Q2 2013 vs Q2 2012 (in U.S. $)
Net income of $152 million increased $9 million or 6% from $143 million in the second quarter a year ago. Adjusted net income was $163 million, an increase of $5 million or 3% from a year ago due to reduced expenses and lower provisions for credit losses.
Revenue of $718 million decreased $25 million or 4% from a year ago, as increased commercial lending fees and commercial loan growth were more than offset by reductions in certain loan portfolios, net interest margin and deposit fees.
Net interest margin decreased by 22 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 $53 million, compared with $61 million a year ago.
Non-interest expense of $447 million decreased $26 million or 6%. Adjusted non-interest expense of $428 million was $22 million or 5% lower, primarily reflecting synergy-related savings in the current quarter, partially offset by the effects of selective investments in the business.
Average current loans and acceptances increased $0.2 billion year over year to $51 billion. The core commercial and industrial loan portfolio continues to grow, increasing by $3.3 billion or 17% from a year ago. As expected, there were decreases in certain loan portfolios and in our personal loan balances, due in part to the effects of our continued practice of selling most mortgage originations in the secondary market and active loan portfolio management.
Average deposits increased modestly year over year to $60 billion, as growth in our commercial business and in our personal chequing and savings accounts were largely offset by a planned decline in higher cost personal money market and time deposit accounts.
Q2 2013 vs Q1 2013 (in U.S. $)
Net income decreased $31 million or 17% from the prior quarter. Adjusted net income decreased $34 million or 17%. The decrease was primarily due to reduced revenue and increased provisions for credit losses from the very low levels of the first quarter.
There were very strong results in the first quarter with strong revenue on sales of newly originated mortgages, very strong commercial lending fees, due to customers' response to anticipated U.S. tax changes that accelerated commercial lending, and high recoveries of previously recorded credit losses.
Revenue decreased $37 million or 5% from the strong first quarter, due to fewer days in the current quarter, lower lending, deposit and other fee revenues and a decline in net interest margin.
Net interest margin decreased by 4 basis points primarily due to lower deposit and loan spreads, largely as a result of the low interest rate environment.
Provisions for credit losses increased $20 million from the unusually low levels of the prior quarter, with the majority of the increase in the commercial portfolio, due to higher recoveries in the prior quarter.
Non-interest expense decreased $4 million or 1% from the prior quarter. Adjusted non-interest expense decreased $3 million or 1%.
Average current loans and acceptances increased from the prior quarter, our second consecutive quarter of positive growth, driven by commercial banking loan growth. Core commercial and industrial loans increased $0.8 billion or 4% from the previous quarter.
Average deposits decreased modestly from the prior quarter due to a planned reduction in higher cost deposits and normal fluctuations in our commercial clients' cash management activities.
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