Banks Still Offer Low-risk Growth

Article Excerpt

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. ROYAL BANK OF CANADA $47 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s largest bank, with assets of $487.9 billion. In the past few years, Royal has steadily built up its U.S. operations, mainly through acquisitions of regional banks and…

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