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Non-Tech : Canadian vs. US Banks--Better PE and rising C$
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To: cherrypitter who wrote (1)2/12/1997 11:25:00 PM
From: Steve Bevington   of 230
 
The TSE has been dominated by the big banks in Canada over the last six months or so, yet their fundamentals keep pointing towards higher valuatiuons. BMO and CIBC have dividend yields still over 3% which is high relative to the rest of the sector. TD has announced that it is resuming its share buyback program, this should help its valuation upwards. Relative to US banks, the big six in Canada are still bargains. One positive note for the sector as well is that it is viewed in some circles as being less interest rate sensitive than what it used to be. This is due to the strong impact of fee-based revenue for the banks through brokerage operations, etc. Profits from loan spreads may have less influence than in past decades. As well, the PE fro the banking sector is still only about 13 compared to 25 for the TSE 300. For the remainder of the spring, I feel banks should outperform the market due to the large influx of RRSP contributions going towards equity funds. Comments?
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