Canadian Banks Deliver the Goods -- Again

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The Canadian banking sector has been a perennial bright spot in an industry that has been pretty lackluster for the past few years. U.S. banks are just beginning to get their legs under them again, but those to the north emerged from the global financial crisis with nary a scratch, which has enabled them to pick up some sweet deals, fueling expansion.

Now that all of these healthy pups have turned in their financial report cards, it's time to take a look at how they have fared in the recent past -- as well as what may be clouding their future.

Royal Bank of Canada (NYSE: RY  ) kicked off the season with its report  showing Q4 earnings up 22% from the year previous, and sporting increases in revenue of 12%, as well. The bank noted that income increased appreciably from fixed income trading, and that net income increased 16% year over year in its Wealth Management department. Bank of Montreal (NYSE: BMO  ) followed , with Canadian earnings up 6.2% from last year, and Capital Markets income more than doubling.

Then there is Bank of Nova Scotia (NYSE: BNS  ) , which recently earned the title of Global Bank of the Year from The Banker magazine: EPS that beat estimates, plus a nice 15% increase in revenue from this time last year. Toronto-Dominion Bank (NYSE: TD  ) turned in nice EPS numbers, though it missed a bit on revenue -- despite a year-over-year gain of 4%. This bank's aggressive U.S. expansion has gone on unabated as of late, with its recent takeover of Target's (NYSE: TGT  ) credit card business, as well as its current bid to purchase  Epoch Holding (UNKNOWN: EPHC.DL  ) , which will add another $24 billion in assets to its already hefty wealth management division.

These banks are doing so well that, unlike global competitors, they are sharing the wealth with employees via bonuses. Royal Bank increased its award pool by 11% this year, and others followed suit, though by smaller percentages. Canadian Imperial Bank of Commerce (NYSE: CM  ) was the only big Canadian bank to cut back its compensation -- by 2%.

And then, there are the dividends. Northern banks have been pretty reliable over the past few years on this front, and recent payouts didn't disappoint. TD Bank recently announced a $0.77 per share quarterly dividend, Bank of Montreal paid out $0.72, and Royal Bank's contribution came in at $0.60. Interestingly, CIBC's dividend was the largest -- $0.96 – even as the bank pulls back on worker bonuses.

One Fool's take
What about the headwinds? Analysts have been predicting that lending will slow as Canadians pay down debt and the nation's hot housing market cools. So far, however, the only evidence of this threat is the fact that banks such as Royal Bank of Canada are setting aside more capital in case mortgages start to sour.

Certainly, a slowdown in real estate and consumer spending is imminent. However, I believe that these issues will have only a mildly negative impact the banks -- and then, for a limited time. These banks have strong foundations, and it will take more than a mild economic downturn to cause them serious damage.

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