Mike Vinokur, CFA, CMT, and CFPBank of Nova ScotiaBNS.TOHOLDMay 09, 2024

The banks are very well positioned. Benefitting from GenAI and AI investments. Regulatory environment is in their favour with OSFI lowering threshold for risk-weighted assets, which means they have more capital to lend. Consumer is reasonably healthy. As long as interest rates don't go flying through the roof anytime soon, the banks can continue to do well.

It's the weakest Canadian bank. They're reducing exposure to the Caribbean, because that area lacks growth. Tailwinds for all Canadian banks: the stock market is going up, management fees are up, M&A is increasing, and loans and mortgage rates are rising in a struggling economy. BNS is still struggling. Their dividend increase was the weakest of the six. He's not convinced BNS will catch up to its peers.

He's very bullish on Canada. Banks have run quite nicely, but there should be a dip coming around July to add. Looks great. Let it run. Next year he anticipates a bigger correction, and that's when you can trim by 5-10% (banks are long-term holds).

Now focusing more on North America. Investment in KEY was a head-scratcher -- if they plan to buy the whole thing, why didn't they do that out of the gate? He prefers others in the space.

It's charm amongst peers is its relative valuation. Fairly inexpensive at ~1.5x book value. Large Canadian banks have all done well, but this one has lagged. Most international of Canadian banks. 

Strong capital base. Dividends should continue to increase over time. Very strong yield of 4.54%.

The only one he still owns (plus a bit of TD). He'll get into banks again when prices are better.

When banks hit 12x PE, that means ROE is 8%. If the problems of GSY spread up the affluence chain, banks will have problems. Housing market is sloppy. Our economy is being bailed out by gold and oil prices. Yield is 4+%.

Hard to pick on the Canadian banks. Stead eddy, good dividends. Low growth. One of his favourite names, especially for the international diversification. No valuation concerns. Strong balance sheets can handle any loan losses.

One to look at if you're looking for a Canadian bank. Cleaned up its act in South America.

You probably don't want to add capital to a name that's moved significantly. Perhaps trim. The time to buy was when it was facing the uncertainty of a new CEO. 

Canadian banks will have credit issues if CUSMA vaporizes. But in general, good franchises. Instead, look outside Canada; JPM is one to consider.

Likes it. Canadian bank yields have come down as they've all rallied. At ~4.3%, almost the highest yield of the group. Still work to do on Latin American operations. Definitely a long-term hold.

Well positioned going ahead. Earnings growth likely to accelerate faster than peers. Compelling on valuation and earnings outlook.

Executing on new strategic plan. Still significant valuation gap between it and rest of Canadian banking sector, and that gap will continue to shrink over time.

Transition is slow-going. Market didn't like its buying a stake in KEY. Question is:  where are they going strategically? Meanwhile, you have cost-cutting, capital markets, and share buybacks. Money has flowed to the TSX this year driving banks higher, but nothing has fundamentally changed with this name.

If you're overweight, you could trim. No calamity on the horizon. He'd just want to see some heat come out of the market before purchasing.