Solid second quarter expected for big banks, but will it be the calm before the economic storm?

In his preview note for the second quarter, Aiken wrote to clients that he was anticipating a “bonanza of dividend hikes” based on those backward-looking results, after only modest increases since the Office of the Superintendent of Financial Institutions gave the financial sector the green light to begin returning value to shareholders in November 2021.

“The problem is that it does not look like … the strength of the second quarter results are likely to be repeated moving forward, and that’s what the market is grappling with — what are earnings going to be and then what multiple should we be purchasing ,” Aiken said. Bank stocks have been underperforming the rest of the TSX composite index this year, falling between five and 11 per cent since the beginning of the year.“Given the fact that we’re starting to see ebbing expectations on the economy … that’s what’s being priced into stocks at this point,” he said.Article content

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