Earnings season has come to a close, and results have shown that executives of internationally-based banks were not exempt from the same challenges facing their peers in the U.S.
Similar to Citigroup's deal with the Office of the Comptroller of the Currency to abide by
Provisions to account for roughly $3 billion in regulatory fines combined with lowered deposit margins and loan demand counteracted revenue from the Toronto-based bank's American operations — leading to its first quarterly net loss since the fourth quarter of 2002.
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Credit losses also impacted bank earnings across all asset classes.
Last quarter, the Montreal-based BMO Financial Group roughly doubled its provisions for credit losses when compared to the same period last year to CA$906 million. For the quarter that ended July 31, net income was up from CA$1.56 billion a year earlier, to CA$1.87 billion.
"We freely admit that we may be closing the barn door after the animals have escaped, the pace of deterioration in credit and BMO's relative over-exposure to commercial infer ongoing pressure to the bank's earnings," Jefferies analyst John Aiken said in a statement. "While we remain positive on the longer-term outlook for its U.S. operations, near-term outperformance over our forecast period has become increasingly difficult."
Changing consumer appetites have also impacted the Bank of Nova Scotia, which similarly upped its cash provisions for covering potentially distraught loans in the third quarter and saw its net income fall to CA$1.88 billion.
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Below are examples of American Banker insight into earnings for international banks that operate in the U.S. and how they performed.
