Canadian Banks Face Elevated Valuations Ahead of Earnings Season
Canadian banks are approaching another earnings season with broadly resilient fundamentals, according to National Bank Financial. The bank's research team has updated its coverage on Canada's major banks, maintaining a positive but increasingly selective outlook.
The analysts rate Royal Bank of Canada (RY:CA) and Toronto-Dominion Bank (TD:CA) with an Outperform rating, citing their scale, diversified earnings base, and leadership across Canadian banking, wealth management, and capital markets. The 12-month price targets for these banks are $318.00 and $190.00 respectively.
Bank of Montreal (BMO:CA), Bank of Nova Scotia (BNS:CA), and Canadian Imperial Bank of Commerce (CM:CA) are maintained at Sector Perform rating, with 12 month price targets of $278.00, $128.00, and $180.00 per share.
The selective positioning is notable given the sector's strong share-price performance has pushed valuations above historical averages. National Bank Financial remains positive on all Canadian banks but identifies RBC and TD as its preferred opportunities, while maintaining a more neutral stance on BMO, BNS, and CM.