Investment bank Credit Suisse (CS) has added Canada’s big six banks to its analyst coverage,
saying it expects an average total return of 20% from this country’s lenders over the next year.
In a note to clients, Credit Suisse outlined several growth drivers for Canada’s banking sector.
They include continued loan growth, signs of an improving macroeconomic outlook, and
discipline around expenses and capital deployment.
Credit Suisse placed “outperform” ratings (the equivalent of a buy) on four banks and neutral
recommendations (the equivalent of a hold) on the remaining two. The ratings are as follows:
- Bank of Montreal (BMO): Outperform, 12-month price target of $159
- Canadian Imperial Bank of Commerce (CM): Outperform, 12-month price target of $81
- National Bank (NA): Outperform, 12-month price target of $106
- Royal Bank of Canada (RY): Outperform, 12-month price target of $153
- Bank of Nova Scotia (BNS): Neutral, 12-month price target of $88
- Toronto-Dominion Bank (TD): Neutral, 12-month price target of $102
Credit Suisse expects Canada’s banks to grow their earnings per share by mid-single digits for
the 2022 and 2023 fiscal years. Canadian banks begin reporting their quarterly financial results
next week with Bank of Montreal and Bank of Nova Scotia kicking things off on April 1.
Some potential risks to the forecasts include an unexpected downturn in economic conditions, a
change in the banks’ business strategy, and weakness in Canada’s housing market, said Credit
Suisse.
