CIBC Advises Investors to Shift Focus from Premium to Discounted Banks

CIBC Says Rate Cut Means Time Has Come to Buy Discount Bank Stocks 🔗

Now is the time for equity investors to move out of premium-traded Canadian banks and into discounted banks, analysts at Canadian Imperial Bank of Commerce said, citing lower interest rates and easing of economic risks that give the cheaper stocks more earnings upside.

Equity investors are encouraged to shift their focus from premium Canadian banks to discounted ones due to recent interest rate cuts and reduced economic risks, according to analysts at CIBC. They upgraded Bank of Nova Scotia while downgrading National Bank of Canada, suggesting that Scotiabank could see significant earnings growth in the coming years. With expectations of lower provisions for credit losses, discounted banks like Scotiabank are positioned to benefit. Additionally, Toronto-Dominion Bank is highlighted as a good buy, as its share price is currently at a discount, which is expected to improve once regulatory issues are resolved.

CIBC recommends moving investments from premium banks to discounted banks.
Scotiabank is seen as having high earnings growth potential.
National Bank has performed well but was downgraded to neutral.
Toronto-Dominion Bank is viewed positively despite current discounts.

What is the main reason for shifting investments to discounted banks?

Lower interest rates and easing economic risks provide an opportunity for discounted banks to have greater earnings potential.

Which bank did CIBC upgrade and which did they downgrade?

CIBC upgraded Bank of Nova Scotia to an outperformer rating and downgraded National Bank of Canada to neutral.

What is expected to improve for Toronto-Dominion Bank?

Its share price discount is expected to narrow once anti-money laundering issues in the US are resolved.