Banking, finance, and taxes

Are Canadian Banks Looking Better or Worse?

Jon C. Ogg

Published: March 9, 2016 4:31 pm

Last Updated: January 13, 2020 12:09 pm

The banking sector has been tough to invest in during 2016. The theme of investing in banks in Canada has also been difficult. A report from analyst K. R. Choquette of Credit Suisse noted on Wednesday that the Canadian banks managed to show a slight earnings beat in the first quarter. They also managed to turn in dividend hikes.

Credit Suisse maintains that Canadian banks managed to grind out another solid quarter with earnings growth of 6%. This was led by FX-assisted international operations. Their wholesale and capital markets were viewed as relatively strong, particularly in trading.

Choquette pointed out that the oil and gas segment’s provision for credit losses acted as a drag. Wealth management had one of its toughest quarters and insurance was very weak.

International earnings growth was 21% in Canadian dollars but was up just 6% in constant currency. The firm believes that a foreign exchange tailwind should last for another two quarters, and then there will be tougher comparable points by the fourth quarter of 2016.

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