Dec 1, 2023
Canadian bank earnings were messy this quarter: portfolio manager
, BNN Bloomberg
A lot of one time expenses, costs have led to messy earnings for banks this quarter: Teltscher
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The Canadian banks set aside more money for bad loans than expected this quarter, while also indicating there will be layoffs in the months ahead, but one portfolio manager says this weakness should create a buying opportunity for investors in the future.
Nearly all of Canada’s leading banks reported higher-than-expected provisions for credit losses (PCLs), while others revealed that they will undergo further restructuring as a measure to get expenses under control. These announcements caused investors to punish most of the bank stocks this week.
“It seems like this quarter the banks have had messy earnings. There’s a lot of one-time expenses or costs,” Rebecca Teltscher, portfolio manager at Newhaven Asset Management, told BNN Bloomberg in a television interview on Friday.
She is forecasting that PCLs will continue for several quarters as the banks take on a prudent strategy for a possible downturn in Canada’s economy, specifically linked to the renewal of mortgages at higher rates in the next year or two.
“We're expecting (PCLs) to go even higher from here,” she said.
Teltscher thinks the continued weakness will send the Canadian banks stocks lower in the months ahead and that should create a window of opportunity for investors to purchase them at a discount.
“We’re looking for things to get a bit messier, for prices to get a bit cheaper, and then well look at purchasing more for our clients on a long-term basis,” she said.
Teltscher likes the group’s dividends and believes they are good businesses to own in the long run, but is waiting for the right time to pick them up.
"We do think there are some headwinds ahead,” she said.
Nearly all of Canada’s leading banks reported higher-than-expected provisions for credit losses (PCLs), while others revealed that they will undergo further restructuring as a measure to get expenses under control. These announcements caused investors to punish most of the bank stocks this week.
“It seems like this quarter the banks have had messy earnings. There’s a lot of one-time expenses or costs,” Rebecca Teltscher, portfolio manager at Newhaven Asset Management, told BNN Bloomberg in a television interview on Friday.
She is forecasting that PCLs will continue for several quarters as the banks take on a prudent strategy for a possible downturn in Canada’s economy, specifically linked to the renewal of mortgages at higher rates in the next year or two.
“We're expecting (PCLs) to go even higher from here,” she said.
Teltscher thinks the continued weakness will send the Canadian banks stocks lower in the months ahead and that should create a window of opportunity for investors to purchase them at a discount.
“We’re looking for things to get a bit messier, for prices to get a bit cheaper, and then well look at purchasing more for our clients on a long-term basis,” she said.
Teltscher likes the group’s dividends and believes they are good businesses to own in the long run, but is waiting for the right time to pick them up.
"We do think there are some headwinds ahead,” she said.
