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 …