SOURCE: Research Driven Investing

Research Driven Investing

January 30, 2013 08:20 ET

Canadian Banks Receive Credit Rating Downgrades From Moody's

Research Driven Investing Provides Stocks Research on CIBC and TD Bank

NEW YORK, NY--(Marketwire - Jan 30, 2013) - Despite being ranked among the soundest in the world by the World Economic Forum, the long-term credit ratings of six Canadian banks were recently downgraded by Moody's Investors Service. Just last week, the Bank of Canada lowered its 2013 growth forecast to 2 percent from the 2.3 percent forecasted in October. Research Driven Investing examines investing opportunities in the Canadian Banking Industry and provides equity research on Canadian Imperial Bank of Commerce (NYSE: CM)(TSX: CM) and Toronto-Dominion Bank (NYSE: TD)(TSX: TD).

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Bank of Montreal, Bank of Nova Scotia, Caisse centrale Desjardins, Canadian Imperial Bank of Commerce, National Bank of Canada and Toronto-Dominion Bank has their credit ratings downgraded one notch Monday. According to Statistics Canada, in the third quarter of 2012 Canadian consumer debt grew to a record high of 165 per cent of disposable income, compared to 137 percent in mid-2007. Rising house prices, which have gained roughly 20 percent since November 2007, have been a major factor in the rise of consumer debt.

"High levels of consumer indebtedness and elevated housing prices leave Canadian banks more vulnerable than in the past to downside risks the Canadian economy faces," David Beattie, vice-president at Moody's said in a note.

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Canadian Imperial Bank of Commerce reported a net income of $852 million for the fourth quarter of 2012, compared to a net income of $757 million in the fourth quarter of 2011. CIBC's Board of Directors has declared a quarterly dividend of $0.94 per share payable on January 28, 2013. Shares of the company are up over 11 percent in the past year.

TD is the sixth largest bank in North America by branches and serves approximately 22 million customers in four key businesses operating in a number of locations in key financial centers around the globe. The company recently reported that they expect TD Ameritrade's first quarter earnings to contribute approximately CDN$47 million to fiscal 2013 first quarter net income as part of its Wealth and Insurance segment. TD Bank Group is scheduled to release first quarter results on February 28th.

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