Analysts say they expect more cost-cutting from the country's top lenders as they look to improve earnings amid slowing revenue growth.
"The reality is that the revenue growth expectations for the Canadian banks in 2015 are nowhere near as strong as they had been over the last several years," said John Aiken, a Barclays analyst who on Friday downgraded the stocks of four Canadian banks to "underweight," the company's lowest rating.
"In an environment where revenue growth is slowing, in order to try to maintain earnings growth, one of the levers that's available is to try to control the growth on your expense side," Aiken said.
"This is a lever that all of the banks are going to be taking a look at, not necessarily just on employment but total expenses overall."
According to a report from the Wall Street Journal, Canadian Imperial Bank of Commerce (TSX:CM) has laid off 500 employees over the past two weeks.
A bank spokesman said the cuts reflect CIBC's efforts to realign its resources and the bank plans to hire an additional 5,000 staff over the course of the year.
CIBC currently has about 44,500 Canadian employees.
Back in November, Scotiabank (TSX:BNS) announced plans to cut 1,500 jobs worldwide, roughly two-thirds of them in Canada. Scotiabank said the Canadian job cuts were due to plans to centralize and automate several branch functions, among other things.
No Canadian branch closures were expected but Scotiabank did plan to reduce the number of locations outside the country by 10 per cent.
About the same time, Royal Bank (TSX:TRY) announced it was exiting its wealth management business in the Caribbean, following the sale of its Jamaican operations earlier in 2014.
RBC did not say how many jobs would be lost as a result of its sale of the Caribbean wealth management business, but noted that international wealth management teams in Toronto, Montreal and the U.S. would be affected.
Meanwhile, Barclays downgraded its stock ratings of three of Canada's big five banks — Royal Bank (TSX:RY), TD Bank (TSX:TD) and Bank of Montreal (TSX:BMO) — along with Laurentian Bank (TSX:LB).
In downgrading them to underweight, Barclays cited concerns about how they'll be affected by a slowdown in Canada's economy as a result of the recent drop in global oil prices.
Analysts say the Bank of Canada's surprise interest rate cut Jan. 21 to 0.75 per cent from one per cent has put pressure on the commercial banks' lending margins, which will hamper earnings growth.
Canada's biggest commercial lenders have only partially passed along the central bank's rate cut, reducing their prime lending rates by only 15 basis points instead of the full 25.
James Shanahan, an analyst with Edward Jones, said the jobs eliminated at CIBC were most likely back office positions.
"Bank management teams will continue to look for opportunities to reduce operating expenses, particularly if interest rates decline further or if credit costs start to rise," Shanahan said in an email.