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

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.

Because he works there, he can't really discuss the merits of this particular bank. So he'll talk about the sector instead.

Great numbers across the board. Many raised dividends, ROEs are improving. Yield curve is more upward-sloping, which is helping. PCLs have been a concern and ticked up, but less than what market expected. Better growth numbers. Expectations for earnings numbers are being increased. All the names are looking good here. 

When he looks at banks, he looks at the dividend and growth at the most reasonable price. BNS ticks those boxes. Looking really good despite its run, more to go.

If you own it, keep it; it'll be fine for the long term. Reported this week; lower-quality beat because it was on the backs of capital markets and wealth management. Stagnant loan growth, international PCLs are going up. Up 25% YTD, but lowest valuation of the group and highest dividend yield of ~4.6%. 

Hard to put new capital into the banks right now, as all banks are trading at a premium. Plus, we're not at the optimal time in the credit cycle to invest in the banks.