Back in late February and early March, the top Canadian banks unveiled their first-quarter (Q1) earnings reports. The top financial institutions in the country suffered an earnings dip in the face of macroeconomic challenges and continued market turbulence. Now, Canadian investors can expect to see the Big Six Canadian banks start to roll out their second quarter fiscal 2023 earnings in late May and early June.
Today, I want to rank my top three Canadian bank stocks ahead of the spring bank earnings season. Let’s jump in.
Here’s why Bank of Montreal is my top bank stock to snatch up before its Q2 earnings
Bank of Montreal (TSX: BMO) is my top bank stock target after the midway point in May 2023. This Montreal-based bank is the third largest of the Big Six by market cap. It also boasts one of the largest footprints in the United States, second only to TD Bank’s retail banking empire south of the border. Shares of this bank stock have dropped 3.1% month over month as of close on May 17. The stock is down 3.8% so far in 2023.
This bank recently announced that it would release its Q2 fiscal 2023 earnings before markets open on Wednesday, May 24. In Q1 of fiscal 2023, BMO reported adjusted net income of $2.27 billion — down from $2.58 billion in Q1 of fiscal 2022. Revenues were up year on year but earnings dragged due to higher provisions for credit losses (PCL) and higher overall expenses.
Shares of this bank stock currently possess a very favourable price-to-earnings (P/E) ratio of 7.5. Moreover, BMO offers a quarterly dividend of $1.43 per share. That represents a super solid 4.7% yield.
Why CIBC is a great source of income and capital growth going forward
Canadian Imperial Bank of Commerce (TSX: CM) is the second Canadian bank stock I’d look to target as we approach the spring round of bank earnings. This is the fifth largest of the Big Six Canadian banks. Its shares have dipped 2.4% over the past month. Meanwhile, CIBC stock is still up 2.4% in the year-to-date period.
Investors can expect to see CIBC’s next batch of fiscal 2023 earnings before markets open on Thursday, May 25. In Q1 FY2023, CIBC reported revenue growth of 8% year over year to $5.92 billion. Meanwhile, adjusted pre-provision, pre-tax earnings climbed 6% to $2.66 billion. CIBC earnings were also hit by a whopping $220 million year-on-year increase in PCL to $295 million in the first quarter.
This bank stock last had a solid P/E ratio of 11. CIBC offers a quarterly dividend of $0.85 per share, which represents a tasty 5.9% yield.
The last of the three top Canadian bank stocks remains one of my top picks on the TSX
Scotiabank (TSX: BNS) is the third bank stock I’d look to snatch up ahead of its Q2 earnings release. This is the fourth largest of the Big Six Canadian banks. It is often called “The International Bank” due to its large global reach, particularly in Latin America. This bank stock has climbed 2.6% so far in 2023.
This bank recently announced that it would release its Q2 fiscal 2023 earnings before markets open on May 24. Scotiabank reported adjusted net income of $2.36 billion, or $1.85 per diluted share — down from $2.75 billion, or $2.15 per diluted share, in Q1 of fiscal 2022. Adjusted net income in its International Banking segment rose to $661 million compared to $552 million in the previous year. Moreover, provisions for credit losses soared $416 million to $638 million.
Shares of this bank stock possess an attractive P/E ratio of 9.3. Scotiabank last paid out a quarterly dividend of $1.03 per share, representing a tasty 6.1% yield.
