The Impact of the Environment on the Financial Industry

Today the Bank of Canada announced that key lending rates will remain unchanged at 0.25%. This news is good stuff for the financial industry for a couple of reasons:

1.)Low lending rates increase their profit margins.

2.)Loans continue to be affordable for individuals and businesses. (More people getting loans means more business for the banks)

Each of Canada's five big banks announced gains today as a result.

RY +2.05%
TD +1.67%
BNS +2.16%
BMO +4.49%
CM +2.66%

Why did BMO post such a large gain?

Well, they announced quarterly earnings today, and their earnings announcement beat the estimates. The Street (an American news and financial services company) predicted that BMO would earn $1.03 per share in the first quarter. BMO actually earned $1.13 per share.

Exceeding analysts predictions for any company is like Canadians expecting to win an Olympic gold medal on home soil, and then winning 14!

Back to P/E ratios tomorrow. This sidebar is much like the hobby of investing itself. Sometimes events come up that demand immediate attention. The ability to be flexible, identify and address them, even if it slightly changes an initial planned course of action is a great skill.

Revenue/Sales Per Share

Revenue (or sales) per share is a measure of the revenues (sales) a business made over a period of time, divided by the number of shares outstanding.

English: Revenue/share is used to analyze the amount of activity taking place in the business, relative to the number of shares outstanding. The higher this number is, the more business activity taking place. Revenue per share can vary a lot between businesses.

For a more detailed description, go to: http://www.investopedia.com/terms/s/salespershare.asp
Tomorrow we'll find the most recent earnings per share for each of the five big banks we're comparing.