01:17 PM EDT, 06/03/2024 (MT Newswires) -- National Bank notes that overall , second quarter results of the Big 6 banks were good.

The main points were that five out the Big-6 banks beat consensus expectations; operating leverage was positive across the board; capital ratios continue to strengthen; and the outlook for certain business lines, such as Capital Markets, is positive.

"Ironically, considering economic divergence between Canada and the U.S., banks with greater exposure to the domestic market have outperformed," analyst Gabriel Dechaine writes and he expects that trend to continue.

BMO's U.S. credit performance, BNS' retreat from LatAm and TD's U.S. regulatory woes highlight some of the challenges outside of Canada, he notes. Furthermore, earlier rate cuts in Canada could serve to improve the growth outlook while also deflating credit cycle concerns (at least partially). This positioning favours CIBC and RBC (especially with HSBC CA) over BMO and TD.

"While we upgraded BMO last December, we believe the stock's upside potential will be deferred as a "higher for longer" rates in the U.S. weigh on the bank's credit outlook as well as its loan growth performance."

Price: 120.46, Change: -1.09, Percent Change: -0.90