Everything You Need to Know on Tuesday: RBC Poised to Outperform Rivals Due to HSBC Acquisition, Say Analysts
Good morning mooers! Here are things you need to know about today's market:
● S&P/TSX 60 Index Standard Futures are trading at 1,337.90, up 0.13%
● Bank of Canada says households can cope with higher rates
● Canadian banks directed over US$100 billion to oil and gas last year: report
● RBC poised to outperform rivals due to HSBC acquisition, say analysts
Market Snapshot
Today, the Canadian dollar is trading at 73.19 cents at US dollar, a slight increase from Monday.
S&P/TSX 60 Index Standard Futures are trading at 1,337.90, up 0.13% from previous close.
Top Stories
Macro
Bank of Canada says households can cope with higher rates
The Bank of Canada has indicated that while households are capable of managing increased borrowing expenses, there are concerns over escalating asset prices and the financial pressures facing renters that could pose a threat to economic prospects.
In its yearly assessment of the financial system released on Thursday, the central bank noted that Canadians are actively adapting to the rise in interest rates and the financial infrastructure continues to be robust. Although repayment amounts have gone up for nearly half of the nation's mortgage holders, officials point out that households are benefiting from greater income and savings, and are modifying their expenditure accordingly.
"Overall, the evidence suggest that households have the flexibility to continue servicing their debt at higher rates," Senior Deputy Governor Carolyn Rogers said at a news conference.
Commodities
Canadian banks directed over US$100 billion to oil and gas last year: report
Despite global calls to cut emissions, Canadian lenders provided nearly US$104 billion to the fossil fuel industry last year, according to the latest Banking on Climate Chaos report released Monday.
This report, compiled by a group of environmental organizations, highlighted that $Royal Bank of Canada(RY.CA$ contributed US$28.2 billion to rank seventh worldwide, while Scotiabank's US$24 billion positioned it at the 10th spot.
In total, the leading 60 banks globally allocated US$708 billion to the sector.
Since the signing of the Paris climate agreement eight years ago, 2023 marked one of the lowest years for fossil fuel funding by most of Canada's top five banks.
$Bank of Montreal(BMO.CA$ reported the smallest amount of financing for fossil fuels since 2016, at US$15.8 billion. $Canadian Imperial Bank of Commerce(CM.CA$, $The Toronto-Dominion Bank(TD.CA$, and RBC each saw their lowest levels, excluding the year 2020 which was impacted by the pandemic, and for Scotiabank, it was the fourth-lowest year on record.
Stocks to watch
RBC poised to outperform rivals due to HSBC acquisition, say analysts
Analysts at Jeffries Securities Inc. suggest that the increased fee-based income resulting from the purchase of HSBC's Canadian operations is expected to enhance $Royal Bank of Canada(RY.CA$'s results compared to its national peers, as they start to disclose their earnings for the second quarter starting next week.
We believe that Royal Bank's acquisition of HSBC provides significant growth and efficiency opportunities and, with no material disruptions emanating from the integration, there are few impediments to out-sized growth against its peers," bank analyst John Aiken said in a note to clients Monday.
Further, HSBC allows the largest platform in Canada to get larger, allowing incremental market share growth from RY's ability to increase efficiencies and win incremental customers and share of wallet."
Source: BNN Bloomberg, Financial Post
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