Royal Bank of Canada (TSE:RY) is still amongst the top financial stocks in terms of ROE
SmallCapPower | August 29, 2016: A financial services firm is heavily reliant on its ability to build up a robust balance sheet. Return on Equity (ROE) is a fundamental ratio that calculates a company’s ability to churn profits from its resources – equity. Not only do the companies on our list today share a high ROE, but they also trade at fairly low Price to Book valuation multiples, with CIBC and RBC commanding a premium over its brand name and scale.
Canadian Imperial Bank of Commerce (TSE:CM) – $103.28
Canadian Imperial Bank of Commerce (CIBC) is a global financial institution that provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets.
- Market Cap (mm): $1,790,728,391
- ROE: 19.1%
- P/B: 1.8x
- Net Income (LTM, mm): 4,142
Home Capital Group Inc. (TSE:HCG) – $27.97
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.
- Market Cap (mm): 1,838
- ROE: 17.7%
- P/B: 1.2x
- Net Income (LTM, mm): 273
Power Financial Corp. (TSE:PWF) – $29.54
Multiline Insurance & Brokers
Power Financial Corporation is a diversified management and holding company that has operations in the financial services sector in Canada, the United States and Europe, through its controlling interests in Great- West Lifeco Inc. (Lifeco) and IGM Financial Inc. (IGM). It operates through three segments: Lifeco, IGM and Pargesa Holding SA (Pargesa).
- Market Cap (mm): 21,069
- ROE: 17.7%
- P/B: 1.1x
- Net Income (LTM, mm): 3,265
Royal Bank of Canada (TSE:RY) – $81.37
Royal Bank of Canada (RBC) is a diversified financial services company that provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services on a global basis. It operates in five segments: Personal & Commercial Banking, which operates comprises its personal and business banking operations, as well as its auto financing and retail investment businesses; Wealth Management, which comprises Canadian Wealth Management, United States and International Wealth Management and Global Asset Management (GAM); Insurance, which operates under two business lines: Canadian Insurance and International Insurance; Investor & Treasury Services, which is a provider of asset servicing, custody, payments and treasury services, and Capital Markets, which comprises two business lines: Corporate and Investment Banking and Global Markets.
- Market Cap (mm): 121,607
- ROE: 16.2%
- P/B: 1.8x
- Net Income (LTM, mm): 10,508