Early in my career, when this big blue bank announced an annual profit in excess of $1 Billion for the first time, we braced ourselves to field complaints on our profitability. Most didn’t complain.
This week several Canadian banks’ earnings were released, putting some hard numbers to a rough 2nd quarter. Royal announced a whopping $2.8 Billion allocated for bad or doubtful loans, and other banks set aside a similarly-scaled amount. But markets reacted like Peggy Lee with a house on fire.
In her 1969 nihilistic, talk-song, she said-sang:
“I stood there shivering in my pajamas and watched the whole world go up in flames. And when it was all over I said to myself: ‘Is that all there is to a fire?’”
In truth, as predicted by our analysts (yeah our analysts!), even after these provisions for loan losses we still made a profit – and show no sign of wearying on our dividends. So, in reaction to a steady stream of horrible-but-not-too-horrible results, the TSX Capped Financials Index is up 6.4% on the week so far. Go us! Go Canada!
But don’t do as the song says. Don’t “break out the booze and have a ball.”
Because no, that’s not all there is. There’s still plenty of both good and bad news still to get through. But it’s been a good week – so far.
I’m including a couple of salient links for your reading and listening pleasure.
Enjoy some sunshine. It’s glorious out there!