The profit outlook for Canadian banks is fine and will likely always be fine. The big banks in particular are too central to the functioning of the economy to ever suffer a severe lack of revenue. The current average annual dividend yield of 4.7 per cent will also help investors avoid losses in the shorter term.
The analyst believes that U.S. bank failures and subsequent volatility will validate the Canadian banking model of fewer, larger and better capitalized members. The central business of bank loans involves borrowing at short term interest rates and lending to clients at higher longer-term rates. . Deposits are becoming more expensive as a source of funds because interest on bank accounts must climb to compete with rising returns on money market funds or customers will move their assets.