This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at firstname.lastname@example.org or call 800-767-3771 ext. 9339.
For Immediate Release
Chicago, IL – October 30, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Moody's Corp. (MCO - Analyst Report), Bank of Montreal (BMO - Snapshot Report), The Bank Of Nova Scotia (BNS - Snapshot Report), Canadian Imperial Bank of Commerce (CM - Snapshot Report), National Bank of Canada (NTIOF).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday’s Analyst Blog:
Moody’s to Downgrade Canadian Banks?
Moody's Investors Service – the credit rating arm of Moody's Corp. (MCO - Analyst Report) – has put the long-term ratings of six major Canadian banks on review for a possible one-notch downgrade. The potential rating revision comes in the wake of a flagging economy, record-high consumer debt, soaring housing prices as well as sizeable exposure of banks to capital markets.
Moody’s will be reviewing the ratings of Bank of Montreal (BMO - Snapshot Report), The Bank Of Nova Scotia (BNS - Snapshot Report), Canadian Imperial Bank of Commerce (CM - Snapshot Report), National Bank of Canada (NTIOF), and others. The rating of Canada’s largest association of credit unions – Caisse Centrale Desjardins – is also put on review for a likely downgrade. However, the rating agency has affirmed the short-term ratings of all these banks, including Caisse Central.
As per Moody’s, Canadian banks face a bunch of risks from substantial increases in the nation’s consumer debt over the last few years. The household debt-to-income ratio came in at 163% in the second quarter of 2012, up from 137% in the second quarter of 2007.This reflects the rising disparity between the growth in debt and hike in personal incomes.
Another contributor to the escalating consumer debt is the substantial rise in housing prices. Home sales in September this year dropped nearly 15% from a year ago due to stringent mortgage lending rules and sluggish economy. Though Moody’s estimates Canadian Gross Domestic Product to grow in the range of 2%–3% for 2013, it is of the opinion that the potential downside risks to the economy have increased significantly.
Further, external risks including slow recovery of the U.S., deepening Euro-Zone crisis and moderate growth in the emerging markets will weigh down on the commodity markets with severe ramifications on the overall Canadian economy, which will consequently engulf the nation’s entire banking system.
In addition to the abovementioned macro economic factors, there are certain other bank-specific factors taken into consideration by Moody’s to assess the ratings of these Canadian banking biggies. These include the considerable exposure to volatile capital markets, increased contribution from subsidiaries threatening the creditworthiness and concentrated franchise structure limiting profitability growth.
Rating Action by Standard & Poor's
In July, Standard & Poor's Ratings Services cut its outlook from ‘stable’ to ‘negative’ on seven Canadian banks, over concerns about shakily high housing prices and consumer debt levels. The banks included Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, National Bank, Laurentian Bank of Canada, Home Capital Group Inc. and Central 1 Credit Union.
S&P, on its part, affirmed the ratings of all these banks. However, it maintained stable outlooks and reaffirmed ratings on five other Canadian banks including Canadian Imperial Bank and Bank of Montreal.
We believe that Moody’s rationale for the possible downgrade is well justified. Further, removal of the government support from the ratings of the subordinate debt of some institutions will force the debt holders to bear the brunt in case of losses, thereby keeping safe the taxpayers’ money.
However, it must be mentioned that these aforementioned Canadian banks have been performing better than their global peers for the last couple of years. The strong fundamentals and franchise structures of these banks are expected to absorb the ill effects of the rating downgrades.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339