Market Outlook: Canadian bank earnings to test credit strength
BNN Bloomberg
Canadian banks begin earnings season with focus on credit losses, ROE targets, valuations and U.S. growth prospects.
BNN Bloomberg spoke with Matthew Lee, analyst at Canaccord Genuity, who said strong capital markets and wealth management revenues are supporting a favourable backdrop, while consumer credit trends and U.S. execution remain key swing factors.
Read the full transcript below:
ANDREW: Canadian banks are set to report earnings starting this week. Scotiabank kicks things off tomorrow. Let’s get some ideas on what to expect from Matthew Lee, analyst at Canaccord Genuity. Matthew, great to see you and thanks for joining us. You’re looking for a pretty decent year for the Canadian banks, with earnings per share up almost 10 per cent?
MATTHEW: Yeah. I mean, look, the setup is favourable right now. If you think about the different factors that go into what makes bank earnings work, we have strong capital markets, strong wealth. We have credit that’s remained relatively benign. Loan growth, not there yet. But overall, yeah, I mean, absolutely looking for a good year.
ANDREW: I guess the worry is always about possible consumer losses. What is your feeling? I mean, we are seeing some weakness in the Canadian job market, but you don’t think provisions are going to be a huge problem?
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