Financial Update for Feb. 27, 2009

TSX higher for third straight day on oils, banks

· TSX +254.52 to 8186.82(Reuters) in a rally sparked by better than expected bank earnings and stronger oil prices
· DOW-88.81
· Dollar +.09c to 79.80USD
· Oil +$2.72 to $45.22US per barrel.
· Gold -$23.90 to $941.80 USD per ounce
· Canadian 5 yr bond yields +.08bps to 2.11
· http://www.financialpost.com/markets/market_data/money-yields-can_us.html

Canadian Banks still profitable despite global crisis

The Canadian PressCanada's banks are reporting weaker profits than a year ago, but even the feeblest of the Big Five is still raking in a net profit of $1.6 million a day while many major banks in the United States and elsewhere are effectively insolvent.

Bank executives are congratulating themselves that, as CIBC's Gerry McCaughey put it, "Canada finds itself better positioned than other economies both to weather this downturn and benefit from a subsequent recovery.''

But the bankers also acknowledge that 2009 will be tough, and even maintaining flat earnings for the year will be hard as the shrivelling economy erodes their volume of business and cranks up the number of bad loans.

The Royal Bank, Canada's largest, said yesterday it earned $1.05 billion, almost $12 million every day, during the first quarter of the banking year. This was down 15 per cent from a year earlier, but better than Bay Street was expecting.

Also above analyst expectations was CIBC, which earned $147 million in the November-January period. That was better than its year-ago loss of $1.46 billion but still was corroded by hundreds of millions of dollars because of ongoing exposure to toxic debt instruments in the United States.

The Royal and CIBC reported a day after TD Bank started the quarterly series with a profit of $712 million, down from $970 million a year earlier but with all its businesses solidly profitable -- even U.S. banking.

The National Bank of Canada, the country's sixth-largest, had first-quarter earnings of $69 million, down from $255 million a year earlier.

Still to report are Bank of Nova Scotia and Bank of Montreal, both next Tuesday. Analysts expect them, like the others, to be profitable but less profitable than in recent years.