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Highlights
- Having closed trading at C$ 126.03 apiece on Thursday, RBC was one of the most actively traded stocks on the TSX.
- RY stock has soared by about 34 per cent in the past year.
- CIBC stock climbed nearly 42 per cent in the past year, and it moved up by almost 14 per cent in the last six months.
Banking stocks have been the talk of the town in Canada since the Prime Minister Justin Trudeau-led Liberal Party won the snap elections in September.
The factor that has been stoking this rise in interest is the possibility of a corporate tax.
During the election campaign, PM Trudeau had voiced his plans regarding the implementation of a three per cent surtax on major banks and insurance enterprises on every dollar they make over C$ 1 billion.
While the plan drew in both criticism and support, Canadian banks have noted a spike in their volume movements.
So, let’s see how top banks Royal Bank of Canada and Canadian Imperial Bank of Commerce have been doing lately.
Royal Bank of Canada (TSX:RY)
The Royal Bank of Canada, commonly known as RBC, is one of the largest financial institutions in the country that provides banking and investment-associated services for personal and commercial purposes.
RBC, which closed trading at C$ 126.03 apiece on Thursday, is among the top active stocks on the Toronto Stock Exchange (TSX).
On Friday, October 1, the bank’s scrip was trading at C$ 125.1 (10.25AM EST), roughly seven per cent below its 52-week high of C$ 134.23 (August 25, 2021).
However, RY stock has soared by almost 34 per cent in the past year, and it experienced an increase of more than eight per cent in the last six months.
On the financial front, the Toronto-based bank posted a 34 per cent year-over year (YoY) growth in its net income of C$ 4.3 billion in Q3 2021.
The financial institution held a provision for credit losses (PCL) of C$ 540 million in the third quarter of 2021.
The bank, on November 24, is timed to pay a quarterly dividend of C$ 1.08 apiece.
Also read: Royal Bank of Canada Q3 Profit Soars 34% YoY: Buy Alert for RY stock?
At the time of writing this, RBC’s market capitalization stood at C$ 178.2 billion, with dividend yield of 3.428 per cent. It also noted a return on equity of 18.6 per cent and a return on asset of 0.93 per cent.
Canadian Imperial Bank of Commerce (TSX:CM)
Canadian Imperial Bank of Commerce, also known as CIBC, is among the leading financial institutions in the country that provides banking, capital market and wealth management solutions.
The Toronto-headquartered bank’s scrip, which closed at C$ 141 apiece on Thursday, has also been a top traded TSX stock, with a 10-day average trade volume of 3.5 million.
On Friday morning, CM stocks were priced at 140.9 at the time of writing this, trading nearly nine per cent below its 52-week high of C$ 152.84 (August 26, 2021).
CIBC stock climbed nearly 42 per cent in the past year, and it moved up by almost 14 per cent in the last six months. However, the banking share tumbled by nearly three per cent in the last one month.
Canadian Imperial Bank of Commerce posted a YoY growth of 48 per cent in its net income of C$ 1.73 billion in the third quarter of 2021.
At the time of writing this, CIBC’s market capitalization stood at C$ 63.4 billion. It noted a return on equity of 15.5 per cent.
Also read: Can Evergrande’s great fall in China impact Canadian stock markets?
Bottom line
Some market experts have projected that the planned tax could see banks lose about two per cent of their income. Hence, it could also have some effect on their stock performance.
