Valuing Canadian banks

Canadian banks continue to hold on to their premium valuations. But how long will that last?

Robert Sedran, financial services analyst at CIBC, tells BNN that while financial companies around the world struggle to grow their business, Canadian banks have been expanding their balance sheets.

"When it comes down to profitability, earnings stability, earnings growth and dividend growth, Canadian banks continue to perform quite well," he says. "When you look at them in global context, there's no question there are lower multiples to be had elsewhere, but better value still resides in Canada where the banks continue to perform quite well."

"One of the expected impacts of the financial crisis was a significant decline in profitability for the banking sector and that's happened in a lot of jurisdictions - and a little bit in Canada - but the core earnings of these banks continues to grow and so the return on equity for the stocks have hung in quite well," he adds.