These are the big questions facing Canada’s Big Six Banks in 2024

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Interest rates, capital buffers and expense management are among the leading issues facing Canada’s biggest banks in 2024. But in the view of National Bank of Canada analyst Gabriel Dechaine, they’re only a start.

In a note released ahead of Tuesday’s RBC Capital Markets 2024 Canadian Bank CEO Conference, the industry’s first big event of 2024, Dechaine laid out about 10 questions each for the Big Six banks, as well as some for lesser players in the sector, ranging from the big picture to highly specific details of the banks’ operations.

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The industry-wide questions included whether interest rate cuts as forecast will affect net interest margins, what level of rate cuts the banks would prefer in 2024 and whether more restructuring charges will be recorded in 2024.

For Canadian Imperial Bank of Commerce, Dechaine wondered what the bank will do for an encore, after it was the only bank to generate positive operating leverage in 2023. “What’s your plan for 2024,” he asks, in addition to being curious about what kinds of mortgages are popular and how the bank’s Costco credit card book is performing.

The effects of several mergers and acquisitions that closed last year are also on his radar.

While Bank of Montreal has touted the closing of its Bank of the West transaction as a positive for its California presence, Dechaine is curious about whether there are some negatives to consider, such as San Francisco’s challenging socio-economic issues and floundering office market, which is now one of the worst in the United States.

Royal Bank of Canada‘s HSBC Canada acquisition, which recently won regulatory approval, is also on his list. Dechaine wonders how RBC will handle HSBC Canada’s mortgage book, which has elsewhere been described as “competitively priced,” and its plan for cost synergies given the commitment to retain HSBC Canada staff for six months after the deal closes.

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For Toronto-Dominion Bank, Dechaine had questions about a deceleration in share buybacks in the fourth quarter, the importance of overdraft fees to its U.S. and Canadian businesses and the aftermath of anti-money laundering concerns raised by the U.S. Department of Justice.

Bank of Nova Scotia’s big strategic reset in December is also clearly on Dechaine’s mind. His questions for the bank include asking about the challenges new management is facing in getting buy-in from long-term staff and sussing out details on its capital allocation plan, which has been refocused on North America.

Laurentian Bank also had an eventuful 2023, culminating with the appointment of Éric Provost as chief executive in October after the departure of Rania Llewellyn. The bank had just completed a review of strategic options without a deal to sell the bank and Dechaine wonders what parts of that review are “important and performing well.”

The Canadian Bank CEO conference hosted by RBC Capital Markets will include talks from chief executives Dave McKay of RBC, Scott Thomson of Scotiabank, Laurent Ferreira of National Bank, Darryl White of BMO, Victor Dodig of CIBC, Bharat Masrani of Toronto-Domininion Bank, Éric Provost of Laurentian Bank, Chris Fowler of Canadian Western Bank and Andrew Moor of EQB.

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