Financial stocks are drawing renewed attention as strong bank earnings and rising market volatility create opportunities across the sector.
BNN Bloomberg spoke with Mike Clare, senior vice-president and senior portfolio manager at Brompton Funds, who highlighted CIBC, Brookfield Corp. and CME Group as top picks tied to earnings momentum, long-term growth trends and trading activity.
Key Takeaways
- Strong earnings growth and margin expansion are supporting Canadian bank performance, with broad strength across business segments.
- Credit conditions remain stable despite geopolitical risks, with limited signs of stress from mortgage renewals so far.
- Long-term themes such as artificial intelligence investment and aging demographics are driving growth for alternative asset managers.
- Real estate recovery and prior capital deployment are positioning select firms for potential multi-year upside.
- Elevated geopolitical and macroeconomic volatility is boosting trading volumes, benefiting exchange operators with fee-driven revenue models.
Read the full transcript below:
ROGER: All right, it’s time for Hot Picks, and today we are zeroing in on three plays in financials. My next guest has CIBC as his top pick. He sees strong performance across every business segment. Let’s hear more from Mike Clare, senior vice-president and senior portfolio manager at Brompton Funds. Mike, thanks very much for joining us.
MIKE: Yeah, thanks for having me.
ROGER: Okay, what are your favourite numbers at CIBC? Which ones stand out the most?
MIKE: So we like all the numbers at CIBC. It’s been a pretty positive environment for the Canadian banks, and CIBC has done a really good job of capitalizing on that environment, with earnings in the most recent quarter growing 25 per cent year over year and return on equity coming in above 17 per cent, which is well ahead of their 15 per cent target.
Some of the things driving that include margin expansion. We’re still seeing the banks, and particularly CIBC, benefit from the normalization of the interest rate environment. Their capital markets business has also been very strong, growing more than 40 per cent year over year, with strong performance in trading, including equities and derivatives, as well as an uptick in investment banking activity, which we expect to continue.
The U.S. business has performed well on volume growth and margin expansion. Importantly, CIBC has also seen strong performance in its mass affluent segment and private wealth franchise, with clients up six per cent year over year and balances up 12 per cent. So really firing on all cylinders here.
ROGER: The numbers are solid, but is there room to grow from here, or is there a risk of becoming, like some tech stocks, almost too perfect?
MIKE: No, I think there’s room to grow. There are geopolitical risks, of course, and the key risk is how that translates into credit losses across the banks. But we’ve generally seen credit losses stabilize at manageable levels.
As we move through 2026, we’re likely seeing the worst of the mortgage renewals cycle, and we haven’t seen a meaningful uptick in delinquencies. So things are going well, and we expect that to continue across the Canadian banking sector, and particularly for CIBC.
ROGER: I was just looking at news out today about Victor Dodig. His compensation package was up 26 per cent after exceeding his goals before stepping down in October. How is the replacement doing?
MIKE: I think he’s doing a great job so far. Mr. Dodig set things up well for success, and they’re continuing with the same strategy, which is positive because it’s worked well for the bank over the last several quarters.
ROGER: Okay, let’s move on to Brookfield. It’s a name that comes up all the time. What do you like?
MIKE: We like Brookfield Corp., which sits at the top of the Brookfield ecosystem. It includes ownership of the asset management business, the global alternative asset manager, the wealth solutions or insurance business, and a number of operating businesses.
What we like is that Brookfield is a very well-run business. It has generated more than 17 per cent returns for shareholders over the past 25 years, nearly double the TSX. Importantly, growth could be accelerating. They are targeting 25 per cent annualized growth in distributable earnings over the next five years, driven by exposure to key trends.
One is private markets investing in infrastructure, real assets and renewables. We see potential acceleration from spending in the AI industry, where more than $7 trillion in capital expenditures is expected over the next decade. Brookfield is positioning for significant investment opportunities in what it calls AI factories, which it views as modern infrastructure.
They are also benefiting from growth in their insurance business, driven by aging demographics and retirement savings needs, particularly through annuities. In addition, Brookfield has a strong real estate platform, and with the recovery underway, it deployed about $60 billion over the past five years while others pulled back, positioning it well going forward.
ROGER: It sounds like they have a nice mix. Let’s get to the last one, CME Group.
MIKE: CME Group is an exchange operator. It originated as the Chicago Mercantile Exchange, with a strong presence in agricultural commodities, but it’s also a major player in energy futures like crude oil. For example, WTI crude trades on NYMEX, which is owned by CME Group.
We see CME as a good balance in financial portfolios because it tends to be countercyclical and benefits from volatility. With the volatility we’re seeing in oil prices due to the Iran conflict and the broader macro backdrop, this is an investment that can perform well.
Looking at energy trading volumes, you typically see about 2.5 million contracts per day, but recently in early March that has risen to more than eight million daily. They also have strong interest rate and foreign exchange trading businesses. Importantly, about 80 per cent of revenue comes from clearing and transaction fees, positioning them well to benefit from increased trading activity.
ROGER: All right, we’ll have to leave it there. Mike, thanks very much for joining us.
MIKE: Thank you for having me.
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This BNN Bloomberg summary and transcript of the March 18, 2026 interview with Mike Clare are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
