It would appear the Canadian banks’ supercycle is coming to an end. Find out more.
Unlikely, but it has happened during my investment career. Hugh Brown, Canada’s all-time great bank analyst, described it best in a 2011 exit interview.
Since that loan debacle, Canadian banks have skated through credit cycles well. They’re well-diversified and less exposed to big blow-ups. They have better balance sheets and make healthy profits at everything they do .Article content The second issue to keep in mind is that banks have a natural liquidity mismatch. The people and companies funding the loans, namely the depositors, can show up at a branch, or on their app, and ask to take their money out any time they want. The loans and investments funded by the deposits aren’t nearly as liquid. In other words, the banks’ liabilities are liquid while their assets are illiquid.
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