Banks of the World
Friday, September 15, 2000
Canadian Banks
Canadian banks continue to move higher with the TSE Banks & Trusts sub index less than 400 points off its all time high of 11,694 established on April 16, 1998. This time around Bank earnings and capital ratios are higher by 50% and 30%, respectively. Trading in the sector has been fuelled by rumours of M&A activity and the strongest fundamentals we have seen in 30 years. The industry is currently trading at 11 times our 2001 EPS estimate. We believe that a long-term multiple expansion could be underway that could see the sector trading at 14 times forecast earnings in a few years time. Meantime, the sector has moved very quickly and may be a little ahead of itself. CIBC still has the most potential and momentum near term. Longer term, Royal Bank and TD Bank are still our favourites because of their excellent growth prospects. - K. Choquette
Thursday, September 14, 2000
Canadian Banks
The Canadian banks have experienced dramatic returns recently as strong financial results, lower interest rates and consolidation in the financial services industry in North America. The TSE Banks sub-index has rallied 6.2% in a week, 12.8% over the past month, and 45.7% since the yield curve shifted in early March. Despite these strong returns we remain overweight the Canadian banks and the interest sensitive sector. However, for investors with significantly overweight positions in financial services we would begin to reduce exposure to a more reasonable overweight position. Our target for the TSE Banks sub-index is 12,264 (the Index closed at 11,134 yesterday). Our top picks of the Canadian banks are Royal Bank, CIBC, and T-D Bank which posted a combined 27% earnings growth rate in the third quarter. We would reduce exposure to Bank of Montreal and National Bank based on their poor relative financial performance. - Portfolio Advisory Group
Bank of Canada
Canadian Banks
For Bank Stock Forecasts Archives
Links to Banks
 Toronto-Dominion and 
Task Force on the
Future of the Canadian Financial Services Sector
Prepared by the
federal Department of Finance.
Merger Enforcement
Guidelines as Applied to a Bank Merger
Prepared by the federal government's Competition Bureau.
The Canadian Community Reinvestment
Coalition
A coalition of community-based groups that advocates bank accountability to
its customers.
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