The Canadian Investor - Canadian Banks Start Strong as Walmart and Intuit Slow Down

Episode Date: August 27, 2026

In this episode of The Canadian Investor Podcast, we break down the latest earnings from major U.S. retailers, Canadian banks, and one beaten-down software company. We start with Walmart and Target, where the results show that the consumer may be starting to feel more pressure. Walmart continues to perform well overall, but its comparable sales growth slowed sharply, and management noted that higher gas prices are changing consumer behaviour. Target showed stronger comparable sales than expected, but both retailers are leaning on price cuts and grocery strength as discretionary spending remains under pressure. We then turn to Canadian bank earnings, including Bank of Montreal, Scotiabank and National Bank. We discuss provisions for credit losses, improving margins, strong capital markets results, wealth management growth, and why the banks continue to deliver despite concerns about the Canadian economy. Finally, we look at Intuit after its latest earnings, including the pressure facing TurboTax and Mailchimp, the continued strength of QuickBooks, and whether AI and pricing pressure are starting to disrupt parts of the business. Tickers discussed: WMT, TGT, BMO.TO, BNS.TO, NA.TO, INTU, HD   Subscribe to Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own cyclicals, don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time.

Welcome back to the Canadian Investor Podcast. I'm back with Dan Kent. I'm Simone Berengi. So we have a fun episode, even though the earnings is dying down a little bit on both sides of the border, both in Canada and the U.S. But we'll be going over Walmart earnings. I know I touched on it a little bit during the live show, but we'll go a bit more of a deeper dive after that go over Target. because it's always good to compare both of them. And then we'll look at some Canadian bank earnings, including BMO, Scotiabank,

how those two look and National Bank. And then if we have time, but we should, we're going to be looking at into it over here. So it should be a fun one, even though news and earnings are actually slowing down a little bit. Yeah, if you look at, well, at least if the fiscal earnings calendar is accurate, which I've kind of implemented myself, it is very handy. Yeah, it is.

The banks are pretty much the only mid-cap or larger, like $2 billion or plus larger reporting this week. So yeah, it's definitely, it's bank week here in Canada. I know I think Nvidia reports tonight as we're recording this on the Wednesday, so we won't get to that, but that'll be a good one for next week. But yeah, we want to get right into it. Yeah, let's get into it. Before we get started, I wanted to just do a couple of quick notes.

So we're finalizing our new podcast covers. So make sure, don't be surprised if you see that. You'll still see Dan's and I and my face on it. So you'll see it, but it'll be some new branding. It looks quite nice. So just be on the lookout. I don't think it'll be out for this one, but most likely on the Monday episode. And then a quick note, we are aware.

We watched the news. There was a certain trade deal that was rumored or truded by Donald Trump as almost a done deal. And of course, everyone knows by now it fell through. Obviously, some major news. But we won't go. this tomorrow on our live show or when you hear this so later on Thursday so Thursday around we'll be starting a bit earlier around 1130 Dan Foch and I will be joined by Ben Rabidoo and Ron Butler to talk about it so we'll be focusing mostly about that

probably a bit of other macro stuff including bond yield mortgage rates so that the impacts it could have on it considering of course Ron's background and Ben's as well so make sure you tune in for that if you want a a deeper dive into the trade deal, the potential impacts, and what it means for the Canadian economy. So just wanted a quick note there now. Let's get started. So Walmart, did you have a look at their quarter or you're just going to listen to my beautiful voice while I go over it? No, I've looked over it. And this is actually what kind of led me to sell my Home Depot for shares. Oh, yeah, that's right. Yeah, you were texting me about it. Yeah, because you'll go over

the quarter. But I mean, when people are trading down at Walmart, it's probably, not a good sign for for home improvements or anything. So yeah, I ended up exiting that position. But yeah, you can go over the quarter. It's, it's pretty clear to me, at least, that the U.S. consumer is tapped. Yeah, it's easy. Yeah, the U.S. consumer is definitely starting to be tapped out. Again, we've talked about the K-shaped economy, and that we're not the only ones. That's pretty widespread out there. But revenues on the top line came in pretty strong. The increase 5.9%. Comparable U.S. sales growth was 2.6%. for Walmart and 4.4% for Sam's Club, excluding fuel sales in the U.S.

and Sam's Club, for those not familiar with it, it's basically like Walmart's version of Costco. Like, I remember going there as a kid and thinking was actually Costco. I'm like, oh, they call it Sam's Club in the U.S., but it's actually Walmart owned there. Yeah, we don't have any of that. You don't have any in the East. There's no Sam's Clubs in Canada. That's all a U.S. thing. Yeah.

I'm surprised they don't open any. like they don't open summer, try it out in Canada, maybe one or two stores still does, because Costco is obviously Canada is one of its strongest markets. So kind of a bit surprised there. The 2.6% comparable sales excluding fuel was the lowest since January of 2020. And for the joint TI subscribers, you'll see it here. So the lowest prior to that was 3% in the spring of 2022, so April of 2022. and before that it was 1.9% so January of 2020.

So you can tell that yes, comparable sales are definitely struggling. And they had been consistently over like 4% pretty much for that period of time. And then we saw obviously the COVID years where it was like high single digit, even low double digits. Yeah. And I think in 2022 like that April, that low point there, that was probably when inflation started to spike up. maybe people pulling back a bit, but. And I believe that's when rates started increasing.

That's right about, yeah, the central bank started increasing aggressively. Yeah. Yeah, so I mean, like once you get past Walmart here in Canada, at least, like what's your next option, dollarama? And then you probably, you've traded down as far as you can trade down. So the fact that. Yeah, or I mean like thrift shops, stuff like that too. So people start looking for secondhand stuff.

I think that would be, yeah. I don't think you can get like groceries or anything there. No, no, not groceries, but it is one of their bright spots. So I'll get to that. So Walmart International did extremely well with sales increasing 7.9%. And that was led by China, India, and Canada. They are seeing more pressure on the consumer with higher fuel prices. And it's interesting on the call.

And I mentioned this in the live show. They said they can even tell when the price of gasoline is above $4 per gallon. And the tradeoffs that consumers have to make. And I'm pretty sure it's above $4 right now. So it just goes to show that they can tell. And it essentially they set on the call. That's why they announced lower prices on around 11,000 items in the U.S. I think it's something that Dan Foch and I had talked on the live show.

So those rollbacks, it wasn't by coincidence. They could actually see that consumers were starting to trade off. So that's the approach that they took. Their grocery segment, like I mentioned, keeps performing well in the U.S. with comparable sales growing the mid-single digits. So that is one of the bright spot. And you'll see that with Target is actually quite similar there as well. General merchandise is improving in the low single digits.

And health and wellness is slowing in the low single digits. So it just goes to show that pretty much everything excluding food is quite slow. And e-commerce continues to be a positive point for them. It would grow to exceeding 20% for both the U.S. and globally. membership fee revenue continue to be strong at 17%. So they have these memberships. I think it includes Sam's Club, but also you can get online memberships for delivery.

Advertising revenue grew 38%. So I think all in all, it was a solid quarter, but I think the market is really zoning in on the comparable sales and the consumer slowing down. I mean, that's the biggest point here. It is interesting because they did raise some of their guidance for the rest of the year, but I think the market was really focused on those comparable sales that just were came in softer than expected.

And it's a sharp drop off from the 4.1% that they had seen the previous quarter. Yeah, I think it's just kind of a situation because didn't it fall 9 or 10% after it reported? I think it did. So I think it's just, I mean, Walmart was fairly expensive. It's a similar situation to Costco, I would say, where Costco had that like 18 months of, like super high growth and then you know kind of when it slowed down a bit they they've kind of traded flat for a bit but walmart's actually down quite a bit from one year highs 134 bucks back in late mid-May and now they're down around 22 percent so yeah consumers are clearly clearly feeling it

like food is not going to be something that dips when people are struggling financially because they need it but you're seeing it pretty much everywhere else Yeah, and I guess to wrap up Walmart here, I guess the most concerning thing, too, is diesel prices. So as high as gasoline is, diesel is much higher than gasoline right now. The spread is actually increasing and the cost is going up. And the problem with higher diesel prices is it really feeds into pretty much everything because transportation is diesel. Like you're not running an 18 wheeler on gasoline. Gas.

They have these and those 18 wheelers. So you would think they did mention that on the call, but you would think that it's either going to be squeezing your margins or they're going to have to start and pass that on to consumers at some point if it stays that elevated. They're definitely going to pass it off. I mean, at some point they have to.

They can kind of hold off for a bit, but after a while it's just going to all come back to the consumer. It kind of always does. Yeah, I think for now they're just playing the approach of rollbacks and trying to essentially maybe eat a little bit of the cost, so consumers actually stay to them and don't go to competitors. Speaking of competitors, Target, net sales were up 5.3%. They are their comparable sales actually fared a little better than Walmart,

so they were 3.8%. And the market apparently was expecting closer to 2.5% for Target. For physical stores, comparable sales were 2.7%, whereas it was 8.7% for online sales, so pretty solid online. They increased their adjusted EPS guidance for the year as well. And adjusted EPS, which excludes the tariff-free fund that they received during the quarter, was up 20% you over here. And it's just maybe a quick note here.

There's a lot of people that will make fun of adjusted like earnings or adjusted numbers. A lot of the time they're masking stuff or the companies are using them. It makes them look better. But in this situation, it's actually lower because it excludes the tariff refund. So I think not all adjusted numbers are created equal. And on Monday, we'll be going over some two, I would say deep dive that we're doing on companies that we haven't really talked about on the podcast before. And I don't know about yours, but the one I'm looking at, like, you need to look at the

adjusted number. Like the regular gap numbers, like, they are not useful whatsoever. So it just goes to show that adjusted can be useful. I just wanted to mention that because some companies do get a bat rob because they use adjusted numbers. And for some, rightfully so for others, it is warranted. Yeah, it all depends on what they're adjusting out. The company I'm going over Monday doesn't adjust much out there.

They just have very, very high margins. That should be a very interesting episode. They just lay it out as it is. I love it. Yeah, they just make a ton of money. And there you go. So just like Walmart, they lowered the price. for Target over 10,000 items so far this year, which definitely has resonated well with consumers.

And it kind of shows, right, I don't know the exact timing here, whether they did it as a response to what Walmart did. But it just goes to show that even these large retailers in their US are feeling that the consumer is slowing down. And they're trying to keep, I guess they're betting on volume. That's pretty much what they're doing right now. They're trying to keep the volume up, even if it means a bit lower margins. I'm getting a little bit here. It's okay. My daughter just is off from daycare and she's just popping in my recording room.

Yeah, that's okay. Hey, Sophia. Yeah. So they saw a 3.6% increase in foot traffic. And yeah, just like Walmart, they are seeing strong momentum in their grocery segment, but general merchandise remains under pressure. So that's it here for Target. Having cash on hand is essential for any business.

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Conditions apply. Yeah, I'll jump into BMO and you can take care of that. But it is Canadian Bank season, I guess we had Scotia yesterday, which you'll talk about. BMO reported yesterday as well, and then National Today, Royal Tomorrow, and then the rest on Friday, I believe. But BMO, I would argue this is one of the best quarters BMO has had in years. So the headline earnings looked like they bombed, but it was just due to some, again, some adjusted. Some non-cash charges from selling off some non-core assets. So the company's adjusted earnings came in 22% higher.

So you're talking about, I believe it was just goodwill write-offs effectively, impairments that would hit earnings. They don't actually cost the company any money. So again, this is kind of a situation where it makes sense to use them. So earnings 22% higher, revenue grew 11%. And if you had watched last Monday's episode on the bold predictions for the rest of the year, I had mentioned that the banks will need to come in well ahead of expected provisions, meaning provisions are expected to come in lower, but I think in order to kind of justify valuations,

they need to come in lower than expected. And it looks like Bank of Montreal did. National was a bit of a different story. But for BMO, provisions came in around $722 million, whereas the analysts had expected around 770. And this is also down from 797 million last year and lower than last quarter as well. And they mentioned on the call that although insolvencies are elevated, they're stable, which is really kind of the more important thing to focus on.

Like I think people would not be shocked at all if these banks said insolvencies were higher than they have been over the last while. It's just you want stability right now. And they are getting that. Somebody also mentioned that its direct trade exposure is under 1% of its total loan book. So it says that tariffs would not really be a broad credit event for BMO. In my eyes, this would not include the impacts that they would indirectly have from tariffs. For example, like somebody losing their job due to tariffs and then defaulting on their mortgage. Like, they're not saying that is 1%.

So it kind of probably ripples out wider than that. Maybe they're more talking about their business loan portfolio potentially. Yeah, okay. Yeah, I think so. That's kind of what I took from it. But on the segment front, every single segment grew double digits. So Canadian banking, 16%. US 11, wealth management, 22, capital markets 46.

The capital market segment is just, it's been wild for so many of these banks for a while. I mean, I've been saying that it's unsustainable. Which is worrying a little bit because that's the kind of stuff that's super cyclical. and it just blows out the earnings and people get more and more bullish on the banks. Like it's great while markets are doing fantastic. There's a lot of hype out there until there isn't, right? Yeah, if you look at every single capital market segment from the banks, you'll see it is cyclical.

But I mean, a year ago I said, like, oh, this is unsustainable. And all they've done is kind of grew by 30, 40% since then. So I'm still sticking to that, that it is. unsustainable, but you know, when it cracks is, is kind of difficult to tell. And for BMO, for quite some time, the U.S. has been dragging the bank down. After a while, it was, it was pretty clear that they overpaid for Bank of the West. That would have been an acquisition they made during COVID, kind of a regional bank in the U.S. looks to be kind of in the past return on equities are improving there. They're still sitting pretty low at 9.8% in the U.S., but they do see a pass to 12 plus

percent. The PCL ratio is now down to 0.41 versus 0.47 percent last year and provisions on performing loans, which are loans that are still getting paid, but the bank takes they could default in the future is down to just $14 million. I believe last year during the big tariff increase, like Liberation Day and everything, a lot of these banks were putting away a ton of performing provisions because the loans hadn't defaulted, but they might have, considering, you depending they didn't know the tariff environment, that's usually when you'll get larger performing loans is when the forward situation is a little more uncertain. But the fact that they're putting, you know, a very little amount away on a performing basis just kind of shows me that they think

the market is definitely going to be, or not the market, the economy is going to be improving in the future. Credit card delinquencies 1.44%, which is up from 1.29 a year ago. the residential mortgage and 90 day delinquencies are 0.5%. So that's up from 0.46. However, the only thing about these banks mortgage portfolios is so many of these mortgages are insured, especially the ones that are, I don't want to say most of their mortgages period, but the ones that are defaulting are insured because only around 0.03% of that have been losses.

So, I mean, this is just a mortgage insurance aspect of it when you put less than 20 percent down. The banks get their money back anyway. So a lot of these defaulting or these delinquents mortgages apparently are insured. So that's a little bit of a buffer for the banks. They're dumping a bunch of low performing loan segments, which should kind of shore up to CET1 ratio and probably allow them to buy back more shares. So they're getting rid of transportation finance. I didn't even know they had this, but this is a business that BMO used to help trucking companies like finance rigs, stuff like that. So they're getting rid of that. The other one would be vendor financing. And this would be something like a

small business needing a point of sale piece of equipment. So BMO would often issue the loans for those. Again, I had no idea they were involved in that either. And then the other one is Monaris, which is a payment processor in Canada. Like you see a ton of the point of sales systems. Apparently, this is a joint venture with RBC. And they're kind of moving on from that as well. Yeah, didn't it get bought by a U.S. private company or something? Monaris? Yeah. It might have, but they said that RBC is kind of sticking with it.

Yeah. No, so yeah, I saw that. Yeah, August 10th. Yeah, August 10th. So announces acquisition by Francisco partners with our, yeah, RBC did agree to sell. Yeah, there you go. So they both did agree to sell. So that's gone too.

Yeah, it got scooped up by U.S. private equity firms. With BMO and RBC each receiving a 50% share. Yeah. Yeah. Yeah. Yeah. So they got rid of that. We're moving on from all these businesses that really didn't make them all that much money anyway.

So I don't really see this as all that big of a deal. I mean, it seems for the bank, the turnaround is kind of well in motion. I mean, return on equities dip to the point where they were almost single digits back when BMO was going through some provision trouble. And I think most of it was on US commercial loans.

They've now recovered back to 14%. They expect 15 plus percent by next year, which would put them probably middle of the past. pack, maybe even, you know, top three in terms of return on equities from the banks. The dividend bump by 5%. And they announced another 25 million potential shares to be bought back. Like, they signed a new agreement for that. They don't have to buy them all back, but they kind of line that up.

Sounds like a pretty good quarter overall. I mean, I think I'm going to go over now, Scotia Bank. But for the most part, what you're seeing, it seems like the banks are just firing on all cylinders with the quick caveat that I think the capital markets and wealth management aspect is something to just keep an eye on because that is definitely dependent of markets. And they're getting like a pretty substantial share now of their net income just from those two segments. Like I don't know for BMO, but I feel like it's BMO and Scotia.

Pretty much all the banks, right? All of them. Like, well, I'll go over national wood. Even when national their deposits are declining, but that's because, because more people are investing, which ultimately is just going to build those capital markets and wealth management as well. It's a massive tailwind for pretty much all the banks right now. And one that, yeah, it won't last.

The more difficult part is guessing when the train kind of slows down or stops. That's the hard part. No, for sure. Okay, so now let's have a look at Scotia Bank here. So provisions for credit losses were down 11% versus last quarter, but up 4% year over year. Allowance for credit losses, which is always interesting to look at because it looks at the amount of money they have on the balance sheet set aside for bad loans and it compares

that to their total assets. It gives you a perspective. They never really talk about it in financial media when they release their earnings. They always look at PCL. But I think it's as important, if not more important because you want to put both number in perspective. You want to see are they adding more money, but also at what level are they adding money? If they're adding more money and it's, for example, 1.2% in terms of the allowance for credit losses

and they're accelerating the amount of money that they're putting at every single quarter, that would be really alarming versus if you add it at 0.5% and they're adding more money and accelerating, well, it's still noteworthy, but it doesn't have the same kind of, you know, alarm bell impact, right? So I think that's really important to keep in mind. Yeah, and when I go over national, that's pretty much one of the main points I'm going to say about that is like your starting point is a low base. Yeah. Yeah. And like if you think about it, the allowances are the allowances are the piggy bank and the provisions are the money you're putting into it every quarter.

So it's kind of a cumulative. Yeah, it's a cumulative thing. And, you know, at some point if things get good enough, they can even pull money out of that and kind of put it back into earnings. We aren't there yet. probably I don't even know if we'll get into that eventually. I mean, I think the environment is pretty tough right now. But yeah, it's Scotia Banks, ACL ratio is one of the highest out of all the big banks for sure. But it's also because they have had some very poor Latin America exposure that's kind of drifted that upwards. Yeah, yeah, exactly. And we were having an interesting

text exchange where you're like, oh, it's actually going back a little bit more to the norms here compared to what it was historically. But my point was this, yes, they still have that big Latin America exposure, but they've been shifting now for quite a few, what, two, three years. They've been really trying to shift away from Latin America. Yeah. So I think you have to take that into perspective as well, that, you know, it's probably a bit higher than it was traditionally when you factor than Latin America.

But again, it's still a big part of the business. So I think just to give a little bit of perspective here. So let's continue here. So adjusted EPS was up 21% over year and 13% quarter over quarter. They achieved 14.2% return on equity versus 12.4% last year at the same time. So that's pretty impressive in terms of what they achieve, especially since Scotia had been struggling in that department. And the net interest margin came in at 2.5% and that has been steadily improving since 2023. Now, the Canadian banking segment did very well.

Earnings were up 12% year over year. Return on equity, improve, although they did mention that provisions for credit losses were a headwin on a year-over-year basis, but they were down substantially quarter-over-quarter. International banking, like I guess most of it is Latin America. Earnings were 766 million up 8% year. Growth was driven by margin expansion and improved credit quality. wealth management again, that's a blockbuster for Scotia as well. So 23% increase you over a year. Earnings of 518 million. So just to give a perspective here, Canadian banking was just a bit more

than one billion earnings. So this is starting to be like close to like half of their Canadian business, the wealth management. And they said it was due to strong mutual fund fees, brokerage, revenue plus net interest income that was strong. Their asset under management grew a 16% year over year to 474 billion. And a quick note on Scotia bank here. Actually, I'll mention it at the end. So global banking and markets, that was up 37%. And again, it's both global wealth management and global banking and markets.

That actually is bigger than their Canadian net income. So it just goes to show what we were saying is it could be dangerous for the banks if there's a slow down the market. because those two segments, which is now almost like half of the business in net income, at least for a Scotia Bank, when you look at it compared to international and Canadian banking, if you see a material slowdown there, you'll see a hit in those two revenue stream. So it could dampen the, yeah, the growth you're seeing in net income or in earnings from these banks. Yeah, I think the only thing that would, I guess on the flip side, like their Canadian lending, you know, loans and deposits and everything are not going that well.

So maybe if capital market slows down, something else picks up the slack, maybe, you know, heavier declining provisions kind of offsets it. But yeah, it's not, it's unsustainable and at some point it's got to slow down. Like they're never going to be able to keep the pace of, yeah,

30 plus percent. In the fantasy world, people may feel richer than they think. So, yeah. I mean, clearly. Yeah. But quick note on school, Buster Bank before we move on to National is, so we have our mortgage with them and, oh my God,

they are relentless at, like, calling you every, like, a couple weeks to try and sell you mutual funds. Like, they are relentless. The last time I basically said, like, I want my name off this list. Like, you're like, every time they call me, it's like a bad moment. Yeah, I haven't had a call in, like, a month. So, I guess so. And, you know, every time they call me and it's not a great moment either. So I was like, okay, like you need to really stop calling me because like I was getting pretty pretty frustrated because I kept answering because I'm like, oh no, maybe like there's fraud or whatever, right?

Like you always like you're not sure, but it was always to sell me stuff. So they're pretty aggressive on it. I don't know the other banks, but just from personal experience, they're pretty relentless. So let's move on here to National Bank. Yeah. So for the banks that have reported thus far, I think Nationals Quarter was. probably the best. I would say Bank of Montreal's was the best relative to how expensive the bank was. Like Bank of Montreal is quite a bit cheaper than National. So, you know, considering the valuation,

I think BMO was a bit better. But Nationals quarter was, it was huge. So it fell in price after reporting. And I would imagine this is just from the market expecting a little bit more in regard to provisions. And it kind of seems like, I don't know, it seems like a trend. This is, anecdotal just from me kind of paying attention to National Bank during earnings time. But it seems like every time after earnings, it just sells off and then it runs up after earnings into the next quarter, then sells off again. It seems like a pretty consistent trend over the last while. I might be crazy on this because I obviously don't remember the exact earnings days, but that's just kind of what I feel. Yeah.

Stock recommendation. No, no. It's just consistently runs up post earnings. And then kind of. It is not an investment advice. Yeah. Yeah, don't listen to me. So they came, so provisions came in up 13 million.

Sorry, I'm scrambling now here, but they came in, provisions in total came in around 13 million or 5% higher than last quarter. And they're higher year over year by about 21%. But this is where I kind of spoke when we talked about Scotia, where the starting kind of benchmark is a lot lower. So National has the lower. provisions for credit loss ratio as a percentage of total loans out of any of the big banks. So that's kind of why it looks like credit is stabilizing because the PCLs have been flat over the last three quarters here and they see like the odd uptick. It's really not that big of a deal.

Whereas if you were to see this with Scotia, who's currently approaching 1% ACL ratio, it would be a little more impact than national that's at, you know, point, what is it there, 0.72. They're one of the lower ones. So it's not out yet for the latest quarter. So that was a quarter ago, but I would assume it's probably maybe like one basis point higher or something like that. Yeah, maybe if that, because it wasn't really all that higher year over year. So the other thing here, their total allowances cover 5.3x their last 12 month charge offs. So the money that they have on the balance sheet would cover over 5x, the amount of the charge offs over the last 12 months. So they have plenty of money aside in my opinion we're seeing provisions stabilized so that's a pretty

good sign on the quarter revenue was up 18% earnings 26% return on equity came in at 16.8%. So you see a company like scotia kind of improving their way to 14% and we have banks like national and i would not be shocked if c ibc and royal were up there too like close to 17% returns on equity and that's company wide. They're even better in the Canadian side of things. That grew 2.7% year over year. Their efficiency ratio drop below 50%, which is just, I mean, it's outstanding really. So this takes the banks non-interest expenses and compares them to revenue. So you're talking about branch costs, staffing, marketing, all that type of stuff. So the lower, the better, most banks will run in the mid-50% range. So for national to go sub-50, very good. Much like BMO, every quarter. Much like BMO, every

quarter, or sorry, every segment grew the quarter. P&C banking up 14% wealth management, 21, capital markets up 32%. U.S. segment, U.S. and international, they kind of bunch it together. They're kind of the laggard. They grew by only 3%, but it's a pretty small portion of the business. Canadian Western is producing and producing pretty much way more than expected. They've realized around 238 million of synergies this year. They expect to get to 270 million by year. They expect to get to 270 million by year's end and then they bump them to long term 300 million a year. Credit card delinquency, delinquencies actually declined, which I found a bit weird. It must be a Quebec thing, I guess, like maybe a bit better consumer health there, because

mortgages also grew by 14%. We're not really seeing this from any other Canadian bank either. And then, as I had mentioned, deposits fell by 3%, but that is primarily because they had mentioned people are choosing to invest rather than deposit. So it's just kind of added fuel to the other segments of the bank. But yeah, big quarter, stock sold off. And yeah, it's been, in my opinion, pretty typical of them over the last while. Maybe a bank that's just a bit too expensive right now.

And provisions just didn't come into where, you know, a lot of analysts were thinking. But they were, they were ahead of expectations by very small amounts. Okay. Now, let nothing more add here. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience too, until we switched to the new EQBank business account.

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TCI and receive $50. Conditions apply. Let's move on and finish off here with Intuit. So I haven't looked at this one in a little bit, but I know it's been part of the Sasmageddon type of deal, right? Yes. And I never really paid attention to them either until the SAS Magidon started. And then I kind of kept tabs on them because I do actually think that Intuit is one of the

companies that pose is set to be disrupted at least some um outsides of the business like i don't know it all that well so i might be it might be a bit of a stretch but when we look at a few of them i just kind of think they don't don't really have all that much of a moat in the you know a i software style era but it was a pretty wild morning so it started off 12% down and then right now i mean we're looking at 3.8% it looks like it's going to close around the day around 4% down on the day. And for the full year, the company increased revenue by 14%, 20% in earnings, and a pretty steady increase in operating margins throughout the entire year. And, you know,

much like any other software name, though, the market really doesn't care that much how good the results were. They just want customer health. They want guidance. They want, you know, what's going to happen in the future. And I think that is where Intuit initially kind of slipped. So it looks like the company is guiding to 9 to 10% growth versus. the 14 they just posted this year. QuickBooks and Credit Karma guided just fine, in my opinion, low to mid-double-digit growth

on both of them. However, TurboTax and MailChimp are definitely taking big hits. TurboTax guidance is actually for low single-digit growth and MailChimp is expected to decline. Yeah, I was going to say, like, who the hell would use MailChimp at this point when you can do, automate all

of that with AI? I have that in my notes, that I have used, No, it's funny that you say that because I've used, we use something called ConvertKit now for like email marketing, all that type of stuff,

but I don't know who would use MailChimp. I guess the added benefit of a lot of these email delivery is the server and kind of the trust factor built into it. You don't really get that with AI so they are a bit more difficult to disrupt, but Mailchip is just bad overall. If you've ever used one of these like MailChimp, just they're similar pricing to a lot of other platforms,

with like a tenth of the functionality. So I'm really not that surprised with MailChimp. I think they bought it. I don't know. I'm guessing at this, but I think it would have been probably 10 years ago now. Oh, no. Oh, no.

It was recently? It's a bad purchase. Yeah. So the acquisition was, I don't know if it was announced. And yeah, I think it was completed in November of 2021. So they really bought the peak.

Yeah. They paid $12 billion. in cash and stock. So this is not a, yeah, not a good purchase. Yikes. Yeah, I mean, I wouldn't have paid, I wouldn't have paid anything for MailChimp. Obviously, that's, it's kind of a joke there. I mean, I'm sure they had good ideas, like at the time.

But now, especially with AI, it's like a double whammy, right? Like, it's whatever like they saw in the business, it's probably, well, I mean, it's clearly not doing well if they're saying it's going to decline. Yeah, decline in sales five years after they bought it. But yeah, it's, there's a lot of pressure on. these mailing clients overall because of AI. So if you have one, it better be worth your, like worth your clients money and MailChimp. I mean, I haven't used it for probably six or seven years, but when I used it, it was awful.

So really not that surprise there. They are also guiding to 20% earnings growth, which is pretty good. I think they're buying back a ton of shares over the last while. I think the drop today is because of TurboTax. So they actually filed year over year, they filed three. fewer returns than last. Turbo tax revenue still grew, but apparently that's because they sold more premium solutions.

That's where you, like you pay extra and you get the live agent to kind of guide you through your return. So this now makes up, but I don't use any of that stuff. You don't use the live stuff? Yeah, I just use the basic stuff. They're losing a lot of people on the basic side of things.

And now the kind of the expert return side, like that premium markup, makes up over half of TurboTaxes revenue. And the company outright admitted they're losing high quality DIY customers because of pricing friction. So they raise prices too much. Now you can, you know, it's pretty easy to have your taxes filed for free now. I'm pretty sure well simple, as long as you have over 100 grand in your brokerage account,

they'll file your taxes for free. I think you just have to be the six figure. You have to hit the six figure mark. For well simple, I could, I could easily see them just doing this for free. everywhere. They might even now. I don't know. I haven't paid attention to that for a while. But there's just too many places right now to get them filed for free if you have a relatively basic tax return. And they mentioned, as I had said, that losing the clients was self-inflicted, price hikes. They're now trying to get back down to more competitive pricing. So is it the pricing or is it

structural? I guess you're going to find out next year because if it was pricing, you'll see the customers come back. But if not, it's definitely structural and it's probably going to be a big issue for into it. the shocking thing for me is quickbooks. This is the one I think is a bit more difficult to disrupt but the accelerated growth is kind of what's surprising to me. So revenue was up 23% payment volume

30% and their lending arm grew loan volume by 54%. This was another thing. I did not know that they were loaning money. I don't know if that's bullish or bearish that. Yeah, it's probably right like I H&R block, right? So they loan you they basically, or they give you the money before you get the tax return?

Yeah, or in advance? That might be. No, because QuickBooks is kind of the bookkeeping. So I don't think, I think QuickBooks is actually loaning money by the sounds of it. Okay. Yeah, I think so. Yeah, quick and easy business loans, it looks like, maybe. Business loans, yeah.

So they are loaning because TurboTax would be the H&R block side of things. But so, so yeah, that's where they're kind of seeing more growth. because on the enterprise side of things, 75% of their customers are using some sort of AI agent every month to keep books current, which is kind of wild. I mean, not really all that surprising, but so they've kind of scaled QuickBooks back to the point where you can get a free and light version,

and they are gaining a ton of customers, and what they're doing is kind of to realistically counterchurn. They're giving the software for free, and they're planning to make money through the invoicing side of things, because you can issue invoices, all that type of stuff through QuickBooks. Kind of seems to me that's where they're kind of trying to go. That said, they did cut guidance. So they have long-term guidance for QuickBooks, 15 to 20% growth.

They downgraded that to 10 to 15%. So that's not good. It's not some one-year guidance thing. It looks like it's long-term. So again, it's not a good sign when you're doing that. And customer growth at TurboTax and QuickBooks is very low, low single-digit growth. And I think there is only, you know, so many things, you can do internally to drive growth until you ultimately need to add more customers.

You're getting a company growing earnings at a 20% clip, revenue at a double digit clip, and 40% plus operating margins for a pretty cheap multiple. But I think the market is just pricing in continued decline in the popularity of these platforms, not really all that surprised. Because, yeah, they've into it has absolutely fallen off a cliff price-wise. down like 47% the past year. Yeah. And probably like most of this in the last year today.

So. Yeah. Yeah. They were peaked at 785 back in July of 2025. And now they're, yeah, 56% down over the last year here. So it's been a, it's been a rough go. Yep. Yeah. It's hard to, hard to disagree with that.

So I guess this is a good point to wrap things up. Definitely a company that will be interesting to follow, but there's definitely seeing some disruption. Hopefully you enjoy this episode. If you want to see both episodes every week on video, you can go to join tCI.com. If you'd like to just see our beautiful faces once a week, you can head over to YouTube. We do post the Monday episode on YouTube. So make sure you subscribe to our YouTube channel. You also get the episodes from the real estate show.

But hopefully you like the episode. And we will be back on Monday with a regular episode. And Saturday I'll be back with, as a reminder, Dan Foch, Ben Rabidou, and sorry, I forgot my last guest, Ron Butler. There you go. Getting a bit tired, so we're recording later. So make sure you tune in for that on Saturday. Thanks for listening.

The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.