I just looked at TD's EPS Consensus Expectations for 2024, and they are less than 2023! Earnings for 2023 were poor, and considerable lower than 2022 and 2021.
Please tell me why I should continue holding on.
Thanks
2023 was a choppy year for financials, across both the US and Canadian markets. All of the Canadian banks showed relatively weak performances in 2023 compared to the broader markets. BNS has had its issues with low growth in the Latin America regions, however, with its new strategic focus, we expect growth can pick up. BNS offers a higher yield than other Canadian bank names, and for investors seeking yield, this can be an important consideration. Its diversification in Latin America was also a benefit for the name, as it differentiated itself from other banks.
We expect a few things to happen this year that can benefit financial stocks. Downward pressure on rates and yields can improve investor sentiment around the bank stocks, as well as the fundamentals of the banks. Large provisions for credit losses were booked in the most recent quarter for most Canadian banks, and if the economic outlook for 2024 is better than expected, we can see these provisions be reversed in 2024, leading to higher profits. This also took place following 2020. Economic expansion and an improved business sentiment should help bank stocks, and we feel this can happen in 2024. As bond yields fall, the attractiveness of high-yielding bank stocks increases, and this should help with multiple expansion.
We continue to like BNS, as well as the other Canadian bank names, and feel that sentiment is nearing a low. These are names that can perform quite well in an economic recovery.