14:11:43 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Bank of Nova Scotia
Symbol BNS
Shares Issued 1,207,516,130
Close 2015-09-23 C$ 57.51
Market Cap C$ 69,444,252,636
Recent Sedar Documents

Globe explains why Big Six banks are cheap

2015-09-24 08:54 ET - In the News

See In the News (C-CM) Canadian Imperial Bank of Commerce

The Globe and Mail reports in its Thursday, Sept. 24, edition that domestic bank stocks are cheap for a good reason. The Globe's Scott Barlow writes that two primary sources of funds for banks are deposits and short-term debt markets. This money is cheap for the banks. The problem is that longer-term rates, the interest banks charge to borrowers, is also extremely low. The difference between the banks' cost of funds and the rate they receive on loans determines their profit. The tiny difference between these rates in the current market -- only 35 basis points as of Friday -- is proving a significant hurdle to profit growth and stock performance. Declining earnings from lending have been reflected directly in stock performance. The poor conditions for issuing loans are the most likely reason for bank stocks trading at their cheapest valuation levels since the financial crisis. Canadian banks have well-deserved reputations for pulling rabbits out of their hats where profit is concerned. Canadian investors, however, have become accustomed to profits growing at a significant rate. That era might have come to an end, at least until the yield curve steepens and profit from lending improves.

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