"Canadian Banks are the Only Sector to Outperform Berkshire Last 25 Years"

[RichardGibbons]

Its a very odd thing to say if you assume our banking system is responsible for housing markets. I don't. Right now there are housing bubbles occurring all over the world and the common denominator is not Canadian banks.

 

Fair point.  I thought when you said "banking system", you mean the entire system (i.e. including the CMHC, the Bank of Canada, and the governments).  If you mean just the banks, then I think you're more right than wrong--there's a lot of truth in Chuck Prince's comment that "you dance when the music is playing".

 

[Liberty]

You choose your poison. You can have competitive banking and repeated bank crises with huge bailouts. Or you have an oligopoly with nice fat profits, limited risk taking and no bank crises. Personally I think Canadians are getting a great bargain. You could of course try and have both no bank crises and competition but that is another story.

 

Well, the story isn't over yet. With 20%+ of GDP related to housing, with houses over a million dollars in two of the most populated areas, household debts at record levels, an economy still very dependent on a few other sectors that aren''t doing too well, etc..

[CorpRaider]

Is CIBC the most domestic-focused and therefore most pure play on the regulatory capture/gov't subsides of the big Canadian banks?

[rukawa]

Is CIBC the most domestic-focused and therefore most pure play on the regulatory capture/gov't subsides of the big Canadian banks?

 

Not related to your question but I work in TO in the finance industry. Here is what I heard on the grapevine:

 

CIBC makes most of their money on interest margins. Lower interest rates really hurt them. Other banks are more diversified...make more money off investment banking or other things less tied to interest rates. Fear of interest rates going down in event of another recession is why CIBC trades low.

 

CIBC is a horrible internal culture. Everyone I know says this...I personally never experienced it.

[Parsad]

Is CIBC the most domestic-focused and therefore most pure play on the regulatory capture/gov't subsides of the big Canadian banks?

 

Not related to your question but I work in TO in the finance industry. Here is what I heard on the grapevine:

 

CIBC makes most of their money on interest margins. Lower interest rates really hurt them. Other banks are more diversified...make more money off investment banking or other things less tied to interest rates. Fear of interest rates going down in event of another recession is why CIBC trades low.

 

CIBC is a horrible internal culture. Everyone I know says this...I personally never experienced it.

 

CIBC historically has always had a less diversified portfolio of business than Royal Bank and most of the other big banks.  Their credit portfolio standards have historically been the worst of the big banks.  When credit losses rise, CIBC gets hit harder than anyone else. 

 

TD has done the best job in the last decade to expand their book of business, especially the U.S. market.  Royal Bank, TD and Bank of Montreal have all done a good job of expanding their services and book of business, and Bank of Montreal has done a good job of improving their credit quality standards.  Bank of Nova Scotia has been doing a good job over the last 3 years and should be the bank to improve their banking profile the most over the next few years as they expand their wealth management business.  The credit quality standards for these big banks is superior to CIBC, as is the underwriting culture between them and CIBC.  Cheers!