Canadian Banks with Most Domestic Exposure Set to Outperform, CIBC Says

07:44 AM EDT, 04/03/2025 (MT Newswires) -- Canadian banks with the most domestic exposure are poised to outperform their peers, CIBC Capital Markets said in a report.

Analyst Paul Holden said enacted tariffs from the US government (as they currently stand) are less negative for Canadian banks than expected.

"We expect a relief rally for the bank stocks that have performed worst," Holden said in a note to clients, highlighting Bank of Nova Scotia (BNS.TO).

"The banks with the most domestic business could rally the most," the analyst said.

Holden said Scotiabank, CIBC (CM.TO) and National Bank of Canada ( NTIOF ) - the three banks most overweight Canada and most underweight the US - have underperformed year to date.

He said Toronto-Dominion Bank ( MLWIQXX ) and Bank of Montreal ( BNKD ) have been the relative outperformers - the two Canadian banks with the highest US earnings.

"National Bank potentially has the most to lose from reciprocal tariffs," Holden said, noting that the US is imposing reciprocal tariffs of $9% on Cambodia.

"It is possible that (National Bank's Cambodian unit) ABA Bank may not have significant direct exposure to exporting companies, but the indirect impact through employment and GDP growth could be significant as Cambodia is a very export-dependent economy," the analyst said.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.