Category: Canada

BAMAKO – Mali, one of Africa’s biggest gold producers, has issued an arrest warrant for Barrick Gold CEO Mark Bristow, a warrant document seen on Thursday by Reuters showed, escalating a dispute with the Canadian mining company.

The West African country’s junta-led government is seeking more income from the sector to bolster state revenues as prices of the precious metal rally and has detained mining executives to put pressure on foreign companies operating there.

Four senior local employees of Barrick were briefly detained in September as the government demanded about $500-million in unpaid taxes, and then arrested again last month pending trial.

Bristow told Reuters in early November that the world’s No. 2 gold miner was confident of resolving claims and disputes with authorities before the end of the year.

He is accused of money laundering and violating financial regulations, the warrant document, first reported by Malian media and dated December 4, showed. Its authenticity was confirmed by two sources close to the matter who asked not to be identified.

Barrick said the company “will not be commenting” on the reported arrest warrant, responding to a Reuters request. Barrick’s shares were down 2.9% on the Toronto stock exchange after the news.

Bristow, a South African national who shuttles between Britain and the US, last travelled to Mali in July, according to the company website. Barrick has its headquarters in Toronto.

Another document showed Mali had also issued an arrest warrant for Cheick Abass Coulibaly, general manager at Barrick’s Loulo-Gounkoto mining complex in Mali.

Australia’s Resolute Mining also had its British CEO and two other employees detained by Mali’s military-led authorities over a tax dispute last month.

They were released after the miner agreed to pay $160-million.

The detentions and arrest warrants in Mali highlight the challenges faced by international mining companies in the region, where Burkina Faso and Niger have also increased pressure on them.

Burkina junta leader Ibrahim Traore said in October the country plans to withdraw mining permits from some foreign companies and will seek to produce more of its own gold.

Niger has taken control of French nuclear fuels company Orano’s Somair uranium mine, the company said on Wednesday.

The three countries have shifted away from traditional allies such as the United States and former colonial power France, and grown closer to Russia, which is helping provide security for their military leaders.

Photo: The Canadian Press

Bank towers are shown from Bay Street in Toronto’s financial district, on Wednesday, June 16, 2010.

Concerns about looming credit losses appear to have peaked at two of Canada’s largest lenders, but Bank of Montreal BMO-T is paying a heavy price for a ballooning watchlist of bad loans, while the pressure is easing and profit is rising at Canadian Imperial Bank of Commerce CM-T.

Leaders at both banks said Thursday they are hopeful that falling borrowing costs will create better conditions for clients in 2025, wrapping up a challenging fiscal year by reporting sharply contrasting fourth-quarter results.

BMO missed profit expectations by a wide margin in the three months that ended Oct. 31 as it added $1.52-billion in new provisions against loans that could default, which was far more than analysts expected. That wiped out any earnings growth from the bank’s Canadian and U.S. retail banking divisions.

Chief executive officer Darryl White said on a Thursday conference call that BMO’s credit performance “deteriorated more than we expected” in 2024. The bank has made changes to certain underwriting parameters, he said, and the level of provisions BMO needs to guard against future losses should start to “moderate” next year.

At CIBC, loan books held up better than analysts anticipated, mostly because the outlook improved for the bank’s U.S. commercial real estate portfolio, especially in the troubled office sector. Provisions for credit losses of $419-million were 23 per cent lower than last year.

CIBC sold off a portion of its U.S. office loans earlier this year and, in some cases, clients have paid down debt. Chief financial officer Robert Sedran said in an interview that he expects “a whole lot less noise” from commercial office loans next year.

CIBC’s revenue rose 13 per cent and its income from interest was up 17 per cent as profit margins on lending increased. The bank’s earnings per share rose by 24 per cent and comfortably beat analysts’ estimates.

“Looking ahead, we expect mortgage growth and consumer discretionary spending to accelerate as lower interest rates spur client demand through 2025,” chief executive officer Victor Dodig said on a Thursday conference call.

CIBC’s share price rose 4.4 per cent to $93.54 on Thursday, while BMO’s shares climbed 4.2 per cent higher to $139.73 on the Toronto Stock Exchange.

At the core of BMO’s credit issues are a series of commercial loans the bank made in 2021, in the wake of the COVID-19 pandemic. Several of the most problematic loans were to new clients, and Mr. White said BMO held more of the risk on its balance sheet than it should have. “In hindsight, the client selection as a result of that wasn’t exactly ideal,” he said.

Chief risk officer Piyush Agarwal called the fourth quarter “a high point” for loan-loss provisions. BMO expects to continue adding to its reserves against loan losses over the coming quarters, but in smaller amounts. By the second half of 2025 and early 2026, BMO expects its provisions to decline to more typical levels.

For now, Mr. White said, commercial loans the bank made more recently are performing better, and BMO still has an appetite for commercial lending.

“You should see us move with the market,” he said. “We’re not trying to press ahead and grow at rates that far exceed the market, nor do we expect to give up any market share.”

BMO profit climbed 35 per cent to $2.3-billion – or $2.94 a share – from the same quarter last year. The bank benefited from the reversal of an $870-million legal provision after an appeal court ruled in BMO’s favour on a lawsuit stemming from a Ponzi scheme that used an account at a bank BMO acquired.

On an adjusted basis, BMO said it earned $1.90 a share, while analysts expected $2.38 a share.

CIBC’s leaders expect competition to ramp up in the mortgage market, where its 1-per-cent rate of growth trailed peers last fiscal year. Some analysts have speculated that a wave of mortgage renewals at higher interest rates over the next year could spark a price war among lenders.

But executives said they are consciously preserving profit margins by focusing on attracting and keeping clients who use more of the bank’s products and services.

“Where we can serve them well, we’re happy to compete aggressively for that business,” Mr. Sedran said in an interview. “In areas where it’s just a single–product customer that doesn’t have any need for more of a relationship and doesn’t want advice, we’re not going to be in a position where we are competing aggressively for that business.”

From the same quarter last year, CIBC’s profit rose 27 per cent to $1.88-billion in the fourth quarter, or $1.90 a share. Adjusted earnings per share of $1.91 beat analysts’ consensus estimate of $1.79 a share.

Each bank raised its quarterly dividend. CIBC increased its payout by 8 per cent to 97 cents, and BMO announced a 5-per-cent hike to $1.59.

TORONTO — TD Bank Group has suspended its financial guidance as it works through a strategic review ahead of a leadership change at the beleaguered bank.

The bank made the announcement as it reported a fourth-quarter profit that was up from last year because of a boost from selling some of its Charles Schwab Corp. holdings, while its adjusted earnings dropped as it continued to grapple with the fallout from anti-money laundering deficiencies.

“In my role as incoming CEO, we are undertaking a broad and detailed review of the bank strategies and investment priorities,” said chief operating officer Raymond Chun, who is set to replace Bharat Masrani in the top job in April.

“It’s my opportunity to dive deep and make sure that we’re putting TD in the best position possible as we think about how we’re going to compete in the medium and long term,” Chun said on an earnings call Thursday.

Asked by an analyst if the review will include potential asset sales in the U.S., Chun said everything is on the table and that he expects to provide an update on the results in the second half of 2025.

In the meantime, the bank has suspended its medium-term financial targets including earnings per share growth, return on equity and positive operating leverage, all of which it plans to provide updated targets for once the review is complete.

TD shares were trading down more than five per cent by early afternoon on the Toronto Stock Exchange.

The big changes come as the bank works to complete remediation efforts to bring its anti-money laundering program up to regulatory standards.

For the year ahead, the bank said it will be challenging to generate earnings growth as it navigates its transition.

TD agreed in October to pay fines totalling more than $4.23 billion after pleading guilty to multiple charges in the U.S. related to its failings. Regulators also imposed an asset growth cap on its U.S. retail banking operations.

Masrani said the bank expects to have the majority of the management remediation actions implemented by the end of calendar 2025, while it is also working to strengthen its money laundering oversight across the enterprise.

To help pay the U.S. fines, TD sold 40.5 million Schwab shares in August and recorded a $1.02-billion gain from the sale in the fourth quarter.

The sale helped lead to a reported profit of $3.64 billion, up from $2.87 billion in the same quarter last year.

Adjusted earnings, however, were down eight per cent to $3.2 billion in what Masrani called a challenging quarter.

Adjusted earnings worked out to $1.72 per diluted share in its latest quarter, down from an adjusted profit of $1.82 per diluted share a year earlier.

Analysts on average had expected an adjusted profit of $1.82 per share, according to data provided by LSEG Data & Analytics.

The miss was largely from higher-than-expected expenses, while the bank’s revenues, taxes and provisions for credit losses came in better than expected, said Scotiabank analyst Meny Grauman in a note.

He said that while the miss was a disappointment, he was more disappointed by the lack of guidance for the year ahead.

“We would have hoped that TD would have been able to provide a little more concrete guidance to investors here right now,” he said.

“Waiting another half a year or more for management to tell us what the longer-run implications of its U.S. consent order are leaves the stock without a proper anchor, and makes the investment thesis here more challenging despite the very deep discount to peers.”

This report by The Canadian Press was first published Dec. 5, 2024.

Companies in this story: (TSX:TD)

Ian Bickis, The Canadian Press

TD Bank on Thursday warned of a challenging 2025 and suspended its medium-term earnings forecast as Canada’s second-biggest lender works through its anti-money laundering remediation program following a U.S. regulatory probe.

Shares of TD, which faces an asset cap and a $3 billion penalty following a probe by U.S. regulators last year into its anti-money laundering program, were down about 5% after it said it would only update its targets in the second half of 2025.

TD also said it would hold a strategic review of opportunities, as it would take at least four years for it to complete its audit and regulatory reviews.

2:17
Business Matters: TD Bank to pay $3 billion USD in historic money-laundering settlement with U.S. Justice Department

“For fiscal 2025, it will be challenging for the bank to generate earnings growth as it navigates a transition year,” TD said in a statement as it works through its anti-money laundering remediation with investments in its risk and control infrastructure.

TD ran into problems with U.S. regulators for shortfalls in its risk and compliance program that provided ground for a host of illicit activity, from fentanyl and narcotics trafficking to terrorist financing.

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Waiting another half a year or more for management to disclose the longer-run implications of its U.S. consent order “leaves the stock without a proper anchor,” Scotiabank analyst Meny Grauman said.

TD issued its updates after the lender and Bank of Montreal, two of Canada’s biggest banks, missed analysts’ estimates for quarterly profit, reflecting weakness in their U.S. businesses and bigger-than-anticipated funds to cover potential loan losses.

In contrast, the smallest of the country’s big five banks – Canadian Imperial Bank of Commerce – reported a fourth-quarter profit that surpassed estimates, helped by smaller-than-expected loan loss provisions and strength at its Canadian retail arm.

BMO and TD have expanded in the U.S. through a series of acquisitions over the years, as they sought growth opportunities outside of Canada, catering to scores of clients on the West and East Coasts.

However, the businesses ran into problems.

BMO has also faced credit issues as some loan books have weakened due to clients struggling to repay their loans. TD disclosed the U.S. regulatory probe shortly after it terminated its $13.4 billion acquisition of Tennessee-based lender First Horizon last year, a deal that would have given it more ground in the Southeast U.S. The probe followed investigations at its retail branches that occurred as early as 2021.

2:12
Business Matters: Royal Bank of Canada reports $4.22-billion Q4 profit, raises quarterly dividend

TD’s adjusted net income fell 8% to C$3.21 billion in the fourth quarter. On a per-share basis, TD earned C$1.72, which was 10 Canadian cents lower than analysts’ average expectation, according to LSEG data.

“We are less disappointed with the quarter itself … and more disappointed with the updated guidance provided by the bank, or lack thereof,” Scotiabank’s Grauman said.

BMO earned C$1.90 per share in the fourth quarter, missing analysts’ average estimate of C$2.41.

CIBC earned C$1.91, beating the average estimate of C$1.79.

BMO’s shares were down nearly 1.7% in early trading on the Toronto Stock Exchange, while CIBC’s shares rose 3.9%.

The results wrap up fourth-quarter earnings for the Canadian banks with mixed results and cautious optimism headed into fiscal 2025.

TORONTO — BMO Financial Group significantly missed analyst earnings expectations as the money it set aside for potential loan losses jumped.

The bank on Thursday reported a fourth-quarter profit of $2.30 billion, up from last year thanks to a $1.18 billion pre-tax boost from the reversal of a legal judgment related to a Ponzi scheme in the United States.

Adjusted earnings that excluded the one-time gain showed a net income of $1.54 billion, down from $2.24 billion in the same quarter last year.

The earnings drop came as its provisions for credit losses surged to $1.52 billion from $446 million a year earlier.

“Our overall results were impacted by elevated provisions for credit losses,” said BMO chief executive Darryl White in a statement.

“We expect quarterly provisions to moderate through 2025 as the business environment improves.”

BMO shares were trading four per cent lower at $128.74 on the Toronto Stock Exchange early Thursday morning.

The headline provision number includes $1.11 billion set aside for the more serious impaired category where it’s even less confident it will have the loans paid back.

The shaky loans helped lead to adjusted earnings of $1.90 per diluted share in its latest quarter, down from an adjusted profit of $2.93 per diluted share a year ago.

The average analyst estimate had been for an adjusted profit of $2.41 per share, according to data provided by LSEG Data & Analytics.

Revenue totalled $8.96 billion, up from $8.32 billion in the same quarter last year.

The bank said Thursday it will now pay a quarterly dividend of $1.59 per share, up from $1.55 per share.

BMO said its Canadian personal and commercial banking business earned $750 million in its latest quarter, down from a profit of $922 million in the same quarter last year.

In the U.S., the bank said its personal and commercial banking operations earned $256 million, down from a profit of $591 million a year earlier.

BMO’s wealth management business earned $326 million, down from a profit of $351 million a year ago, while its capital markets business earned $251 million, down from a profit of $472 million in the same quarter last year.

The bank’s corporate services segment reported a profit of $721 million, compared with a loss of $626 million a year ago, as it reversed a 2022 provision related to a lawsuit associated with Marshall and Ilsley Bank, which BMO bought in 2011.

This report by The Canadian Press was first published Dec. 5, 2024.

Companies in this story: (TSX:BMO)

Ian Bickis, The Canadian Press