Jan 30, 2015
By Michael Kramer
Barclays has downgraded the stocks of four of Canada’s banks.
The British multinational bank says there’s some concern about economic growth in this country, so, downgraded to “underwight” from “equal weight” are: TD Bank, Bank of Montreal, Royal Bank and Laurentian Bank.
Analyst John Aiken says consumer borrowing – which is the main profit driver for the Canadian banks – is likely to shrink even more than previously expected.
Aiken says the dramatic drop in the price of oil will negatively affect the country overall – and there’s the potential for a recession in Alberta.
The Barclays analyst also says the Bank of Canada’s surprise interest rate cut last week – puts pressure on the lending margins of commercial banks – and that will hurt their earnings growth.