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Royal Bank of Canada (RY $205.84)
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Toronto-Dominion Bank (The) (TD $113.72)
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Q: I have noticed that a number of the large banks have had a big rise recently. I am wondering about the reason for this. Specifically, is this a flight to safety going on in the background? Or is it the interest rate reduction or something else?
Thanks

Asked by Gordon on September 29, 2025

5i Research Answer:

It is largely (likely) a reflection of earnings, and in particular lower loan loss provisions. This, combined with lower interest rates, has been a powerful driver of positive sentiment. Investors have been expecting a recession, but it is just not showing up in the credit quality of bank loans. Thus, buyers are becoming more confident. Decent growth in earnings is also expected in 2026, and valuations are quite reasonable still.

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