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CIBC, National Bank likely most relieved Bank of Canada rate cut didn’t happen: Barclays

An analysis by Barclays shows CIBC and National Bank would 'face the greatest headwinds' if the central bank opts to cut the overnight rate below 0.5 per cent in future sessions.

Officials at Canadian Imperial Bank of Commerce and National Bank of Canada are probably breathing the greatest sighs of relief that the Bank of Canada opted not to cut interest rates on Wednesday, based on a analysis by Barclays Capital.

Analyst John Aiken says those two banks are most exposed to margin compression stemming from Bank of Canada overnight interest rate cuts, which are usually followed at least in part by the big banks when they extend loans to clients. The analyst reached his conclusions based on an analysis of the domestic composition of the banks’ loan books and the contribution of net interest income to total revenue.

Bank of Montreal appears to have the lowest relative exposure to incremental rate cuts, Aiken said.

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