Market Overview

Are Canadian Banks Set For Frigid Earnings?

Are Canadian Banks Set For Frigid Earnings?

In a new report, Barclays analyst John Aiken explained why Canadian bank investors need to start facing the harsh reality that Q1 performance will likely be weak. Barclays has reduced its earnings estimates and price targets for most banks and believes that Q1 numbers will fall well short of previous consensus forecasts.

“As declining oil and the Canadian dollar begin to weigh on consumer confidence, we believe that meeting 2015 profitability levels would be an exemplary but exceedingly difficult result,” Aiken explained.

Related Link: 6 High-Quality Tech Stocks To Buy On The Dip

With commodity prices slumping and the Canadian dollar weak, real estate has been the lone bright spot for many Canadian banks, but Aiken believes even the housing market may soon reach a turning point. “With concerns of a slowdown to the housing market ever present, incremental stress to an already weak economy could still be forthcoming," he noted.

Most Canadian banks are trading at earnings multiples well short of their historical averages, and Aiken likes their hefty 4.9 percent dividend. However, Barclays remains cautious.

The firm maintains Underweight ratings on Bank of Montreal (USA) (NYSE: BMO), Canadian Imperial Bank of Commerce (USA) (NYSE: CM), Royal Bank of Canada (NYSE: RY) and Toronto-Dominion Bank (NYSE: TD).

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain

Latest Ratings for BMO

Dec 2020Credit SuisseMaintainsNeutral
Dec 2020Credit SuisseMaintainsNeutral
Nov 2020CIBCUpgradesNeutralOutperformer

View More Analyst Ratings for BMO
View the Latest Analyst Ratings


Related Articles (BMO + CM)

View Comments and Join the Discussion!

Posted-In: banking banksAnalyst Color Long Ideas Economics Markets Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

TSLAJP MorganMaintains125.0
INTCTruist SecuritiesMaintains64.0
FBTruist SecuritiesMaintains320.0
AAPLCowen & Co.Maintains153.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at