Canadian banks after rate cutJust down a marginal amount, certainly no euphoria.
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Scotiabank analyst Meny Grauman is not convinced that a Bank of Canada rate cut will have sustainable benefits for bank stocks, “If we compare the best-performing Big Six bank stock this earnings season (RY) against the worst-performing stock this earnings season (BMO), we get a delta of roughly 970 bps. Results generally came in better than expected, although clear signs of credit stress emerged as a result of the “higher for longer” rate environment. The rate outlook continues to be the most important single variable for this sector, and we believe that a BoC rate cut in June is likely to spark a rally in the shares even as we question how sustainable it will be … In our view, RY put up the best results of the earnings season, followed by CM which continued to deliver on its guidance. We would rank NA a close third … As we leave bank earnings season, we continue to favour RY and CM as our top Sector Outperform names among the large banks, and EQB among the smaller banks”