4 TSX Financial Stocks That Might Benefit Most From Rate Hikes

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Higher interest income in 2017 could boost the TSX financial stocks on our list

SmallCapPower | December 22, 2016: As the economy begins to show signs of recovery and the United States increases its interest rates, there could soon be pressure on Canada to follow suit. The TSX financial stocks on our list today all have large lending practices and saw modest (if not, slightly negative) growth in their interest income over the past 12 months, however moving forward should see these increase with interest rates as their lending becomes more valuable to them.

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Laurentian Bank of Canada (TSE:LB) – $58.25
Banks

Laurentian Bank of Canada is a Canada-based Chartered bank. The Bank and its subsidiaries provide banking services to individuals, and small and medium-sized enterprises, as well as to independent advisors across Canada. It also operates as a full-service brokerage firm. The Bank’s loan portfolio consists of personal loans, residential mortgage loans, commercial mortgage loans and commercial loans, including acceptances and finance lease receivables. The Bank offers financing products, such as Visa credit cards, Personal line of credit, Personal loan and Student loan. Its mortgage products include Homeowner’s Kit, Equity line of credit, Mortgage with cashback, Variable-rate mortgage and Fixed-rate mortgage.

  • Market Cap: $1,971.32(mm)
  • YTD Price PCT Change: 20.6%
  • Interest Income, Bank (LTM, CAD, Millions): $1,166.88
  • PoP % Chg (1LTM) in Interest Income, Bank (LTM, CAD): 2.3%

Home Capital Group Inc. (TSE:HCG) – $29.36
Banks

Home Capital Group Inc. is a Canada-based holding company, which operates primarily through its subsidiary, Home Trust Company (Home Trust). The Company, through its subsidiary, offers residential and non-residential mortgage lending, securitization of insured residential first mortgage products, consumer lending and credit card products. Home Trust also offers deposits through brokers and financial planners, and through its direct to consumer deposit brand, Oaken Financial. The Company’s subsidiary, Payment Services Interactive Gateway Inc. (PSiGate), provides payment card services.

  • Market Cap: $1,893.83(mm)
  • YTD Price PCT Change: 9.1%
  • Interest Income, Bank (LTM, CAD, Millions): $879.69
  • PoP % Chg (1LTM) in Interest Income, Bank (LTM, CAD): -1.8%

Equitable Group Inc. (TSE:EQB) – $59.90
Consumer Lending

Equitable Group Inc. is a financial services company that operates through its subsidiary, Equitable Bank (the Bank). The Bank provides mortgage loans to a range of customers that include business-for-self borrowers, newcomers to Canada and commercial real estate investors. It also provides savers with various saving options that offer security and competitive interest rates, including guaranteed investment certificates (GICs), high interest savings accounts (HISAs) and deposit notes.

  • Market Cap: $934.80(mm)
  • YTD Price PCT Change: 16.3%
  • Interest Income, Bank (LTM, CAD, Millions): $614.00
  • PoP % Chg (1LTM) in Interest Income, Bank (LTM, CAD): 11.7%

VersaBank (TSE:VB) – $5.10
Banks

VersaBank, formerly Pacific & Western Bank of Canada (the Bank,) is a Canada-based chartered bank, which operates using an electronic branchless model. It sources deposits, consumer loans, commercial loans and leases electronically. The Bank also makes residential development and commercial mortgages as its sources through a network of brokers and direct contact with its lending staff.

  • Market Cap: $102.18(mm)
  • YTD Price PCT Change: -8.9%
  • Interest Income, Bank (LTM, CAD, Millions): $69.66
  • PoP % Chg (1LTM) in Interest Income, Bank (LTM, CAD): 8.1%