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Canadian bank earnings preview: Stronger profits and dividend hikes


Globe editors have posted this research report with permission of  Desjardins Capital Markets. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following text is excerpted from the report:

For most of the major banks, 3Q FY13 EPS is expected to be up modestly compared with 2Q FY13 as a rebound in capital markets offsets slowing mortgage and consumer loan growth.

Canadian banks continue to return capital to shareholders, with increased dividends expected to be announced by Bank of Nova Scotia, Royal Bank and TD Bank, each of which also repurchased 4 million or more common shares in the quarter.

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Canadian banks continue to underperform North American life insurance companies and U.S. banks on the back of an improving U.S. economy. Our investment thesis remains predicated on the prospect of rising bond yields driving a flow of funds into equities — in particular, equities with yield where there is visible dividend growth.

Read the full report here.

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