Canaccord Royal Bank of Canada* (RY : TSX : $61.53), Net Change: 1.35, % Change: 2.24%, Volume: 2,251,360
TD Bank* (TD : TSX : $82.13), Net Change: 1.00, % Change: 1.23%, Volume: 1,651,866
Bank of Montreal* (BMO : TSX : $63.52), Net Change: 0.83, % Change: 1.32%, Volume: 1,253,285
Bank of Nova Scotia* (BNS : TSX : $58.58), Net Change: 1.21, % Change: 2.11%, Volume: 2,384,097
CIBC* (CM : TSX : $78.97), Net Change: 0.72, % Change: 0.92%, Volume: 1,690,946
National Bank of Canada* (NA : TSX : $75.26), Net Change: 1.09, % Change: 1.47%, Volume: 1,103,343
Hold 'Em or fold 'Em? Canadian banks have been really weak of late - with several testing their 200-Day Moving Averages.
Deterioration in labour and housing market conditions is taking its toll on the Canadian economy, hence hurting banks' lending
operations. Canaccord Genuity Portfolio Strategist Martin Roberge notes however, that Canadian banks are not operating in
domestic silos. Thanks to foreign operations, total bank lending is still growing 5.4% YoY, which is just below the five-year
average of 7%. Also, delinquency rates on mortgage loans (0.33%) keeps declining, which suggests that there is limited housing
stress on Canadian banks' balance sheets. Therefore, with the S&P/TSX bank index nearing its 40-week average, the four-week
change approaching the oversold mark at -7%, and valuation now below that of the U.S. banks, a buying opportunity in
Canadian banks should be near if recent history is any guide. Canaccord Genuity Financials Analyst Mario Mendonca believes
RY, TD and BNS should deliver superior earnings growth. CIBC and NA at current levels may also be considered. Another
way to own the Canadian banks on an enhanced yield basis is through the BMO Covered Call Canadian Banks ETF (ZWB).
This ETF holds the big six Canadian banks at essentially the same weights and writes covered call options to enhance yield. At
yesterday's close ZWB had a yield of ~5.8%.