chief executive officer Rick Waugh has targeted for growth. Net income for the division rose 16 per cent, year over year, to $456-million.”

So what does this mean for the promise of social lending in Canada?

The fundamental premise of social lending is to connect Canadian lenders with Canadian borrowers in a safe and secure lending platform where they can set their own rates and receive the resulting benefits excluding the middleman. 

Even in today’s turbulent financial markets, Canadian banks are proving that this core business of banking in Canada is a strong and profitable business indeed.

Michael