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Bank Profits

SkyRider

Banned
Mar 31, 2009
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It appears that profits at the Big 6 Canadian banks are almost back to their pre-recession level. These banks are reliable cash generators.
 

turbin

Gold Member
Jan 7, 2002
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I would not overweight my portfolio with in banks as their profitability level will not be as much gravy as in the past. Regulators are coming down with tightening policy and discourage banks from investing in high risk assets that generate high return. Therefore, they are resorted to focus on core banking and their retail business which is highly competitive. All in all, their growth potential will not be as attractive as the pre-lehman days
 

SkyRider

Banned
Mar 31, 2009
17,572
2
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Regulators are coming down with tightening policy and discourage banks from investing in high risk assets that generate high return. Therefore, they are resorted to focus on core banking and their retail business
I view core banking and retail as good things. Steady and slow is fine with me (no boom and bust). Besides, banking in Canada is an oligopoly so the industry should always be profitable.
 

turbin

Gold Member
Jan 7, 2002
1,541
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Toronto
Banks are definitely good to own but just not overweight your portfolio in that sector. You may also. diversify your holding by. buying XFN, basket of financials to lower your risk
 

danmand

Well-known member
Nov 28, 2003
46,353
4,776
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I would not overweight my portfolio with in banks as their profitability level will not be as much gravy as in the past. Regulators are coming down with tightening policy and discourage banks from investing in high risk assets that generate high return. Therefore, they are resorted to focus on core banking and their retail business which is highly competitive. All in all, their growth potential will not be as attractive as the pre-lehman days
Right now there is a large spread between the short and long interest rate. That spells profit for the banks.
 

Dragon.i

New member
Jan 10, 2010
41
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It appears that profits at the Big 6 Canadian banks are almost back to their pre-recession level. These banks are reliable cash generators.
Ever wonder just why banks in general are "reliable cash generators?"
Looking at their balance sheet will tell you that most of their profits come from "interest income"
Remember they charge you more to borrow and play less in deposit interest. This diff is the "cash cow" of the bank.
 
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