• 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

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