Salient to Investors:

The Scotia Canadian Dividend Fund cut bank holdings by 40 percent from the end of 2011 on concern that lending is slowing as consumers retrench. Fund manager Jason Gibbs at GCIC said there is no question that things are going to slow down and is using the released funds to increase real estate holdings to 13 percent versus 8 percent at the end of 2011 to capitalize on increased demand for commercial real estate in North America, particularly Canada. Gibbs said there is not a lot of supply in real estate and the demand remains enormous.

The World Economic Forum ranks Canada’s banks as the world’s soundest for the past 5 years. Canadian banks expect  domestic banking profit to slow in 2013 amid record household debt.

Standard & Poor’s expects revenue and loan growth for Canadian banks to reach mid single-digits in 2013 from 9 percent and 10 percent in 2012, respectively.

John Aiken at Barclays Capital said ongoing headwinds will lead to significantly lower earnings growth through the remainder of 2013.

The ratio of Canadian household debt to disposable income rose to a record 165 percent in Q4 2012.

Fidelity True North Fund cut bank investments to 14 percent from 16 percent two years ago, TD Dividend Growth Fund cut to 41 percent from 42 percent. Investors Dividend Fund upped its bank exposure to 34 percent from 31 percent at the end of 2011.

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