Dec 5, 2019
The Daily Chase: TD, CIBC report big profit misses; Telus's $1.3B acquisition
By Noah Zivitz
The Big Three: TD, CIBC miss big in Q4; Telus to buy Competence Call Centre; OPEC meets in Vienna
VIDEO SIGN OUT
Is this the day bank bears were waiting for? Toronto-Dominion and Canadian Imperial Bank of Commerce reported fourth-quarter profits this morning that not only fell significantly short of profit expectations, but also deteriorated from year-ago levels. Plenty to sift through. At TD, there’s a $114-million after-tax restructuring charge, a 36 per cent spike in loan loss provisions, and a sharp drop in profit from wholesale banking. For its part, CIBC saw provisions jump 38 per cent sequentially and posted a rarely-seen drop in core Canadian banking profit. Credit Suisse Analyst Mike Rizvanovic described CIBC’s quarter as “very weak” and that the credit-related woes “will be concerning to many of the bank’s shareholders.”
TELUS $1.3-BILLION ACQUISITION
Wireless normally gets all the attention, but today it’s the Telus International customer-service outsourcing business that’s in the news after announcing plans to acquire Germany-based Competence Call Center for more than a billion dollars, including debt. Telus also said it’s planning to spin off the Telus International business in an IPO within the next two years.
CATALYST VS. BAKER'S GROUP
The Ontario Securities Commission is holding a hearing this afternoon to consider Catalyst Capital Group's request for the regulator to intervene in the bidding war for Hudson's Bay Company. Catalyst has asked the OSC to either prevent the group led by HBC Chairman Richard Baker from scooping up shares under its privatization attempt or otherwise slow the process, as mapped out here. Time is of the essence, with HBC shareholders currently scheduled to vote on the Baker group's offer on Dec. 17.
IN CONVERSATION WITH STEPHEN SCHWARZMAN
Amanda Lang has an interview today with the chairman and CEO of Blackstone Group. The private equity titan rattles off a laundry list of geopolitical risks, countries he’s steering clear of, and shares perspective on doing business in today’s low interest rate environment (playing to the Canadian audience by likening it to a hockey game). Watch for that conversation on Bloomberg Markets and at BNNBloomberg.ca
OTHER NOTABLE STORIES
-Canadian Tire is on the receiving end of another short call. Spruce Point Capital Management today said it sees up to 50 per cent downside for the retailer’s shares and called the company “a challenged brick-and-mortar retailer”. A spokesperson for Canadian Tire told BNN Bloomberg Spruce Point’s report “contains numerous inaccuracies, which we believe are solely intended to benefit its author.”
-Oil prices are little changed this morning as the OPEC meeting begins in Vienna amid a debate over introducing deeper cuts or focusing on stronger compliance with existing curbs (or both, depending on who you ask). All this paints a compelling backdrop for the imminent pricing of Saudi Aramco’s IPO.
-Reitmans’ quarterly release from late yesterday is worth a read, if only for the uniquely candid admission of disappointing performance right at the top.
-Canadian Lawrence Stroll, the billionaire father of F1 race-car driver Lance Stroll, is reportedly planning to make a bid for Aston Martin.
-Restaurant Brands International announced plans to open 100 Burger King outlets in Ontario and Manitoba over the next half decade, calling Canada an “underpenetrated burger market.”
NOTABLE RELEASES/EVENTS
-Notable earnings: Toronto-Dominion Bank, CIBC, Canadian Western Bank, Tiffany & Co.
-Notable data: Canadian trade balance, U.S. trade balance
-Bank of Canada Deputy Governor Timothy Lane delivers speech "Economic Progress Report" in Ottawa (0800; remarks on Bank website at 745)
-10:00 a.m. ET U.S. Treasury Secretary Steven Mnuchin testifies at U.S. House Financial Services Committee hearing “Reviewing the Administration’s Deregulatory Approach to Financial Stability”
-2:15 p.m. ET OSC hearing on Catalyst Capital-HBC
-Parliament reconvenes, Throne Speech at approx. 3:30 p.m. ET
-Saudi Aramco expected to price IPO today
-OPEC meeting in Vienna
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.
