Barclays on Canadian Banks: Fourth Quarter Preview: Started Off 2011 with a Bang, But to End with a Whimper
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Rating Summary:
8 Buy, 8 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on Canadian Banks: Fourth Quarter Preview: Started Off 2011 with a Bang, But to End with a Whimper
Barclays analyst, John Aiken, said, "Contrasting the strong start to 2011, a lackluster second quarter followed by a mixed Q3 underscored that the difficult earnings environment continues to linger. We anticipate that the banks will produce a modest fourth quarter performance to close out the year. While we still anticipate relatively solid double digit earnings growth for the year, we have lowered our Q4 estimates, reflecting continued revenue pressures in capital markets, and higher expenses associated with an 'everything but the kitchen sink' fourth quarter and little relief on the net interest income front."
"Revenue Headwind Means that Costs Control Continues to be Key - Capital markets activity was even slower than Q3 and we anticipated sequential declines in almost all lines. Further, even though we anticipate lending volume growth and no incremental competitive pressures, the banks cannot escape the macro factors and we believe that net interest margins will be down again, albeit slightly. In light of continued revenue pressures, cost containment will be critical in minimizing the
damage to profitability. We see little reason to doubt the banks that have been
successful in recent quarters (TD and CM) will not be able to do so again in the
fourth quarter."
Barclays maintains an Equalweight on Bank of Montreal (NYSE: BMO), lowers PT from $64.00 to $61.00. Lowers FY11 EPS estimate from $5.33 to $5.27 and FY12 from $6.13 to 5.51.
Maintains an Underweight on Bank of Nova Scotia (NYSE: BNS), lowers PT from $57.00 to $54.00 and FY11 from $4.37 to $4.33 and FY12 from $4.70 to $4.43.
Maintains an Overweight on Canadian Imperial Bank of Commerce (NYSE: CM), lowers PT from $90.00 to $87.00, and lowers FY11 EPS estimate from $7.49 to $7.40 and FY12 from $8.03 to $7.48.
Maintains an Equalweight on Royal Bank of Canada (NYSE: RY), lowers PT from $56.00 to $53.00 and FY11 EPS estimate from $4.34 to $4.30 and FY12 from $4.67 to $4.41.
Maintains an Overweight on TD Bank Group (NYSE: TD), lowers PT from $91.00 to $87.00 and FY11 EPS estimate from $6.81 to $6.59 and FY12 from $7.27 to $6.92.
Barclays analyst, John Aiken, said, "Contrasting the strong start to 2011, a lackluster second quarter followed by a mixed Q3 underscored that the difficult earnings environment continues to linger. We anticipate that the banks will produce a modest fourth quarter performance to close out the year. While we still anticipate relatively solid double digit earnings growth for the year, we have lowered our Q4 estimates, reflecting continued revenue pressures in capital markets, and higher expenses associated with an 'everything but the kitchen sink' fourth quarter and little relief on the net interest income front."
"Revenue Headwind Means that Costs Control Continues to be Key - Capital markets activity was even slower than Q3 and we anticipated sequential declines in almost all lines. Further, even though we anticipate lending volume growth and no incremental competitive pressures, the banks cannot escape the macro factors and we believe that net interest margins will be down again, albeit slightly. In light of continued revenue pressures, cost containment will be critical in minimizing the
damage to profitability. We see little reason to doubt the banks that have been
successful in recent quarters (TD and CM) will not be able to do so again in the
fourth quarter."
Barclays maintains an Equalweight on Bank of Montreal (NYSE: BMO), lowers PT from $64.00 to $61.00. Lowers FY11 EPS estimate from $5.33 to $5.27 and FY12 from $6.13 to 5.51.
Maintains an Underweight on Bank of Nova Scotia (NYSE: BNS), lowers PT from $57.00 to $54.00 and FY11 from $4.37 to $4.33 and FY12 from $4.70 to $4.43.
Maintains an Overweight on Canadian Imperial Bank of Commerce (NYSE: CM), lowers PT from $90.00 to $87.00, and lowers FY11 EPS estimate from $7.49 to $7.40 and FY12 from $8.03 to $7.48.
Maintains an Equalweight on Royal Bank of Canada (NYSE: RY), lowers PT from $56.00 to $53.00 and FY11 EPS estimate from $4.34 to $4.30 and FY12 from $4.67 to $4.41.
Maintains an Overweight on TD Bank Group (NYSE: TD), lowers PT from $91.00 to $87.00 and FY11 EPS estimate from $6.81 to $6.59 and FY12 from $7.27 to $6.92.
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