Q3: A High Water Mark for Corporate Profits

Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank reported first-quarter profits that topped analysts’ estimates on record earnings from personal and commercial lending. Royal Bank, Canada’s largest lender by assets, said net income for the period ended Jan. 31 rose 12% to $2.07-billion, or $1.36 a share. CIBC, the fifth-biggest bank, said profit fell 4.4% to $798-million, while Toronto-Dominion, the No. 2 bank, said profit climbed 21% to $1.79-billion, or $1.86 a share.

You know, I don't even bother to go over banking statements anymore. They are so steeped in bullshit, quasi-fraudulent fallacy and muppetology, that I'm simply waiting for Bernanke to slip up and true market pricing to come to the fore before I jump back into the game.

In the last week or so every Wall Street bank has reported its earnings, so now it's time for the takeaways. As usual the headlines of the week didn't tell the whole story.

Bank of Nova Scotia has built its reputation on its international division with operations spread across Latin America and Asia, but its bread and butter is much less glamorous: Plain old domestic retail lending.

Canadian banks are like the mythical perpetual motion machine, except there’s nothing mythical about them. Quarter after quarter, year after year they’ve been steadily adding to their profits. Despite real estate meltdowns, currency crises, economic slowdowns, even the odd financial crisis, our banks crank out more and more of the green stuff. Even the analysts who cover them (and are often employed by them) are left in a state of almost permanent befuddlement, given the frequency with which the banks manage to beat their earnings estimates.

The much anticipated JPM earnings are out and while the company beat superficially, posting Q4 revenue of $24.4 billion vs expectations of $24.3 billion, and adjusted EPS of $1.35 "ex-items" vs expected $1.22, the real story as usual is below the surface.

ETF Database submits: After a rough start to the holiday-shortened week, equity markets surged on Wednesday as most major indexes jumped by close to 3% on the day. This large jump was due to an expectation out of ETF issuer and financial giant State Street which said that it was likely to top analysts’ expectations for second-quarter earnings.

Daryl Montgomery submits: In its recent earnings report, JP Morgan (JPM) revealed that it had a bigger loss in its retail financial services division in the fourth quarter of 2009 than it did at the height of the Credit Crisis in Q4 2008.