GICs Vs Canadian Bank Stocks | GIC discussions | Discussion forum

Tommy Tutalidge:

if the U.S. stock market ever reverts to the mean stocks around the world would be obliterated and dividend cuts amass in all sectors would be the likely result.

Did you really mean to say "amass" (accumulate or build up) or did you mean "en masse" (in a large quantity, from the French)? I'm not sure what you would be meaning if the former.
RetirEd

Mr Tommy T reminds me of the now gone forecaster who predicted a big drop in DOW that never materialize, pin point the high in interest rate which also failed.

May be it is the same person just coming back with a new handle (his membership is 3 weeks young)

I've got small holdings (five figures) in 5 of the 6 big banks, purchased over the last decade. The shares purchased last year are now below purchase price, but since I reinvest the dividends on the stocks through DRIP, and have not lost money yet. As long as I'm using DRIP, the lower share prices work in my favour to accumulate more shares each quarter. I'm not looking to spend any of this money for at least 5 years, so I am patient about the current dip in the bank share prices.

My bank stocks are worth less than half of my GIC holdings, so I feel secure in terms of the risk level in my investments.

Dean said
.
A good little article about the Pros & Cons of GICs and Bank Stocks . . .

Article Link ➡ https://www.bnnbloomberg.ca/bank-stocks-versus-gics-battle-of-the-income-titans-1.1937016

…

The ½% increase in CET1 capital requirements to 11½% minimum is a non-issue.

For example, BMO’s CET1 ratio was 12.2% as at April 30, 2023. The bank's CET1 was $51.4 billion. That works out to be $51.4 billion / 12.2% = $4.21 billion for each whole percent of CET1.

A ½% increase in CET1 for BMO is then $2.10 billion. That's not significant for a bank that earns more than $1 billion each quarter. That's especially insignificant for BMO which would have had CET1 of 16%, far about the 11½% minimum, if it had not decdided to acquire Bank of the West.

There's no impact for Bank of Montreal. The bank's CET1 ratio of 12.2% exceeds both the previous 11% minimum requirement and the current 11½% minimum requirement.

Capital efficiency and net interest margins have nothing to do with it.

The CET1 ratio is the ratio of Common Equity Tier 1 capital to risk-weighted assets. For a bank, deposit products are liabilities, not assets, and don't affect the CET1 ratio.

For those who follow Canadian Bank stocks and results, here are the latest Financials (source is OSFI site) for Wealth One Bank of Canada. In the 1st quarter of 2023, WOB recorded a net loss of $3,731,000. The Accumulated Losses for WOB per the Consolidated Balance Sheet are recorded at $57,719,000 .

Tommy Tutalidge said

I remember that other guy. He was correct on both calls but one month early on both as the stock market collapsed in February instead of January and interest rates put in a short term top in April instead of March. He was right on long term yields. He also said the first rate cut by the U.S. Fed or Bank of Canada would be March 2024 which looks spot on to me. If you're looking to buy Canadian banks stocks on the TSX The Bank of Montreal would be the purest play on home prices going to infinity in China.  

While your assertions are false, they are also meaningless. Anyone predicting a crash will be “correct” if the timing isn’t considered to be part of the prediction. You were predicting the exact date, 3rd of Jan if I remember rightly. That was an important reason why the prediction was nuts. Saying “stocks will drop 3% at some point” would have been rather different.

Briguy said
Wealth One Bank is most likely partially owned by CCP and does money laundering for them, so they may not care about losses.

Finance Minister Chrystia Freeland is raising national-security concerns about Wealth One Bank of Canada, telling three of its founding shareholders that they could be susceptible to Chinese government coercion, according to two sources.
The shareholders are also facing allegations from other Canadian financial institutions that they have engaged in money laundering, according to a letter sent by Ms. Freeland to the three individuals late last year.

https://www.theglobeandmail.com/politics/article-chrystia-freeland-rings-national-security-alarm-about-founders-of/  

I would be careful with allegations like that. None of those allegations have been proven, and 'money laundering' is a loaded term, that can be interpreted broadly or narrowly. Interpreted more broadly, self-employed home renovation/construction contractors that offer discounts for paying in cash are engaging in 'money laundering'. Similarly, state-owned enterprises that use corporate shell games to evade local taxes may be engaging in some form of laundering of money (i.e., sovereign wealth funds, state-owned pension funds, state-owned postal services firms, etc.). Interpreted more narrowly, it would be to engage in criminal activity, possibly including the financing of terrorism. I'm not legitimizing the former activities, by any stretch, but I'm just saying there are degrees of severity.

Freeland is also woefully out of her depth as Finance Minister, as a former newspaper/periodical editor/reporter, and has made a number of critical errors. In other words, she frequently doesn't know what she is talking about and/or is the political mouthpiece for the Prime Minister.

China and Canada have had a long-standing, and increasing, series of diplomatic spats/tiffs worsening to deteriorating relations, so both parties are very biased on this matter, and anything either says on the matter should be treated as unbashed propaganda.

Cheers,
Doug