Comments on: Outlook for Canadian Financial Stocks

By: Weekly Dividend Investing Roundup - November 15, 2008 » The Dividend Guy Blog

Sat, 15 Nov 2008 11:04:04 +0000

[...] The outlook for Canadian banks [...]

By: A.J.

A.J. — Wed, 12 Nov 2008 12:20:14 +0000

Reply to coldcall:

The best way to help the banks would be to lift the irrational ban on mergers.

By: Coldcall

Coldcall — Wed, 12 Nov 2008 11:02:11 +0000

While i believe the top 3 Canadian banks to be amongst the most stable in the Western economies at the moment, I am very concerned about the market distorting bailouts of British, US and European banks.

While they were necessary so that the whole banking system did not collapse, these bailed out baks are using cheap rate taxpayers cash for buying other banking assets.

This automatically puts Canadian banks at a major disadvantage in the global economy.

Our government should be willing to provide low rate help to our banks so they are not at a disadvantage. It need not be a bailout, just very cheap lines of credit to be used for aquisitions when they bid against one of the nationalised banks of US, UK or Europe.

Its not fair that Canadian banks, who were on avergae far more responsible lose out because they did not get billions in taxpayers money.

Canadian banks should be taking advantage of their better models, by attratcing global investors who seek stable and solvent financial investments.

There should be no better time for Canadian banks to shine, but unless our govenrment sticks up for our banks we will have wasted a huge opportunity to rank Canadian banks as the best…which they clearly are..based on the evidence.

Sorry had to rant about this as it really bugs me.

By: Phil S

Phil S — Wed, 12 Nov 2008 00:38:29 +0000

One of the stocks I own in the financial sector is MCAN Mortgage (symbol MKP). They are a non-bank retail mortgage lender and commercial leasing company. Anyways, they have been taking advantage of the credit market meltdown and is increasing their portfolio by acquiring securitized mortgages for a fraction of their original cost. Their latest quarterly report reflects this increased mortgage revenue.

http://www.globeinvestor.com/servlet/story/CNW.20081107.C6268/GIStory/

They are also structured as a MIC (mortgage investment company) and hence is just like an income trust in that they distribute their profits in a corporate income tax exempt manner. Which I guess some of you hate. But I certainly enjoy what is now an 11% distribution based upon today’s beaten up price.

By: A.J.

A.J. — Tue, 11 Nov 2008 19:49:52 +0000

The difference between the banking systems in America and Canada is night and day. The U.S. system is completely fragmented and not well regulated. Canadain banks enjoy a highly protected oligopoly.

By: Canadian Capitalist

Canadian Capitalist — Tue, 11 Nov 2008 17:42:15 +0000

I found this article on Time magazine website on our banks:

http://www.time.com/time/business/article/0,8599,1855317,00.html

By: Nurseb911

Nurseb911 — Tue, 11 Nov 2008 15:02:00 +0000

I think CDN financials have enough flexibility in their revenue streams to not only remain competitive in this environment, but also grow revenues in certain units in the face of global competitors tackling their own monumental challenges.
If you examine RY they as recently as early 2007 had to discount margins in order to compete internationally for investment banking but now are enjoying a lot of attention as large funds look to move away from troubled US financials.
If you even look at the amount of capital that RY has raised this past year from just preferred shares you have to think that they’re building up a reserve in the event that a portion of a large insurance (AIG) or entire banking purchase (Fifth Bancorp) materialize.

By: Andrew Baechler

Andrew Baechler — Tue, 11 Nov 2008 14:23:37 +0000

The bond market doesn’t necessarily agree with Mr. Wheeler’s assessment of Canadian insurance companies. I just took a look at some Manulife bonds and the yields presently available on their bonds is noticeably higher than other corporate bonds with similar credit ratings and maturity dates.

By: Dividend Growth Investor

Dividend Growth Investor — Tue, 11 Nov 2008 14:08:37 +0000

Of course it is always important to read between the lines. Other reports have claimed that dividend growth for the canadian banks will stagnate in 2009 in order for them to maintain their conservative payout ratios..

By: Hungry Gal

Hungry Gal — Tue, 11 Nov 2008 14:06:07 +0000

Absolutely agree with the article above… I might also want to contribute two less tangible considerations wrt to Canadian banks stength and stability:
1. OSFI and to a lesser extent, rating agency scrutiny of each bank’s abilityt to management capital (particularly in light of Basel II)
2. the implicit desire of most, if not al,l the peer banks to manage within the “peer group range”