iA Financial Corporation Inc IAFNF

TD Notes

[retiredcf]

• We maintain our OVERWEIGHT stance on the banks, but we favour the insurers (Manulife and Industrial Alliance) that are trading at a discount to their peers over the banks. Our outlook is influenced by the view that Q1/21 will be seen as an anomaly for the insurers. Specifically, we believe that the move in interest rates and the resulting impact on reported earnings and LICAT that impacted investor confidence in Q1/21 will give way to a focus on the underlying fundamentals in Q2/21. Looking out to H2/21 and 2022, we expect the banks with greater rate sensitivity and card portfolios, and more generally, more room for improvement in non-CMRR fee income, to outperform. In this context, we favour Royal and BNS over BMO and NA.