TSX:ZEB Rallies as Canada's Big Six Banks Deliver Earnings Beats
The BMO Equal Weight Banks Index ETF (TSX:ZEB) has seen significant gains, thanks to Canada's Big Six banks delivering a clean sweep of earnings beats. The fund holds these six major banks in roughly equal weights, avoiding concentration in the largest lenders that occurs in market-cap weighted indexes.
The Big Six banks - Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, and National Bank of Canada - have all reported strong third-quarter earnings. Royal Bank of Canada posted record net income of approximately C$6.0 billion, up 11%, while TD Bank earned roughly C$4.6 billion, up about 38%.
The banks' solid capital and growing dividends support the outlook for TSX:ZEB. However, investors should watch out for credit quality, trade war fallout, and capital markets activity in the coming months. The fund's main risk is its full exposure to banking risks such as credit losses, regulation, and economic slowdowns.