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An alternative to UK bank shares?

General discussions about equity high-yield income strategies
SalvorHardin
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Re: An alternative to UK bank shares?

#314489

Postby SalvorHardin » June 2nd, 2020, 11:16 am

flyer61 wrote:Salvor, would you like to make a comment on Bank of Montreal's results versus the others.

I haven't really got much to say about the other banks. If I don't own shares in a company, then unless I'm thinking about buying some shares I don't pay all that much attention to a company's results. Especially banks, where the accounts are often extremely complicated (especially if they have insurance arms). If it's operating in the same sector as a share that I own then I may look at the headline results. Nothing jumped out at me from the headlines in the recent reporting season.

I picked Bank of Montreal over the other "Big Five" banks primarily because it has paid a dividend in every year since 1829, longer than any other Canadian company. To me that signals a conservative corporate culture. Its board of directors aren't going to want to be the ones to cut or not pay a dividend. A company with a similar dividend record in which I used to own shares is Procter & Gamble, which has paid a dividend in every year since 1890. P&G's directors guard its dividend track record.

I already knew that Canadian banks are better regulated than British banks and that they put a lot of importance upon paying dividends, especially as they have a large number of private investors who rely on their dividends (somewhere between 40% and 50% of the shares in the Big Five are owned by private investors).

The article below mentions about the provisions the big Canadian banks have made in last week's results. Bank of Montreal has made one of the largest increases in provisions. Whether this is because they have made riskier loans or are much more conservative about provisions is open to discussion; I'm going with "much more conservative".

"Shareholders learned that TD's provisions for credit losses soared to nearly $3.22 billion from $633 million during the same period a year ago. Earlier in the day, CIBC said it had put aside $1.41 billion, up from the $255 million it reported in its previous second quarter. Royal Bank of Canada said earlier this week that its credit-loss provisions amounted to $2.83 billion, up 564 per cent from $426 million in the same quarter last year.

Bank of Montreal's reached $1.11 billion, up 531 per cent from $176 million, National Bank of Canada's hit $504 million, up from the $84 million, and Bank of Nova Scotia's totalled nearly $1.85 billion, more than doubling from $873 million a year earlier."


https://ca.finance.yahoo.com/news/td-bank-reports-1-5b-111046890.html

Sorry I can't be of more help

dundas666
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Re: An alternative to UK bank shares?

#314502

Postby dundas666 » June 2nd, 2020, 11:57 am

I saw this closed-end IT "Strathbridge Top 10 Canadian Financial Trust" which invests in "the six largest Canadian banks and four largest Canadian life insurance companies" which might be of interest to see which companies it has:

The Toronto-Dominion Bank            12.5%
Royal Bank of Canada 12.1%
National Bank of Canada 11.7%
The Bank of Nova Scotia 10.5%
Sun Life Financial Inc. 10.1%
iA Financial Corporation Inc. 8.7%
Manulife Financial Corporation 8.6%
Canadian Imperial Bank of Commerce 8.6%
Great-West Lifeco Inc. 7.6%
Bank of Montreal 6.6%


http://www.strathbridge.com/overview.aspx?fund_id=6

dundas666
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Re: An alternative to UK bank shares?

#314505

Postby dundas666 » June 2nd, 2020, 12:00 pm

dundas666 wrote:I saw this closed-end IT "Strathbridge Top 10 Canadian Financial Trust" which invests in "the six largest Canadian banks and four largest Canadian life insurance companies" which might be of interest to see which companies it has....


Just noticed that IT is yielding nearly 10% :shock:

Wizard
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Re: An alternative to UK bank shares?

#314515

Postby Wizard » June 2nd, 2020, 12:37 pm

SalvorHardin wrote:
88V8 wrote:Glad to say that all my Prefs have continued paying. And I remain confident that they will.

Peeping at Canada - and tbh I have more than sufficient Financials - I see there is also a large offering of Prefs, five years with reset.
https://canadianpreferredshares.ca/rank ... -by-yield/
and if you click on Blog in that link there is also a raft of other Prefs, including -non-Financial.

Given the lack of discussion on these in the past, I wonder if there is a problem that this enthusiastic site does not point out.
Or perhaps for us UK stick-in-the-muds it is a pirate's map to a buried chest of treasure.

The problem is that preference shares, investment trusts and foreign shares are not permitted topics in pure HYP circles.

HYP practical dominates TLF, with over 50% of all investment posts on TLF being on that board. So by laying down strict HYP-Practical rules, a lot of people on TLF won't consider anything which doesn't meet the pure HYP criteria.

The reckless way in which British banks were found to have performed in the run up to the 2008 financial crisis (and during it when LloydsTSB bought HBOS) should have put most HYPers off British banks for life. But since HYP did not permit foreign banks, British banks came back onto HYP's collective radar once they started paying dividends. Their track record of dividend cuts and cancellations during the 21st century, as well as their regular misselling provisions for borderline criminal behaviour, wasn't an issue for many.

That's why we need to encourage people to post more on this board as such restrictions do not apply. I think there is a chicken and egg issue whereby people post on HYP Practical because it is more likely to get read than on this board. That means they have to fit into the restrictions of HYP Practical and the volume of posts never grows anywhere else.

GrahamPlatt
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Re: An alternative to UK bank shares?

#314522

Postby GrahamPlatt » June 2nd, 2020, 1:05 pm

Shouldn’t this thread be in the Banking Sector? ;-)

GoSeigen
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Re: An alternative to UK bank shares?

#314553

Postby GoSeigen » June 2nd, 2020, 2:17 pm

GrahamPlatt wrote:Shouldn’t this thread be in the Banking Sector? ;-)


No, but feel free to post a link to here from there.

GS

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Re: An alternative to UK bank shares?

#314559

Postby Arborbridge » June 2nd, 2020, 2:39 pm

SalvorHardin wrote:The problem is that preference shares, investment trusts and foreign shares are not permitted topics in pure HYP circles.

HYP practical dominates TLF, with over 50% of all investment posts on TLF being on that board. So by laying down strict HYP-Practical rules, a lot of people on TLF won't consider anything which doesn't meet the pure HYP criteria.

The reckless way in which British banks were found to have performed in the run up to the 2008 financial crisis (and during it when LloydsTSB bought HBOS) should have put most HYPers off British banks for life. But since HYP did not permit foreign banks, British banks came back onto HYP's collective radar once they started paying dividends. Their track record of dividend cuts and cancellations during the 21st century, as well as their regular misselling provisions for borderline criminal behaviour, wasn't an issue for many.


I am very interested to hear about the possibility of any alternative investment, including prefs and foreign shares - but I think it's a bit rich then to "blame" the HYP-P board or HYP guidelines, when there is and always has been other boards which one can post on. If people don't have the interest or gumption to do so, that's hardly the fault of HYPers :roll:

My only experience of Canadian banks is that they were very quick to look after their own affairs in the financial crash. At leat one big asset used to secure a loan - a Swedish ice-breaker which I was on in Antarctica - was broken up for srcap because the bank nicked the insurance money on the vessel which was intende to repair it after an accident. Merciless and mercenary, but good if they are looking after your interests.

Like Wizard, I would hope that people find this board and post here as an alternative to the HYP-P. I've always recommended doing so because the discussion can be far more wide ranging and would suit many of us interested in general HY ideas.

Arb.

88V8
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Re: An alternative to UK bank shares?

#314569

Postby 88V8 » June 2nd, 2020, 3:11 pm

SalvorHardin wrote:
88V8 wrote:Given the lack of discussion on [Canadian shares] in the past, I wonder if there is a problem that this enthusiastic site does not point out.

The problem is that preference shares, investment trusts and foreign shares are not permitted topics in pure HYP circles.

HYP practical dominates TLF, with over 50% of all investment posts on TLF being on that board. So by laying down strict HYP-Practical rules, a lot of people on TLF won't consider anything which doesn't meet the pure HYP criteria.


There is some truth in that, but we also have a Banking board and a Bonds board where these could have been discussed, if they merited discussion.

V8

TUK020
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Re: An alternative to UK bank shares?

#314580

Postby TUK020 » June 2nd, 2020, 3:42 pm

88V8 wrote:
SalvorHardin wrote:
88V8 wrote:Given the lack of discussion on [Canadian shares] in the past, I wonder if there is a problem that this enthusiastic site does not point out.

The problem is that preference shares, investment trusts and foreign shares are not permitted topics in pure HYP circles.

HYP practical dominates TLF, with over 50% of all investment posts on TLF being on that board. So by laying down strict HYP-Practical rules, a lot of people on TLF won't consider anything which doesn't meet the pure HYP criteria.


There is some truth in that, but we also have a Banking board and a Bonds board where these could have been discussed, if they merited discussion.

V8

I think that illustrates the issue. I would not go looking on a banking board for investment ideas. Having my attention brought these on this general board is of value.
I am looking for a forum for discussion of practical issues of managing/top slicing/topping up of my high yield portfolio (no capitals) that includes ITs and other non-"HYP" tendencies. I think this is it

GrahamPlatt
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Re: An alternative to UK bank shares?

#314581

Postby GrahamPlatt » June 2nd, 2020, 3:47 pm

Well, despite posting mischievously & tongue in cheek above, I had a look at the Strathbridge fund... trading at ~ NAV at a current $C 6.89, but MCP only £4.11m. Hardly HYP material, but interesting all the same to some.

Wizard
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Re: An alternative to UK bank shares?

#314647

Postby Wizard » June 2nd, 2020, 10:08 pm

GrahamPlatt wrote:Well, despite posting mischievously & tongue in cheek above, I had a look at the Strathbridge fund... trading at ~ NAV at a current $C 6.89, but MCP only £4.11m. Hardly HYP material, but interesting all the same to some.

But this isn’t an exclusively HYP board so that doesn’t matter.

Padders72
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Re: An alternative to UK bank shares?

#314662

Postby Padders72 » June 2nd, 2020, 11:02 pm

How would you hold that Strathbridge IT in the UK? The usual suspects don’t seem to list it.

88V8
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Re: An alternative to UK bank shares?

#314663

Postby 88V8 » June 2nd, 2020, 11:03 pm

TUK020 wrote:I am looking for a forum for discussion of practical issues of managing/top slicing/topping up of my high yield portfolio (no capitals) that includes ITs and other non-"HYP" tendencies. I think this is it


On HYPP, tjh regularly posts his portfolio adjustments and methodology, which would be equally applicable to a mixed portfolio.
Latest here https://lemonfool.co.uk/viewtopic.php?f=15&t=23723

V8

dundas666
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Re: An alternative to UK bank shares?

#314776

Postby dundas666 » June 3rd, 2020, 11:56 am

I've added Market Cap (CAD $Billion) and yield.

Company                            Holding    MCap   Yield%
The Toronto-Dominion Bank 12.5% 106.7 5.26
Royal Bank of Canada 12.1% 127.4 4.73
National Bank of Canada 11.7% 20.1 4.64
The Bank of Nova Scotia 10.5% 66.9 6.41
Sun Life Financial Inc. 10.1% 27.6 4.58
iA Financial Corporation Inc. 8.7% 4.8 4.32
Manulife Financial Corporation 8.6% 32.7 6.49
Canadian Imperial Bank of Commerce 8.6% 39.3 6.44
Great-West Lifeco Inc. 7.6% 20.8 5.91
Bank of Montreal 6.6% 42.8 6.14

SalvorHardin
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Re: An alternative to UK bank shares?

#335825

Postby SalvorHardin » August 25th, 2020, 3:37 pm

Another follow up. Earlier today Bank of Montreal kicked off the Canadian banks' reporting season with figures for the third quarter to 31st July.

Earnings per share of C$1.81 are down 22.6% on 2018-19; a pretty good result given the current climate. Quarterly dividend of C$1.06, up from C$1.03 for Q3 for last year. Shares are up 3.5% as I type this.

Scotiabank aka Bank of Nova Scotia also reported this morning. Eps down 30.7% in part because of much larger provisions than expected (Bank of Montreal made much larger provisions, relatively speaking, in the previous quarter). Unchanged dividend, shares up 0.3%.

IMHO these results bode well for the rest of the Canadian banks.

I've spent far more time looking at Bank of Montreal's results than Scotiabank's, as I only own shares in BMO. No surprise to see bad debt provisions being 244% higher than for the same quarter last year. Nothing serious leaps out at me. As usual it is much easier it is to read the profit & loss accounts and balance sheets of Canadian banks than British banks :D

https://www.bmo.com/home/about/banking/investor-relations/shareholder-information

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Re: An alternative to UK bank shares?

#335833

Postby Dod101 » August 25th, 2020, 4:08 pm

I recently bought in to Toronto Dominion which will report on Q3 in two days. Sort of looking forward to that. Thanks for the info SH.

Dod

SalvorHardin
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Re: An alternative to UK bank shares?

#336018

Postby SalvorHardin » August 26th, 2020, 10:32 am

Dod101 wrote:I recently bought in to Toronto Dominion which will report on Q3 in two days. Sort of looking forward to that. Thanks for the info SH.

Glad to help. I must admit that for years I've avoided bank shares like the plague, because British banks have been terribly run. Bank of Montreal is my first ever bank share purchase; probably not my last though I won't be looking at British banks.

Lloyds Bank is arguably the worst. It used to be an extremely well run bank under Brian Pitman. Then Mr. Pitman's successors became far too interested in selling insurance and empire building than efficiency. This culminated in the disasterous aquisition of HBOS, where the board were suckered into buying a total crock by the Treasury (who lied about HBOS's true financial position). The rewards for running a larger bank were too tempting.

Today Lloyds Bank's share price is 28.3p. In 2008 Lloyds paid a dividend of 36.1p, then went the best part of a decade without paying a dividend. Lloyds shares peaked at over £10 in the 1990s. It's a great advert for the Canadian banks.

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Re: An alternative to UK bank shares?

#336053

Postby dealtn » August 26th, 2020, 12:13 pm

SalvorHardin wrote:
Dod101 wrote:
Lloyds Bank is arguably the worst. It used to be an extremely well run bank under Brian Pitman. Then Mr. Pitman's successors became far too interested in selling insurance and empire building than efficiency. This culminated in the disasterous aquisition of HBOS, where the board were suckered into buying a total crock by the Treasury (who lied about HBOS's true financial position). The rewards for running a larger bank were too tempting.



Well there's an alternative view, seen by many on the inside. HBOS may not have been perfect but its purchaser had little opinion of many of those it acquired, got rid of many that had kept it alive before realising that expertise was actually an asset, and then decided its best option was to proceed and sell assets at firesale prices such that all buyers knew they didn't need to pay full price again. Those that think Lloyds was the better of the two institutions need to ask themselves where all the PPI claims sat.

Even with the hindsight of over a decade it was an extraordinary time. It was no surprise how long (or should I say short) the tenure of Lloyds Directors and senior management lasted.

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Re: An alternative to UK bank shares?

#336057

Postby Dod101 » August 26th, 2020, 12:31 pm

For the record the quote in dealtn's post was from SalvorHardin not me although I happen to agree with his views expressed.

Dod

Dod101
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Re: An alternative to UK bank shares?

#336540

Postby Dod101 » August 28th, 2020, 10:52 am

The TD Bank Q3 results do not mean a lot to me as I have just bought in to the company but they seem to have been accepted at least with equanimity by the market as the shares are up a little and the dividend is safe enough it would seem. May buy some more.

Dod


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