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Fitch affirms ratings of 7 big Canadian banks with stable outlooks

Fitch Ratings affirmed long-term and short-term issuer default ratings of Toronto-Dominion Bank, Desjardins Group, Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce at AA-/F1+ following its review of the Canadian banks peer group.

Royal Bank of Canada's long-term and short-term issuer default ratings were affirmed at AA/F1+, while National Bank of Canada's long-term and short-term issuer default ratings were affirmed at A+/F1.

The ratings outlooks are stable for the seven large Canadian banks.

Fitch said the ratings of Toronto-Dominion Bank reflect the bank's strong profile, consistently high asset quality, stable through-the-cycle financial performance, sound capital and good liquidity position. For Desjardins Group, the ratings reflect strong product mix with sizable wealth management and life and P&C insurance operations, accounting for an estimated 30% of the company's after-tax surplus earnings.

The affirmation of Bank of Novia Scotia is influenced by its diversified business model, strong domestic and international franchises, and its long track record of consistently high asset quality, according to the rating agency. Bank of Montreal's ratings reflect its larger-than-peers loan growth, sizeable franchise and business market in Canada, good revenue diversification by product and geography given its notable U.S.-based operations, and consistent financial performance over various credit cycles.

CIBC's ratings are highly influenced by the company's solid franchise and diversified business model, occupying the fifth position in terms of assets, loans and deposits in its large Canadian bank peer group, Fitch said. The rating agency added that CIBC's asset quality supports its rating while its earnings stability, sound capital and good liquidity position are generally commensurate with its rating level.

Royal Bank of Canada's ratings reflect its very strong domestic franchise and business position, and its sizeable capital markets business that has generally remained below 25% of total revenues and not translated into increased revenue and earnings volatility, Fitch explained.

The rating agency said National Bank of Canada's ratings reflect the bank's good domestic franchise and business position, strong asset quality, improved and above-peer-average operating performance, modest loan growth and strong capital levels.