Highlights
- Since our previous report in December 2022, shares of the Big Five are up 3% on average, in line with the TSX. CIBC was the best performer.
- Q1 (quarter ended January 2023) revenue was up 11% YoY on average, amid higher rates and strong loan growth. However, EPS declined by 4% on average, and fell 2% below our estimates, due to higher loan loss provisions.
- We are expecting default rates/provisions to increase in the coming quarters, driven by high interest rates, and slower GDP growth.
- Maintaining our BUY rating on TD, BMO, CIBC, and BNS, while downgrading RBC from BUY to HOLD.
- Sectormultipleshavemovedupsinceourpreviousreport,andare currently 24% below pre-pandemic levels (previously 26%). We are expecting the Bank of Canada (BoC) to hold its benchmark rate in its meeting tomorrow, triggering a rally in equity markets.
- Our revised fair value estimates indicate an average expected total return (including dividends) of 21% for the Big Five. BNS and CIBC continue to have the highest expected yields. We believe BNS has the highest upside potential.
-
However, EPS was down 4% YoY on average, and 2% below our estimates, primarily due to higher loan loss provisions; RBC and TD reported EPS growth, while BNS/BMO/CIBC reported declines
-
-
-
-
- This report is currently available to premium subscribers – Free subscribers will gain access on Mar 14th, 2022 Join as a FREE member and get our research report delivered straight to your inbox, with a seven-day delay
-
-
-
Visit Bank of Nova Scotia page for more research, discussion boards and to like, and share.
Are you enjoying the highlights?
Discover the company's fair value estimate from our certified analysts, identify potential risks, and explore exciting upcoming catalysts in our detailed report.