The S&P/TSX Composite Index dropped 162 points on Friday, June 23. Some of the worst-performing sectors included base metals, battery metals, health care, utilities, and financials. Today, I want to focus on two of the top regional bank stocks that are available on the TSX. Canadian Western Bank (TSX: CWB) and Laurentian Bank (TSX: LB) offer exposure to regions in opposite sides of the country. Which bank stock is the better buy in late June 2023? Let’s dive in.
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The case for Canadian Western Bank right now
Canadian Western Bank is an Edmonton-based regional bank that provides personal and business banking products and services that primarily service a customer base in Western Canada. However, it has also branched into eastern Canada with varying levels of success. Shares of this bank stock have climbed 2.5% month over month as of close on Friday, June 23. However, the stock is still down 3.5% in the year-to-date period.
This regional bank released its second quarter fiscal 2023 earnings on May 26. Like its peers in the international arena, Canadian Western Bank has been forced to navigate a volatile economic environment. Adjusted earnings per share (EPS) dropped 27% year over year to $0.74. Meanwhile, in the first half of fiscal 2023 this bank reported adjusted EPS of $1.76, which was only down 4% compared to the first half of fiscal 2022.
Total revenues climbed 2% on the back of growth in net interest income. Moreover, Canadian Western Bank delivered 9% annual loan growth. Looking ahead, this bank is targeting pre-tax, pre-provision income growth that is greater than 10% and adjusted return on equity (ROE) of 10-11% in 2023 and 12% in 2024.
Shares of Canadian Western Bank currently possess a very favourable price-to-earnings (P/E) ratio of 7.1. Moreover, this bank stock offers a quarterly dividend of $0.33 per share. That represents a very strong 5.6% yield.
Should you buy Laurentian Bank in late June?
Laurentian Bank is a Montreal-based regional bank that provides various financial services to personal, business, and institutional customers in Canada and the United States. This bank stock has jumped 5.9% month over month. Its shares are still down 2% so far in 2023. Investors can see more of Laurentian Bank’s recent performance with the interactive price chart below.
In the second quarter of fiscal 2023, Laurentian Bank reported adjusted net income of $51.7 million, or $1.16 per diluted share — down 16% and 17%, respectively, compared to the second quarter of fiscal 2022. Meanwhile, adjusted net earnings dropped 12% and 13%, respectively, to $106 million or $2.31 per diluted share, in the year-to-date period.
Despite the earnings retreat, Laurentian Bank management heaped praise on its performance in the face of economic and market headwinds. It finished the second quarter in a strong liquidity position as it prepares to tackle the challenges ahead.
This bank stock last had an attractive P/E ratio of 6.8. Meanwhile, the bank stock offers a quarterly distribution of $0.47 per share, which represents a tasty 5.8% yield.
The verdict
I like both regional bank stocks as we enter the summer season of 2023. However, Laurentian Bank is well positioned for solid revenue and earnings growth, boasts a fantastic balance sheet, and beats out Canadian Western Bank in terms of its value and dividend yield at the time of this writing. These are some of the reasons I’m going with Laurentian Bank today.
