Scotiabank Strategist Predicts Continued Outperformance of Bank Stocks

Scotiabank strategist Hugo Ste-Marie predicts that Canadian bank stocks will continue to outperform in 2026, following a remarkable year-to-date surge of 31.7 percent. This analysis was reported by Scott Barlow in the Globe and Mail.

The Canadian banking sector is set to release its fiscal fourth-quarter results this week, with Scotiabank initiating the report on December 2. Analyst Mike Rizvanovic anticipates a solid quarter for the banks, attributing this to sustained high capital markets, stable to slightly rising margins, moderated expense growth, and significant share repurchases as banks accrue excess capital.

Rizvanovic indicates that if profitability aligns with or surpasses return on equity targets, the sector can maintain its outperformance into 2026. Despite the impressive gains this year, he notes that the year-over-year outperformance is not excessive from a historical perspective.

Rizvanovic has assigned outperform ratings to several financial institutions, including Canadian Imperial Bank of Commerce, National Bank of Canada, and Royal Bank of Canada. In a related note, RBC Capital Markets analyst Sam Crittenden highlighted that copper prices have reached an all-time high, driven by tightening supply and optimistic forecasts, along with disruptions in trading on the CME's Comex Exchange.

In the precious metals market, silver prices surged to a record $55.66 per ounce, influenced by thin liquidity and ongoing supply issues. Moreover, BMO senior economist Robert Kavcic provided insights into the Canadian economy, indicating that the real GDP has expanded just 1.4 percent over the past year, reflecting below-potential growth.

He noted that while domestic demand has grown by 1.7 percent, residential investment remains subdued due to ongoing housing corrections, though there are signs of recovery in certain segments. As the banking sector prepares for its financial disclosures and analysts remain optimistic about profitability and growth, the outlook for Canadian bank stocks remains bright, positioning them favorably in the market.