Canada's banks get Trump boost but CIBC still waiting at altar

Thu Mar 2, 2017 4:56pm EST
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By Matt Scuffham

TORONTO (Reuters) - Canada's banks are already seeing the benefits of pro-growth policies pursued by President Trump's new U.S. administration, executives said, with expectations of tax cuts, lighter regulation and fiscal stimulus boosting market confidence.

Shares in Canadian banks, which have substantial operations in the United States, have soared since Trump's election victory on Nov. 8., boosted by hopes of higher U.S. interest rates on Trump policies like a $1 trillion infrastructure spending plan.

Toronto-Dominion Bank (TD.TO: Quote), Canada's second biggest lender which also has a major U.S. presence, on Thursday reported better-than-expected earnings in the first quarter to Jan. 31 helped by a strong U.S. performance.

TD's Chief Financial Officer Riaz Ahmed said in an interview that activity in equity and bond markets had "picked up considerably" since the U.S. election while business confidence in the United States was also improving.

"There is momentum right now and companies are taking advantage, to look at acquisitions and do financings. It feels like business confidence is strong," said Ahmed, adding that expectations around interest rates, regulations and taxes "all bode well for the (banking) industry".

TD and Bank of Montreal (BMO.TO: Quote) have the biggest exposure to the United States among Canadian banks, with about a quarter of their profits coming from that market.

Shares in TD, which has around 1,300 branches in the United States, are up 15 percent since November with BMO shares up 23 percent.

BMO reported forecast-busting results on Tuesday beating market expectations by the widest margin achieved by any Canadian bank this quarter, helped by a strong performance by its retail banking, wealth management and capital markets business in the United States. [PnL5N1GD4LR]   Continued...

FILE PHOTO: A Toronto-Dominion Bank (TD) sign is seen outside of a branch in Ottawa, Ontario, Canada, May 26, 2016. REUTERS/Chris Wattie