TORONTO — Investors watching the banks’ quarterly results, which begin rolling out this week, will be on the lookout for any clues as to how institutions plan to weather the year’s two big trends: interest rate hikes and inflation.
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Observers expect the central banks of Canada and the United States to start raising interest rates in March, so analysts will be watching for any changes in the outlook for Canadian banks on the consequences of these hikes, noted Scotiabank analyst Meny Grauman in a note to clients.
Spending will be another trend to watch, he said, as wages and other costs climb in an environment of competitive growth.
Royal Bank analyst Darko Mihelic says big bank bosses have signaled so far that inflation risk is manageable, but he will pay close attention to any change in tone on the matter. , given recent inflation data and cost hikes reported by US banks in January.
Looking to the first quarter results, Mihelic expects to see improved loan growth and low provisions for bad debt losses.
The Royal Bank will open the ball by publishing its results on Thursday. It will be imitated on Friday by the CIBC and the National Bank, by the Bank of Montreal and the Scotiabank on March 1 and by the TD Bank on March 3.
Companies in this story: (TSX:RY, TSX:BNS, TSX:BMO, TSX:NA, TSX:TD, TSX:CM)
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