--- title: "CIBC Says Strong Earnings From Banks Due to Capital Markets in Q2 Preview, Downgrades National Bank" type: "News" locale: "en" url: "https://longbridge.com/en/news/286449525.md" description: "CIBC anticipates strong Q2 earnings for banks, driven by capital markets, but recommends shifting investments to lifecos. Analyst Paul Holden downgraded National Bank to neutral, citing concerns over credit losses amid a weak job market and housing sector. While banks may report EPS beats, capital markets-driven gains may not sustain stock prices. BMO remains the only outperformer-rated bank due to potential upside in ROE targets. National Bank's stock has risen 20% recently, now trading at a premium. Current price: $203.95, down 0.34%." datetime: "2026-05-14T17:14:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286449525.md) - [en](https://longbridge.com/en/news/286449525.md) - [zh-HK](https://longbridge.com/zh-HK/news/286449525.md) --- # CIBC Says Strong Earnings From Banks Due to Capital Markets in Q2 Preview, Downgrades National Bank 01:14 PM EDT, 05/14/2026 (MT Newswires) -- CIBC recommends investors rotate money out of banks into lifecos, even as it expects a strong second-quarter earnings from the sector when it starts reporting on May 27. Analyst Paul Holden, who notes that the strong earnings will be predominately based on capital markets activity, has also downgraded National Bank (NA.TO) to neutral. Holden says the credit outlook is incrementally worse and he is getting more cautious on credit losses given the weakness in Canadian unemployment, a soft housing market in the GTA, and industry credit metrics. Loan growth is expected to remain muted and net interest margin is also likely to be less of a tailwind this quarter. "We would not be surprised to see the banks report EPS beats again this quarter, but perhaps like the U.S. banks, capital markets-driven beats will no longer be good enough to drive the stocks higher." National Bank is downgraded to neutral from outperform, with Holden pointing out that "two years' worth of returns were delivered in three months". The stock is up ~20% in the past three months and is now trading at the highest multiple in the group (9% premium on F2027 consensus). Fiscal 2028 consensus estimates are giving full credit for ROE expansion, Holden adds. BMO (BMO.TO) is Holden's only outperformer-rated bank as there is still upside potential to consensus estimates relative to its 15% ROE target. "With the recovery in U.S. commercial loan growth, there is also a possibility that U.S. balance sheet growth comes in higher than expected. We also think the relative skew to the U.S. can help with impaired PCLs in the near term." BMO is trading at a 5% discount to the group average P/E and a strong quarter that demonstrates continued progress towards ROE targets should help the stock. Price: 203.95, Change: -0.69, Percent Change: -0.34 MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited. ### Related Stocks - [CM.US](https://longbridge.com/en/quote/CM.US.md) - [BMO.US](https://longbridge.com/en/quote/BMO.US.md) ## Related News & Research - [BMO Announces Strategic Sale of Transportation and Vendor Finance Businesses | BMO Stock News](https://longbridge.com/en/news/286000387.md) - [A Look At Canadian Imperial Bank of Commerce’s Valuation After A Strong Share Price Run](https://longbridge.com/en/news/284651934.md) - [Americans are right to worry about the job market](https://longbridge.com/en/news/286920925.md) - [03:00 ETGreenberg Traurig's Capital Markets Practice Recognized Across Five Winning Deals of the Year at Islamic Finance News Awards 2025](https://longbridge.com/en/news/287020144.md) - [](https://longbridge.com/en/news/286751503.md)