The chief executives of Royal Bank and Bank of Montreal are expecting first-quarter writedowns due to U.S. President Donald Trump's tax changes, but also significant tax savings on future earnings.
RBC CEO Dave McKay told a conference in Toronto today that he expects a writedown of $150 million US, plus or minus 10 or 15 per cent, in the fiscal first quarter.
However, he said Canada's biggest bank by market capitalization is expecting an annual tax-positive benefit of $150 million US to $200 million US.
BMO CEO Darryl White confirmed during the industry conference the bank's prior guidance that it would reduce its net deferred tax asset by $400 million US, but said it also expects a positive economic impact of $100 million annually.
Tax changes signed by Trump late last year cut the corporate income tax rate to 21 per cent, from 35 per cent.
RBC and BMO's comments at an industry conference today comes after Toronto-Dominion bank yesterday said it expects its fiscal first-quarter results will be cut by roughly US$400 million, but the lower corporate rate is expected to have a "positive" effect on its future earnings.