canadian banks

BANK OF NOVA SCOTIA $51.75 (Toronto symbol BNS: SI Rating: Above average) is Canada’s third-largest bank, with assets of $412 billion. It operates 1,900 branches and 4,200 ATMs in Canada and several other countries. In the three months ended April 30, 2007, Bank of Nova Scotia earned $1.03 billion or $1.03 a share, up 15.9% from $887 million or $0.89 a share a year earlier. Net interest income rose 15.8%, to $1.9 billion from $1.6 billion. Other income (which includes wealth management) rose 10.3%, to $1.3 billion from $1.2 billion. Bank of Nova Scotia keeps gaining market share in corporate and investment banking, in retail and commercial banking, and in the wealth management and personal trust businesses....

BANK OF NOVA SCOTIA $45 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s third-largest bank, with total assets of $325.0 billion. The bank has the highest international exposure of the big five Canadian banks, and now gets nearly 30% of its revenue and income from overseas assets. Bank of Nova Scotia prefers to invest in developing areas like the Caribbean and Latin America, where spreading prosperity is fueling demand for banking services. It has few operations in the United States. For example, Bank of Nova Scotia just agreed to pay an undisclosed sum for Citigroup Inc.'s retail banking business in the Dominican Republic. The purchase will make it that country’s fifth-largest bank, and enhances its credit card and consumer loan operations....

Canadian bank stocks have moved down in recent weeks, mainly due to fears that rising interest rates will hurt demand for mortgages and other loans. While that is a possibility, the banks are in a much better position to handle a drop in loan volumes than they were a few years ago. Tighter credit policies have cut the risk of big loan write-offs. The banks’ entry into new businesses such as insurance and mutual funds has cut their reliance on traditional banking operations. Growing overseas operations also cut their geographic risk. We still like the long-term prospects of all five of Canada’s big banks, and recommend that every Canadian investor aim to own at least two of them....

IMPERIAL OIL $116 (Toronto symbol IMO; SI Rating: Average) is Canada’s largest integrated oil company, with operations in all phases of the petroleum industry. In the three months ended March 31, 2006, Imperial’s earnings rose 58.4%, to $591 million or $1.79 a share, from $393 million or $1.13 a share. Revenues fell 2.5%, to $5.8 billion from $5.9 billion a year earlier. The company plans to split its share on a three-for-one basis. Imperial’s cash flow rose 58% in the latest quarter, to $894 million from $566 million. However, cash flow per share rose 65.6%, to $2.70 from $1.63. The higher per-share figure reflects aggressive stock buybacks. The company bought back $542 million of its stock in the latest quarter. Imperial holds cash of $715 million....

BANK OF MONTREAL $67 (Toronto symbol BMO; SI Rating: Above average) aims to double the size of its Harris Bank subsidiary in Chicago, to 400 branches over the next five years. Revenue at this division grew 8% in the first fiscal quarter ended January 31, 2006, partly due to acquisitions. But income rose 16%, as economies of scale let Harris cut its productivity ratio (non-interest expenses like salaries and overhead divided by revenue — the lower, the better) from 68.7% to 67.8%. Increasing Harris’ size could also turn this subsidiary into an attractive takeover target for larger U.S. banks. A strong U.S. operation also increases Bank of Montreal’s own takeover appeal. However, it’s unlikely that Ottawa will permit Canadian banks to merge anytime soon....

Fifth Third Bancorp, $6.88, symbol FITB on Nasdaq (Shares outstanding: 576.9 million; Market cap: $4 billion), is a bank that operates in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Its lead bank is Fifth Third Bank in Cincinnati. In all, the company operates a network of 1,311 branches, including 95 Bank Mart locations (these are located in grocery stores and are open seven days a week), and 2,354 automated teller machines. Fifth Third operates through five business segments: commercial banking (which caters to larger businesses), branch banking (for individuals and small businesses), consumer lending (which provides mortgages and home-equity loans), investment advisors (for individuals, companies and not-for-profit organizations) and Fifth Third processing solutions (which handles the electronic transfer of funds, as well as, debit, credit and merchant transaction processing). In the three months ended March 31, 2009, Fifth Third’s revenue fell 12.5%, to $1.5 billion from $1.7 billion a year earlier. The company lost $26 million, or $0.04 a share. Unusual income-tax benefits added $0.18 a share to the company’s first-quarter results. In the year-earlier quarter, Fifth Third earned $286 million, or $0.54 a share....

Bank stocks have been among the market’s top performers in the past few years — as they have for the past few decades. Now some investors worry that rising interest rates will hurt their loan growth, and that the banks’ loan losses will rebound to the long-term average from their recent lows. That may happen, and bank stocks may face a setback. But banks always face these kinds of risk, while still providing top long-term returns. Meanwhile, in the past five years, Canadian banks have increased their share of Canada’s mutual fund market from 25% to 35%. This and other sources of growth will continue to expand their appeal. We still feel all Canadian investors should aim to own two or three of the top five banks. We like all five, particularly now that Ottawa plans to cut taxes on dividends....