Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

BMO launches bank earnings by surging past profit expectations 

BMO kicked off banks earnings season by reporting better-than-expected profit. Adjusted third-quarter profit rose to $1.94 per share. Analysts were expecting $1.81. Core Canadian banking contributed the most to Bank of Montreal's bottom line, while the U.S. banking division's profit surged 24 per cent. On the credit quality front, provisions for losses rose about 60 per cent from a year ago to $257 million.  We’ll cover the quarter and the outlook with BMO CFO Tom Flynn on The Close at 1645 ET.

Some more noteworthy details on BMO’s loan books:

On provisions for credit losses:

Oil and Gas: $58M (versus $15M in Q3 ’15)

Residential mortgages: $8M (versus $16M in Q3 ’15)

On gross impaired loans:

Oil and Gas: $421M (versus $106M in Q3 ’15)

Residential mortgages: $349M (versus $552M in Q3 ’15)

Pension funds selling TMX shares 

Three of the partners in the consortium that wrapped itself in the flag in 2011 while waging a takeover battle for TMX Group are cashing out a chunk of their investments. AIMCo, Caisse de Depot and Ontario Teachers’ Pension Plan announced after yesterday’s close they’ll sell 1.8 million TMX shares, representing 9.9 per cent of the total stock outstanding. Timing could be of the essence here: TMX shares have soared 78 per cent since the December low.  Each of the three funds retain will retain 5 per cent stakes in the exchange owner, and will still have board representation (and what a board it is! https://www.tmx.com/investor-relations/corporate-information/board-of-directors).

Concordia CEO margin call 

Concordia International CEO Mark Thompson has been forced to sell 505,000 shares in his company due to a margin call.  Concordia says the shares were used by Thompson to secure loans and were sold after the stock fell below an unspecified threshold (CXR has plunged 79 per cent this year). “It is with great regret that I have been forced to sell shares in Concordia,” Thompson said in a statement late yesterday.  “This is no way diminishes my confidence in Concordia’s business and prospects.”  The sale leaves him with 1.6 million shares.    

Alberta fiscal update

Alberta Finance Minister Joe Ceci will deliver the province's first-quarter fiscal update this afternoon. When he released the budget on April 14, this was the oil-infused fiscal forecast he presented:

• 2016-17 deficit: $10.4B
• 2017-18 deficit: $10.1B
• 2018-19 deficit: $8.4B

At the time, these were some of the basic forecasts baked into the outlook (which, we should remember, forced the province to punch through its own self-imposed debt limit):

• Oil expected to average US$42 in 2016-17, US$54 in 2017-18, US$64 in 2018-19
• GDP expected to fall 1.4 per cent in 2016, then rise 1.9 per cent in 2017

Oil will be the key determinant for the province's economic and fiscal fortunes. In the budget, the province said it was counting on "a gradual improvement in oil prices [to] support economic growth over the medium term."  It's worth pointing out that on the day of the budget, WTI was trading at around US$41.50. Yesterday, it settled at US$47.41.

A province can plan for volatile oil prices; it’s harder to plan for a historic, devastating wildfire. At 1530 ET today, we'll find out how the Fort McMurray wildfire affected the province's budgetary outlook.  

Releases/events: 

-Notable data: U.S. new home sales (1000 ET)

-Notable earnings: BMO (1400 ET conference call)

-1145 ET: Finance Minister Bill Morneau announcement and speaks to the media at Toronto subway station

-1430 ET: Jim Carr holds news conference in Winnipeg after meeting on Energy and Mines ministers.

-1530 ET: Alberta Finance Minister Joe Ceci delivers first-quarter fiscal update  

-Fraser Institute releases report on average Canadian household’s total tax bill (spoiler: the report says the average Canadian family paid $34,154 in taxes last year, outstripping what that same family paid on basic necessities) 

Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Today's note was written by BNN's Managing Editor Noah Zivitz. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.