Q1 2013 vs Q1 2012 (in U.S. $)
Net income of $183 million increased $26 million or 17% from $157 million in the first quarter a year ago. Adjusted net income was $197 million, up $23 million or 13% from a year ago due to the benefits of reduced expenses and lower provisions for credit losses.
Revenue of $755 million decreased $23 million or 3% from a year ago as higher gains on the sale of newly originated mortgages and increased commercial lending fees were more than offset by the effect of lower net interest margin, a decline in securities gains and lower deposit fees.
Net interest margin decreased by 26 basis points due to lower deposit spreads largely as a result of the low rate environment, as well as a decline in loan spreads.
Provisions for credit losses were $33 million, down from $62 million a year ago due primarily to better credit conditions, resulting in improved recoveries and reversals of previously recorded provisions on loans.
Non-interest expense of $451 million decreased $36 million or 7%. Adjusted non-interest expense of $431 million was $32 million or 7% lower, primarily reflecting the recognition of a litigation expense in the prior year, synergy-related savings in the current quarter and a number of smaller reductions in keeping with our overall efficiency initiative. These were partially offset by the effects of selective investments in the business.
Average current loans and acceptances were unchanged year over year at $51 billion. The core commercial and industrial loan portfolio continues to grow, increasing $3.3 billion or 18% from a year ago. As expected, there were decreases in certain loan portfolios and in our personal loan balances, due in part to the current economic environment and the effects of our continued practice of selling most mortgage originations in the secondary market.
Average deposits increased $1.3 billion or 2% year over year to $60 billion, as growth in our commercial business and in our personal chequing and savings accounts more than offset a decline in higher-cost personal money market and time-deposit accounts.
Q1 2013 vs Q4 2012 (in U.S. $)
Net income increased $42 million or 30% from the prior quarter. Adjusted net income increased $41 million or 25%. The increase was due to improved revenue, much lower provisions for credit losses and reduced expenses.
Revenue increased $5 million or 1%, due to higher fee revenue on the sale of newly originated mortgages and increases in commercial lending fees. Net interest income was unchanged as commercial loan growth was offset by reduced net interest margin.
Net interest margin decreased by 9 basis points primarily due to lower deposit spreads largely as a result of the low interest rate environment and changes in mix, as loan growth exceeded deposit growth.
Provisions for credit losses were down $43 million from the prior quarter. The prior quarter included additional provisions due to regulatory guidance on changes to impairment classification for certain consumer loans.
Non-interest expense decreased $16 million or 3% from the prior quarter. Adjusted non-interest expense decreased $13 million or 3%, primarily due to synergy-related savings, partially offset by selective investments in the business.
Average current loans and acceptances grew $0.8 billion or 2% as commercial banking loan growth in key segments was partially offset by decreases in personal banking loans and a reduction in certain other loan portfolios, as expected. Core commercial and industrial loans increased $1.4 billion or 7% from the previous quarter.
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