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Bank profits explained

Re: Don MacKinnon’s letter Bank profits outrageous (Castanet Dec. 3)

I will try to explain bank profits. From the links provided (in the letter), the return on assets (ROA) is actually quite low.

BMO has $973 billion in assets compared to $7.8 billion in net income, giving a return of 0.8%. TDs’ ROA is 0.84% and CIBC is 0.83%.

Compared to the rest of the worlds banks, Canadian banks are at about half of their average ROA. A small percentage of a large number is still a significant number. If banks are making too much money, then buy shares in them.

I don’t agree with a lot of their retail practices, but having strong banks is better than the alternative.

Darrell Morley



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