maz

Canada vs. U.S. - Whose Banks Are Safer?

Some excellent points brought up re Canuck banks. One other point to consider is the amount of revenue each bank derives from its US operations

The pecentages are well down from their highs but still range 15 - 20% for most. BNS has least US exposure.

Overall the banks will contract further imo as the Canadian economy is inextricably linked to the US and government coffers have recently been filled by high commodity prices (one example gas tax for cars is a % not a fixed dollar/litre - many other royalties/taxes are % based). So just as the revenues drop the government has a massive increase in spending & will run deficits for several years. This will mean eventual inflation - may be two years off just when the economy starts to show life.

Canuck banks benefited hugely from the recent financial bubble. For example: From 1995 through 2005 Royal Bank's ROE averaged between 14.3% and 17.9% - respectable figures for any bank. Contrast this to 2006 & 2007 where ROE ballooned to an exceptional 22.4% and 23.3% - some 40% above the long run average. No surprise that the trailing twelve months is now 16.4% and as with almost all bubbles we can expect a substantially lower than average figure to follow.