Donald Trump win could be a boon for these Canadian banks

financialpost.com:

A second term for Donald Trump as president of the United States could potentially impact Canada’s banking sector more than a win by Kamala Harris due to his proposed tax cuts for corporations and his aggressive focus on re-shoring, some analysts say.

In such a scenario, Canadian banks that have most exposure in the United States are likely to benefit the most in case of a Trump presidency, said CIBC Capital Markets analyst Paul Holden, but vice-president Harris wouldn’t change the banks’ current outlook as much.

“When thinking about which Canadian financials would benefit from a Trump presidency and which would not, the analysis is relatively straightforward: what companies have the highest proportion of employees who celebrate Thanksgiving in November versus October,” he said in a note on Oct. 24. “And what proportion live in countries that do not celebrate Thanksgiving at all?”

A Trump presidency is likely to benefit the Bank of Montreal the most since it generates the highest proportion of earnings from the U.S.

“BMO has both a large U.S. commercial bank that would benefit from U.S. reshoring and a large U.S. investment bank that would benefit from more capital markets activity,” Holden said.

Toronto-Dominion Bank is expected to be the second-biggest beneficiary despite an asset cap placed on the lender by U.S. authorities for issues linked to money laundering, he said.

Both banks underperformed and missed analysts’ expectations in the last quarter due to their exposure to the U.S.

BMO had to keep significantly more money aside to cover potential losses on impaired loans, stemming mainly from its U.S. segment, while TD posted a rare loss due to the US$2.6 billion it kept aside to resolve anti-money laundering issues