BNN - Monday, May 27, 2024 - 01:00 p.m. (ET) - Segment #2

4%. So you're getting a yield well, north of 2 percentage points with scotia. I mean, that is a pretty generous yield, especially for a taxable account with the dividend tax credit. But of course, there's always a possibility any company can step of rabbit at. Thank you so much that you reporting on the banks. I don't think that is a fear dividend cut and this time around for the canadian banks for maybe dividend growth is something investors are contemplating. Let's bring in rebecca tell church she's portfolio manager at newhaven asset management. Thanks much. >> For joining me, this seems like it going to be a tense quarter for td. How do you think they manage, you know, the operational issues again, certainty, money laundering issues. I mean, I think right now the stock is a little bit in a penalty box because I think everyone's looking for more clarity on the ml issues. But if you actually look at the quarter itself, I mean, I think they did everything right revenue was higher. They did well in the u.s.. >> Pnc side you know, they're, they're managing their expenses correctly. I just think right now they're not really getting any credit for any of the good things they do because, you know, there is that overhang of the aml and and you know how that's going to cap their growth in the u.s.. And if it's going to be a larger than expected find and we haven't really gotten any additional updates on that in the quarter. So if you're a long-term investors, this a buying opportunity capitalizing when others are fearful. I mean, exactly if you're a long-term investor, I think there is an opportunity there. You're getting an opportunity to buy td at, you know, 8 and a half times that significantly lower than its historical average of itself. And its also lower than the average of the other side of large 5 I think if you're, you know, could go lower from here. Sure, if there's any, you know, short-term bad, you know, press with regard to the n l. But I think on a long-term basis, I think the stock can go higher and the multiples can go higher from here. To your point, when you looked operationally, you liked what you saw. I does that give you comfort that the other banks might actually show great strength in canada capital markets. I think right now I think that quarter is we're going to see probably some status I think earnings are good. If you look at, you know, just general economy, I think things are going better than expected in the U.S. as well as canada. I think, you know, specifically what the canadian banks was a coke has. It comes to like canadian mortgages. I think, you know, we're going to see banks increased their pcl. So the provision for credit losses. I think what that does is on the short term that could create, you know, negative impact on earnings, but we view that as a positive because that just the banking more conservative. So took, you know, larger provision this quarter impact short-term impact to their earnings. But you know, overall it's being more conservative as we expect these mortgages to, you know, reset in 2020 for 2025 in 2026, it sounds like the regulator osfi is encouraging the banks to hold these these capital buffers which share point, you know, again, if you're a long-term shareholder, that money, it's if it's not needed for those provisions. Where does that go? That goes right back, right? Exactly. So you know, we I mean, this is just how we manage our portfolio in general. We always take we always take the more conservative approach. So when it comes to the canadian banks, we like that they're being a little bit more conservative. That's why we've always preferred canadian banks, you know, versus the U.S. and you know, if it means a short term negative impact on their earnings now, but you know, it it protect, protects them in the future. If there is any impairment charges. I think that that that that's better over the long term. And I think right now, you know, the canadian banks are are being because of are you all in on the canadian banks, are you cherry picking being selective? We are we own 45, we don't own bmo. And you know, coincidentally, it is trading at one of we don't own bmo national okay. They are true, that you actually trading at the highest premiums right now relative to the average we're also underweight the sector in general, just because we are expecting some economic weakness in the next, you know, few years were not, were still invested again on a long term. I think it's okay on a short term. I think we're taking our time. I think there could be an opportunity if things get worse with the economy, there could be an opportunity to average into the banks that lower prices. All right, so underweight the canadian banks, but there's a high conviction sector that she overweight. And we're going to find out after this break. 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