Bullboard - Stock Discussion Forum North American Financial 15 Split Corp T.FFN

Alternate Symbol(s): FNCSF

North American Financial 15 Split Corp. is a Canada-based mutual fund corporation, which invests in a portfolio of over 15 financial services companies. It offers two types of shares, such as Preferred Shares and Class A Shares. Its investment objectives with respect to preferred shares are to provide holders of preferred shares with cumulative preferential monthly cash dividends in the amount... see more

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North American Financial 15 Split Corp > BofA on banks

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Post by kurtwalter on Jun 26, 2024 1:39pm

BofA on banks

BofA Securities bank analyst Ebrahim Poonawala provided some skeptical notes on Canadian banks,

“Our recent CEO/CFO meetings highlighted the potential for stabilizing EPS outlook even as credit quality remains somewhat tenuous. Our forecast for the big five banks implies PCLs (credit costs) to average 37bp/32bp for 2H24/FY25 vs. 34bp reported for 1H24. We see downside risk to our EPS forecast from PCLs staying at an elevated level, for longer than we expect. Capital positioning (and 5%+ divi. yields) a positive story … We continue to see US large-cap banks (GSIBs) offering a better risk/reward relative to their Canadian peers. While relative P/E valuation looks discounted (9.4x CAD vs. 10.6x US), we see higher interest rates as posing a structural headwind to the growth outlook for the Canadian banks. On the other hand, the competitive positioning of the largest US banks has arguably improved relative to pre-pandemic years, which should allow them to better capitalize on potential growth opportunities … FY24/25e consensus EPS revisions +1.7%/-0.1% YTD on average with Royal outperforming (FY25 +3.3% vs. stock +5.6%); BMO underperforming (-11.7% vs. -13.4%). Big five banks trading at 9.4x FY25e EPS vs. 10.9x 5yr pre-pandemic median … We reiterate our Buy-ratings on Royal Bank of Canada-RY (superior EPS/ROE defensibility) and BMO Financial-BMO (potential to re-rate on stabilizing EPS outlook, US growth opportunity)”