Following the latest set of earnings from Canada’s six largest banks, one portfolio manager says he has a positive outlook for the sector.
On Thursday, the Canadian Imperial Bank of Commerce was the last of the Big Six banks to report third-quarter earnings. CIBC, Royal Bank of Canada, National Bank of Canada and Bank of Nova Scotia all topped analyst estimates, while Bank of Montreal and Toronto-Dominion did not meet expectations.
Ross Healy, the chairman of Strategic Analysis Corporation and a portfolio manager at MacNicol & Associates Asset Management, said in an interview with BNN Bloomberg Thursday he is optimistic about the future performance of the group of lenders.
“First of all, I think there’s some catch-up in the really cheap banks, although Bank of Montreal has got some work ahead of it. But Scotia is rethinking its strategy and yes, its numbers weren’t great, but they beat expectations. So I think that’s a nice cheap bank with a nice dividend, which should do well,” he said.
“I think TD, actually it’s more of the reputational damage behind it as opposed to the operational damage.”
Healy said that TD Bank’s issues with money laundering investigations by U.S. regulators would not discourage him from owning the stock.
“And they didn’t scare the market away either. When it all got announced, it (TD shares) sort of blipped down a little bit, but it came back nicely. And the stock is towards the lower end of its normal range,” he said.
He added that CIBC appears to be “catching up to its long-term potential” and National Bank and RBC are “two very, very well-managed, profitable banks.”
After the Big Six released earnings, Bloomberg News reported Thursday that CIBC and RBC are seeing improving credit trends, while BMO was hit with multiple downgrades from analysts after missing estimates due to concerns regarding its commercial loan book.
