The Daily Chase: RBC, BMO Q2 profits sink; Huawei CFO hearing

Royal Bank Canada and Bank of Montreal saw their profits cut in half in the fiscal second quarter, and missed expectations in the process, as provisions for credit losses ballooned at both institutions. BMO CEO Darryl White referred to his bank’s $1.12 billion in PCLs as being “prudent.” Meanwhile, RBC set aside almost $3 billion for loans that could go bad. That’s the main storyline today. But there’s much more beneath the surface: like major weakness in the banks’ capital markets units. Paul Bagnell will have in-depth coverage throughout the day. And we’re looking forward to speaking with RBC CEO Dave McKay on Friday.

CRUCIAL DAY FOR HUAWEI CFO

A year and a half since she was taken into custody in Vancouver, Meng Wanzhou could be set free as early as today. At 11 a.m. PT/2 p.m. ET, B.C. Supreme Court justice Heather Holmes will release her decision on whether the fraud that Meng is accused of, which allegedly put HSBC in contravention of U.S. sanctions against Iran, meets the threshold of double-criminality; IE, would it have also been a crime here? The stakes for Canada-China, Canada-U.S., and China-U.S. relations are profound. We'll set the scene and be ready for the news this afternoon.

FALLOUT FROM LONG-TERM CARE ABUSE ALLEGATIONS

In a release late last night, Sienna Senior Living vowed to work with the government to address horrific (my words, not Sienna’s) circumstances that came to light in the Canadian Armed Forces’ report on five long-term care facilities where its members are serving. One of those facilities is owned by Sienna, a TSX-listed company that counts some of the country’s largest asset managers among its top shareholders. While Sienna put the spotlight on staffing challenges in its release, the armed forces’ report is also putting an uncomfortable spotlight on the future of for-profit entities caring for Canada’s elderly.

AIR CANADA GOING TO MARKET

The airline announced after yesterday's closing bell it's looking to raise $1.05 billion, almost evenly split between a share offering and a private placement of senior unsecured debt. Air Canada says the proceeds will improve its operational flexibility and support its strategy for dealing with COVID-19. Have to wonder what message the company is trying to send to the government (if any). Seems clear this positions Air Canada as not rushing to tap the lender of last resort LEEFF program.

OTHER NOTABLE STORIES

-Torstar has agreed to be taken private by Nordstar Capital, run by Jordan Bitove and recently-retired Fairfax Financial executive Paul Rivett, for $0.63 per share. This is what it has come to for The Toronto Star’s owner after years of facing stiff digital competition that has ravaged its revenue. 

-Tilray late yesterday announced it will close a Leamington, Ont. greenhouse, resulting in $7.5 million in annual savings. CEO Brendan Kennedy said the move puts Tilray in a better position to achieve its goal of adjusted EBITDA profitability this year.

NOTABLE RELEASES/EVENTS

-Notable earnings: Bank of Montreal (5:30 a.m. ET; 715 a.m. ET conference call), Royal Bank of Canada (6 a.m. ET; 815 a.m. ET conference call), MedMen Enterprises

-9:00 a.m. ET: Parliamentary Budget Officer releases costing note on Canada Emergency Commercial Rent Assistance

-11:00 a.m. ET: Prime Minister Justin Trudeau addresses Canadians from Ottawa

-12:00 p.m. ET: Canada Mortgage and Housing Corporation releases Housing Market Outlook

-2:00 p.m. ET: B.C. Supreme Court expected to release decision on whether Huawei CFO Meng Wanzhou's extradition case meets threshold of double-criminality

-2:00 p.m. ET: U.S. Federal Reserve releases Beige Book

-4:33 p.m. ET: SpaceX expected to launch flight to International Space Station with NASA astronauts

Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe