Bank of Nova Scotia managed to exceed fiscal second-quarter expectations even as profit collapsed under the weight of ballooning loan loss provisions (a doubling, in fact, to $1.85 billion). The bank’s large international division accounted for more than half of the provisions, and saw its profit plummet 73 per cent year-over-year. Core Canadian banking also posted double-digit profit erosion. But there was stability elsewhere, as capital markets and wealth management registered growth. We’ll go through all the details today and await the second act in bank earnings season this afternoon, with National set to report after the closing bells.
HUAWEI CFO AWAITS KEY HEARING
China’s foreign ministry is speaking out on the eve of a crucial decision in the extradition case of Huawei CFO Meng Wanzhou. “Canada should correct its mistake and immediately release Meng Wanzhou and ensure her safe return to China to avoid continuous damage of China-Canada relations,” a spokesperson is quoted by our Bloomberg partners as saying overnight. Tomorrow, Meng will learn whether her case, which has put this country in the middle of U.S. President Donald Trump’s feud with China, meets the threshold of double-criminality. If not, she could be set free almost immediately (depending on appeals).
IN CONVERSATION WITH CPPIB CEO
The head of Canada’s largest pension fund joins us this afternoon to share his perspective on the economy and the investment universe. Don’t miss Amanda Lang’s interview with Mark Machin shortly after 1 p.m. ET.
LATAM AIRLINES FILES FOR CHAPTER 11
Calling it the “best option” to survive COVID-19 and ensure its future, Latam Airlines Group is seeking the shelter of Chapter 11 protection to restructure itself. Importantly, Latam says it will continue operating during the process and has secured up to US$900 million in debtor-in-possession financing. The airline also said it’s in talks with the governments of Colombia, Peru, Chile and Brazil – which, it must be remembered, was singled out by the U.S. with travel restrictions that take effect today.
OTHER NOTABLE STORIES
-Interesting announcement this morning from Slate Asset Management: it’s launching a special situations team that’s armed with $500 million to deploy as “transitional capital” for real estate industry players who’ve been affected by the COVID-19 turmoil.
-CI Financial announced another deal with a U.S.-based registered investor advisor today; this time, it’s Congress Wealth Management, which has US$2.3 billion in assets under administration. CI CEO Kurt MacAlpine joins us this afternoon.
-Aphria announced this morning it will switch its U.S. listing to the Nasdaq after the close of trading on June 5. CEO Irwin Simon says the move fits with Aphria’s focus on finding “cost effective ways of operating”
-Transat has extended the outside date to close its sale to Air Canada by one month, to July 27, as a result of the European Commission’s in-depth probe of the transaction – which sent TRZ shares down seven per cent yesterday.
-Merck will be a stock to watch today after it announced several developments in the race for a COVID-19 vaccine. Firstly, it's buying vaccine-maker Theims. It's also collaborating with non-profit organization IAVI in the pursuit of a vaccine for the novel coronavirus.
-Air Canada CEO Calin Rovinvescu is seeing a sizable amount of his compensation evaporate as the airline’s share price languishes. The information circular for Air Canada’s annual meeting pegs the total value of Rovinescu’s 2019 compensation at $5.79 million as of May 4, compared to a pre-COVID level of $12.87 million.
NOTABLE RELEASES/EVENTS
-Notable data: U.S. new home sales
-Notable earnings: Bank of Nova Scotia (6 a.m. ET; 8 a.m. ET conference call), National Bank of Canada (4pm; 530 p.m. ET conference call)
-11:00 a.m. ET: Prime Minister Justin Trudeau addresses Canadians from Ottawa
-2:30 p.m. ET: Parliamentary Budget Officer Yves Giroux addresses Senate Committee on National Finance
-5:00 p.m. ET: Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins address Senate National Finance Committee (REMINDER: this is Poloz’s final scheduled event as governor)
-New York Stock Exchange partially reopens trading floor
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe
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