January 10, 2017 / 2:30 PM / a year ago

Canadian banks bullish on Trump's pro-growth agenda

TORONTO (Reuters) - Canadian banks are looking to expand in the United States, taking advantage of pro-growth policies expected to be pursued by President-elect Donald Trump’s new administration, senior executives told a banking conference in Toronto.

A Royal Bank of Canada (RBC) logo is seen on Bay Street in the heart of the financial district in Toronto, January 22, 2015. REUTERS/Mark Blinch/File Photo

The valuations of U.S. regional banks have soared following Trump’s victory in the Nov. 8 election, supported by the prospect of higher interest rates, softer banking regulation and a lower corporate tax rate.

Royal Bank of Canada (RY.TO) Chief Executive Dave McKay expects the bank to benefit from changes made by the incoming president, he said at the RBC 2017 Canadian Bank CEO conference.

“We do see a stronger growth agenda in the United States, we do anticipate pro-growth policy coming out of the new administration,” he said. “That would potentially lead to higher rates which is very good for our franchise in the United States.”

Canada’s largest banks want to expand in the United States to offset sluggish growth in their domestic market.

Toronto-Dominion Bank (TD.TO) CEO Bharat Masrani said the bank would look at acquisition opportunities in the U.S. Southeast or expanding its credit card business in the United States.

“We are organically growing right through our franchise but I would like to see more in the southeast of the U.S. because I think there’s more opportunity there,” he said.

TD, Canada’s second-biggest bank, has grown to become one of the 10 biggest banks in the United States, where it has a major retail presence serving 9 million people through 1,300 branches.

RBC has said it plans to expand further in the United States following its $5 billion acquisition of Los Angeles-based City National in 2015.

    Bank of Montreal CEO Bill Downe said he also expected to see an acceleration in growth in the United States.

    “Clearly, the new administration is leaning toward more fiscal stimulus than was present. The reliance on monetary stimulus is ebbing away. Both of those things are good for our clients in the business that they do,” Downe said.

    Canadian banks are also closing branches in response to customers visiting them less frequently and investing more in digital technology.

    Bank of Nova Scotia (BNS.TO) CEO Brian Porter said the bank planned to close around 5 percent of its network of just over 1,000 branches over the next two years.

    CIBC (CM.TO) will cut branch numbers to “above 1,000” by 2019 from 1,100, CEO Victor Dodig said.

    Editing by Jeffrey Benkoe and Meredith Mazzilli

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