07-22-2015, 06:17 PM
(This post was last modified: 07-22-2015, 06:45 PM by Roadmap2Retire.)
Hi rayray,
Canadian banks provide great value here. As you pointed out, most of them are attractively valued.
I wrote an article earlier this year that the banks would face continued weakness through the year and would be a great time to build good positions for long term holding. Article post here.
An update since then:
- Canada is already in recession, although Bank of Canada is using every word in their vocabulary to avoid using the R-word.
- The most recent interest rate cut came last week after the cut in Jan 2015. The banks have decided to take a bigger cut by increasing the spread between overnight interest rate and prime rate. See some of the details I shared last week when I added to my TD position.
Also pay attention to the risks - the Canadian housing market is extremely overheated and even the Bank of Canada has acknowledged that the market is probably 20-30% overvalued and is hoping for a soft landing.
To answer your oil question: See this article from earlier this year. According
to this BMO analyst, oil makes about 3% of total lending portfolio and about 10% of the Capital Markets division. Ive read some reports saying that BNS has a higher exposure and BNS took a bigger hit than the others - but BNS was also seeing some issues with its Latin American operations last year and closed some operations and laid off ppl.
Canadian banks provide great value here. As you pointed out, most of them are attractively valued.
I wrote an article earlier this year that the banks would face continued weakness through the year and would be a great time to build good positions for long term holding. Article post here.
An update since then:
- Canada is already in recession, although Bank of Canada is using every word in their vocabulary to avoid using the R-word.
- The most recent interest rate cut came last week after the cut in Jan 2015. The banks have decided to take a bigger cut by increasing the spread between overnight interest rate and prime rate. See some of the details I shared last week when I added to my TD position.
Also pay attention to the risks - the Canadian housing market is extremely overheated and even the Bank of Canada has acknowledged that the market is probably 20-30% overvalued and is hoping for a soft landing.
To answer your oil question: See this article from earlier this year. According
to this BMO analyst, oil makes about 3% of total lending portfolio and about 10% of the Capital Markets division. Ive read some reports saying that BNS has a higher exposure and BNS took a bigger hit than the others - but BNS was also seeing some issues with its Latin American operations last year and closed some operations and laid off ppl.