Royal Bank of Canada T.RY

Canaccord Raises Target

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Albeit modestly. GLTA

Heading into second-quarter earnings season for Canadian banks, Canaccord Genuity analyst Scott Chan sees their domestic operations “very insulated” from U.S. regional banking crisis.

“With recent U.S. regional banking fears, the Big-6 banks have underperformed the TSX Composite year-to-date and since Q1/F23 reporting,” he said. “This comes after Canadian Banks’ relative underperformance in 2022 and in Q4/22 .

“Heading into Q2/F23 results, we are lowering our Group (avg.) EPS forecast by 2 per cent mainly due to higher expenses. For Canadian banks with U.S. exposure (Canadian P&C very insulated from U.S. regional banking crisis), we factored in NIM pressure (higher deposit beta), modestly lower loan growth, and larger PCLs (from higher reserve builds from performing loans due to macro environment.”

Mr. Chan also made these target price adjustments:

• Bank of Montreal ( “buy”) to $130 from $130.50. Average: $139.84.
• Bank of Nova Scotia ( “hold”) to $68 from $70.50. Average: $72.09.
• National Bank of Canada ( “hold”) to $103.50 from $99. Average: $105.08.
• Royal Bank of Canada ( “hold”) to $133.50 from $133. Average: $140.45.
• Toronto-Dominion Bank ( “buy”) to $89 from $86.50. Average: $95.61.