“Our recent CEO/CFO meetings highlighted the potential for stabilizing EPS outlook even as credit quality remains somewhat tenuous. Our forecast for the big five banks implies PCLs to average 37bp/32bp for 2H24/FY25 vs. 34bp reported for 1H24. We see downside risk to our EPS forecast from PCLs staying at an elevated level, for longer than we expect. Capital positioning a positive story … We continue to see US large-cap banks offering a better risk/reward relative to their Canadian peers.
“Cost of Just Living Still Rising Sharply. Sticky inflation made an unwelcome return to Canada in May. And that’s especially bad news for lower-income households that spend a proportionately larger share of their budget on necessities such as shelter and food than wealthier families. To wit, both grocery bills and rents have risen faster than general prices since the start of the pandemic, by an annualized 5.2% and 4.7%, respectively, versus 3.9%. While the former has simmered down to a 1.