Gabriel Dechaine, who covers the banks for National Bank We cannot rule out the possibility of banks reversing course entirely and resuming the trend of additions to the performing [allowances for credit losses]," he stated in his latest report.
Dechaine said Bank of Nova Scotia, Bank of Montreal, and Toronto-Dominion Bank are his top candidates to retain their provisions based on their footprints outside of Canada.
Despite the murky outlook for credit quality, Dechaine noted that consensus profit estimates for the Big Six have been steady. Though he pointed out his outlook for earnings per share are below the broader view among his peers.
"With the world having become much more unpredictable and with clear signs of business deterioration in capital markets segments, you’d think consensus expectations would have become much more downcast," he wrote.
Dechaine has outperform (the equivalent of a buy) recommendations on Royal Bank of Canada and Canadian Imperial Bank of Commerce. He has sector perform (the equivalent of hold) ratings on TD, BMO, and Scotia. He doesn't have a rating on National.