Paul Gardner, CFANational Bank of CanadaNA.TOBUYNov 09, 2023

Banks are hitting all time highs and their P/E ratios are much higher than historically. He has been reducing exposure to them but owns TD and BNS for dividend growth. Slowing population growth and high unemployment are a concern but the capital markets are very good. Some internationals are looking to buy Canadian banks.

Much higher ROE than peers. Generates recurring high fees. He'd be buying for new clients. One of the best to own long term. Diversified, national presence.

Concern for all banks at these high valuations is that we have a recession or credit cycle.

One of the Canadian banks in the sweet spot. Nice growth rate for a reasonable valuation. He'd be more of a buyer than a seller, even at this level.

Likes it even more since acquisition of CWB, now a national presence. Good wealth management. Capital markets business good, getting better. CWB brings excellent commercial banking. All banks are buy-and-hold compounders.

Really smart -- not trying to play the bottom, just adding to build your position. Though oil won't go down anytime soon, he thinks the Strait will be open in a few weeks. There will still be threats, but it'll be a lot better than today.

Of course no one knows for sure, but if that's the case then banks are really good buys in here. This name is growing better than peers.

Good numbers today. Its business will continue to do well in this environment. Great run, so you might want to take a bit of profit.

Only caveat (on the sector in general) is that if CUSMA gets ripped up, we're probably going to see a bit of economic pain in Canada. Interest rates might fall, which would be somewhat negative for the banks.

He does anticipate a dividend increase, though he can't tell which quarter it will be. Business has grown significantly with its acquisitions. As earnings go up, the dividend will go up over time (as it likes to target a certain payout ratio). Rich valuation. Can't expect growth to continue at the same pace; as it gets bigger, less it can do via M&A.

The valuation of the Canadian banks are at their high end. but they are solid and offer attractive dividends. National Bank is more Quebec focused but they bought Canadian Western Bank which expands their focus. It still needs to integrate this big acquisition. It is a long term hold for income.

He likes that they bought Canadian Western Bank. NA has a good tracks of finding profitable niches that don't compete directly with the other Canadian banks. The merger gives NA many opportunities to cross-sell and improve efficiency in CWB.

Good performer. Nothing bad to say. He owns other names as longstanding positions.

The new infrastructure projects that Ottawa has announced will benefit the banks. NA is more Canadian than CIBC, though both are. Big projects need a lot of funding, and the banks' job is to find that capital. CM is pretty well priced now.

Probably warrants a fresh look in the wake of its merger with CWB, a fantastic and very synergistic deal. Makes it a scale player nationally with lots of cross-selling opportunities. Capital markets business is excellent. Reports mid-week next week. Small business in Cambodia has been tricky, but not enough to move the needle. Continue to own comfortably.

No qualms buying. Coast-to-coast Canadian bank, with modest international exposure. CWB acquisition brings both revenue and cost synergies. Good capital markets and pretty good wealth management. Overexposure to the dynamically growing Quebec has been to its advantage. Pullback is a pretty good entry point.

Both have a very large domestic presence, which helps them in this environment. Both had very good numbers last quarter and are very good businesses. As expected, all banks increased credit provisions.

RY will benefit more from its large capital markets business. Volatility helps capital markets a lot; perhaps you won't get the M&A, but a lot of trading goes on with equity, debt, and other derivatives. It's global. Expectation in US of deregulation in financial services; if so, RY will benefit a lot more than NA.

NA is smaller and more focused in Quebec, though the CWB acquisition is changing that.

It had always traded at a discount to the big 5 banks but has started to trade in line. However he feels that it will go back to its historic range. He will continue to hold but not add.