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Canadian Banks Gain Jobs, Profit as U.S. Lenders Cut Back


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Bank Job Gains Buoy Profit as U.S. Lenders Cut

Bank Job Gains Buoy Profit as U.S. Lenders Cut

Bank Job Gains Buoy Profit as U.S. Lenders Cut

Brent Lewin/Bloomberg

Canada’s banks, ranked the world’s soundest for the past four years by the Geneva-based World Economic Forum, are at the highest level of employment in at least three years after they recorded combined profits of C$7.15 billion in the last quarter.

Canada’s banks, ranked the world’s soundest for the past four years by the Geneva-based World Economic Forum, are at the highest level of employment in at least three years after they recorded combined profits of C$7.15 billion in the last quarter. Photographer: Brent Lewin/Bloomberg

Canadian banks, bolstered by
profits per employee 31 percent higher than U.S. lenders, added
more than 2,800 workers in the most recent quarter while Bank of
America Corp. and Washington Mutual Inc. (WAMUQ) shed thousands of jobs.

For every worker hired at one of Canada’s eight main
lenders in the first fiscal quarter, three were let go by their
U.S. counterparts, according to bank statements and data
compiled by Bloomberg. Staffing at the 10 largest U.S. banks
declined by 8,577 people in about the same period, according to
Bloomberg data.

Canada’s banks, ranked the world’s soundest for the past
four years by the Geneva-based World Economic Forum, are at the
highest level of employment in at least three years after they
recorded combined profits of C$7.15 billion ($7.2 billion) in
the last quarter. Earnings rose by 12 percent from a year
earlier, with seven banks matching or topping analysts’
estimates.

“It’s a reflection of the underlying strength and
resiliency of the banking industry in Canada, particularly when
compared to the situation in other jurisdictions,” Terry Campbell, president and chief executive officer of the Canadian
Bankers Association
, said in a telephone interview.

Canada’s economy grew 2.5 percent last year following a 3.2
percent expansion in 2010. The country’s lenders didn’t receive
any government bailouts during the financial crisis of 2008-2009
and recorded a fraction of the writedowns taken by banks and
brokers worldwide.

Canada’s 10-member SP/TSX Banks Index (STBANKX) dropped 3.4 percent
in the last year, compared with a 3.9 percent decline for the
24-member KBW Bank Index. (BKX)

Productive Employees

Canadian banks have more productive employees than their
U.S. rivals. Among Canadian banks with market values of at least
$1 billion, every 1,000 employees brought in $19.13 million in
profit in the latest quarter, according to Bloomberg data. For
U.S. lenders, the total is $14.7 million.

Bank of America, the second-biggest U.S. bank, eliminated
8,718 jobs between the third and fourth quarters, part of Chief
Executive Officer Brian T. Moynihan’s plan to trim expenses
after revenue stagnated. Washington Mutual, which filed for
bankruptcy in September, shed 2,685 jobs over the same period,
while Citigroup Inc. (C) fired 1,000.

Canada’s eight largest lenders, which employ about 335,000,
added 20,642 people over the last year, according to Bloomberg
data. The 10 largest U.S. banks that report employee headcount
have increased by 17,074. The U.S. banks employ more than 1.2
million people, almost equal to the population of the Canadian
province of Manitoba.

“Canada’s banks have been able to leverage their well
managed, well regulated and well capitalized standing to
actively pursue growth strategies,” consultant PwC wrote in a
study published this year.

Third-Largest

Toronto, Canada’s most populous city, employs more than
200,000 people in the financial-services sector and is the
second-largest financial center in North America behind New
York
, according to the Toronto Financial Services Alliance.

Bank of Nova Scotia (BNS), Canada’s third-largest bank, added
1,940 jobs between Oct. 31 and Jan. 31 for a total of 77,302,
according to filings on its website. The increase was mostly
from the Uruguay acquisitions of Nuevo Banco Comercial and
consumer-finance company Pronto!, bank spokeswoman Paula Cufre
said.

Toronto-Dominion Bank, (TD) Canada’s second-largest bank, added
426 jobs in the quarter for a total of 77,786 employees. While
the bank has “fluctuations” from quarter to quarter, the
increase was partly due to the acquisition of Bank of America’s
MBNA Canada credit-card business, said Stephen Knight, a
spokesman.

National Bank

TD also plans to create more than 1,600 jobs in South
Carolina
over the next three to five years, Knight said.
Toronto-Dominion has more branches in the U.S. than in Canada.

National Bank of Canada (NA), the No. 6 bank, added 281 people
during the quarter for a staff of 16,498. The increase comes
“mostly” from the bank’s acquisition of HSBC Holding Plc’s
Canadian investment-advisory business, said Claude Breton, a
bank spokesman.

Laurentian Bank of Canada, the seventh-largest bank,
increased its headcount by 307 people for a total of 3,976. Many
of the new employees came from its C$199 million purchase of
M.R.S. Inc. from Mackenzie Financial Corp.

Still, bank employment may not accelerate in Canada this
year if profit growth slows. Bank of Montreal (BMO), the No. 4 bank,
said it cut an unspecified number of jobs last month at its
investment-banking unit.

Slowdown

Andre-Philippe Hardy, an analyst at RBC Capital Markets in
Toronto, expects profit growth for the sector to fall to about 7
percent in 2012 and 8 percent in 2013 because of slowdowns in
consumer banking. Profit before one-time items increased 13
percent in 2011, he said.

“It doesn’t sound like it ties into the strategy of
focusing in on cost control,” said investor Greg Eckel,
referring to the hiring at Canadian banks. He helps manage about
C$1.2 billion at Morgan Meighen Associates Ltd. in Toronto.
“I have to believe it’s just a one-off and not a trend.”

To contact the reporters on this story:
Sean B. Pasternak in Toronto at
spasternak@bloomberg.net;
Ilan Kolet in Ottawa at ikolet@bloomberg.net.

To contact the editors responsible for this story:
David Scanlan at
dscanlan@bloomberg.net;
David Scheer at dscheer@bloomberg.net.

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