The results showed a marked surge from the same period of last year, when the major banks earned a weaker $4.5 billion.
The better than expected fourth quarter for several of the banks helped achieve significantly improved full year earnings totalling $24.2 billion, up from $19.5 billion in 2010.
TD Bank (TSX:TD) and Royal Bank (TSX:RY) saw their earnings double, while others posted growth in the low double digits.
But the largest Canadian banks also reported their capital markets divisions were a drag on their bottom lines during a quarter of extreme market volatility as European debt woes continued to cause market worries.
Many warned that growth next year could be moderate as the European crisis and a political impasse over how to deal with the U.S. federal deficit continue to impede prospects for global growth.
The banks sought to comfort investors, with many stressing that their exposure to Europe is limited.
Domestic banking operations continue to buoy the sector as low interest rates encourage consumers to borrow and take on mortgages, lines of credit and other loans.
However, the banks have been reporting shrinking margins on loans as Canadian interest rates remain at ultra low levels – partially due to the economic upheaval in Europe.
Bank of Montreal (TSX:BMO) was the last of the big banks to disclose its earnings, reporting Tuesday that its profits rose 21 per cent to $897 million.
BMO said its earnings amounted to $1.34 per share for the three-month period, up from $739 million or $1.24 per share a year earlier. Total revenue increased to $3.88 billion from $3.23 billion.
However, Bank of Montreal missed analysts expectations for adjusted earnings, which came in at $1.27 per share. Analysts had expected $1.31 per share, according to a poll by Thomson Reuters.
Its shares fell $2.10 or 3.5 per cent to close at $57.74 on the Toronto Stock Exchange.
Like its competitors, BMO reported a big jump in activity in its personal and commercial banking operations. Profits in the sector were $580 million, up 25 per cent from the quarter of 2010.
Much of that came from July's $4 billion acquisition of Marshall & Ilsley Corp. which "has fundamentally changed our competitive position in the U.S. Midwest," said Downe.
However, the bank's capital markets division posted a 30 per cent tumble in profits to $149 million over the same time last year as it contended with volatile market conditions which affected revenues.
Like his peers, Downe warned that the European situation and a continuation of the downturn in the U.S. housing market could have a lasting effect on the banking market.
Downe said he expects a moderate growth environment going forward.
"I'm still quite optimistic that we will have acceptable economic growth and that will support growth at all the businesses," he added.
Still on the schedule to report is National Bank (TSX:NA), the country's sixth biggest bank, which will issue results on Thursday.
Bank earnings for the fourth quarter:
– TD Bank (TSX:TD) profits rose 58 per cent to $1.57 billion. Adjusted earnings were $1.77 per share, above analyst expectations of $1.53 per share. Revenue increased to $5.67 billion from $5.02 billion.
– CIBC (TSX:CM) posted lower income tax expenses and improved wholesale banking results, which helped profit rise to $794 million from $500 million. After adjusting for one-time items, cash earnings were $1.87 per share, six cents higher than analysts had expected. Total revenue held relatively steady at $3.2 billion.
– Royal Bank (TSX:RY) earnings strengthened by 43 per cent to $1.6 billion on improvement in most of its divisions. On a cash basis, earnings were $1.11 per share, well above analyst predictions of 98 cents per share. Revenue held near $6.8 billion.
– Scotiabank's (TSX:BNS) profit rose 11 per cent to $1.24 billion, while earnings per share came in two cents above expectations at $1.10. Revenue increased to $4.35 billion from $3.94 billion a year earlier.
