Wave of dividend increases and share buybacks expected as banks report this week

A Royal Bank of Canada sign is pictured in downtown Toronto on Dec. 2, 2011. (Nathan Denette / THE CANADIAN PRESS)

Canada's big banks are expected to roll out significant dividend increases as they release earnings this week.

The results are the first since early November when Canada's banking regulator lifted restrictions on raising dividend payouts and share buybacks that were imposed as a cautionary measure at the start of the pandemic.

Banks have performed well despite COVID-19, leading RBC analyst Darko Mihelic to predict an average payout increase of 20 per cent, while CIBC analyst Paul Holden says he expects to see individual bank dividend increases ranging anywhere from five to 25 per cent.

Scotiabank analyst Meny Grauman says he's bullish on the sector and expects a wave of payout increases, but notes COVID variants continue to pose risks, as do the potential for runaway inflation and supply chain issues.

Along with dividend increases, analysts say loan growth could be a positive at the banks, while slowing capital markets and rising costs could weigh on results.

Scotiabank kicks off the earnings week on Tuesday, followed by RBC and National Bank on Wednesday, CIBC and TD Bank on Thursday, and BMO on Friday.

This report by The Canadian Press was first published Nov. 29, 2021.