Canadian banks are soaring. Last week, Royal Bank (RY) reported a solid quarter with revenue beating consensus. TD Bank (TD) also reported good results. On Tuesday, December 6, Bank of Montreal (BMO) will file its quarterly results. Chances are good the company will at least meet consensus estimates.
Royal Bank reported a 15.6% Y/Y growth in revenue. It earned CAD $1.65 a share and although that missed estimates, the stock touched a yearly high. TD Bank reported a lower rate of revenue growth. TD reported $8.75B in revenue, up 8.7%. Despite the single digit increase, it, too touched a yearly high. The Canadian banks may have benefited from investors shifting money out of bonds, where yields soared and prices fell, and towards interest-sensitive stocks.
Few investors question the health of the Canadian real estate market’s health. In Alberta, the oil-dependent province is at the start of a rebound, thanks to oil prices bottoming in the 40’s and now back above $50/bbl.
Expectations for BMO are not high for at least one investment firm. In October, Credit Suisse downgraded the stock to ‘neutral.’ It cited the stock’s performance is in line with the other banks. Shareholders should ignore the downgrade and look at the continued money flowing into the banking sector.