Banking sector hasn’t seen much momentum heading into Q1 results [Video]

Stock markets may be hovering around record highs internationally, but Canadian bank shares haven’t seen as much momentum as they head into first-quarter earnings results this week.

The sector has been lagging on concerns of sluggish loan growth, risks to existing loan portfolios and a range of other headwinds including changes to tax exemptions and capital requirements.

Some of the biggest fears are easing, but analysts say a turnaround isn’t expected any time soon.

“After many quarters of bearishness, we are getting much more constructive on the outlook for Canadian banks,” said Scotiabank analyst Meny Grauman in a client note.

“The only hitch is that from a numbers point of view we only see that happening in (fiscal) 2025.”

Slow loan growth, especially in the U.S., and the elimination of a tax deduction on dividend income from Canadian businesses will weigh on results this year, he said.

Earnings for the …