Diversified Canadian banks well protected in tough times: Analysts

Analysts say Canadian banks may be protected by their diversified structures and the delayed impacts from higher interest rates as they report earnings amid ominous headwinds in the global economy.

John Aiken, head of Canada research at Barclays, said Monday that “the beauty” of Canadian banks is that their diverse set of financial activities sets them up well to withstand tough economic times.

“When you look at the banks and what they've cobbled together in terms of their structure, it is very well diversified, and they do have a mix of businesses where if something's not going well in the economy, that is actually promoting another part of the business,” Aiken said in a Monday interview with BNN Bloomberg.

Aiken said U.S. banks, which are not as diversified in their activities, may be more profitable under strong economic conditions, but “Canadian banks always significantly outperform on the down cycles.”