The Globe and Mail reports in its Tuesday, May 23, edition that Canada's biggest banks will start
rolling out their second quarter
financial results this week. The Globe's David Berman writes that since Home Capital Group (HCG)
experienced a run on its deposits
last month, observers have been concerned
about the potential knock-on
effects. Adding to the urgency is
the fact that HCG's challenges
have arisen at a time
when regulators are busy introducing
measures to cool the real
estate market.
Stock prices of the Big Six banks
are reflecting unease. They have fallen on average more than 8 per cent from
recent highs. The sector is now
lagging the broad S&P/TSX composite
index year-to-date.
Keefe, Bruyette & Woods analyst Brian Klock says: "Our expectation is that during
earnings calls, bank managements
will point to differences between
HCG's mortgage
origination and funding structure,
as well as the quality of the
banks' portfolios, as points of distinction. The Canadian government has
taken steps to cool off the housing
market and we'll look for
bank managements to provide
colour on the steps they're taking
to insulate their portfolios."
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