Description: Canadian banks already have had some pretty profitable years. But in the most recent year, the tax cuts in the United States have saved Canadian banks millions of dollars. The Bank of Montreal estimates the tax cut generated about $100 million in benefits in 2018. TD sees its own figures at roughly $60 million a quarter.
Date: March 8, 2019
1) The story tells us the US corporate tax rate has been cut from 35% to 21%. How do corporate tax rates in Canada compare?
2) Do you think that this reduction of tax rates would influence strategic decisions of Canadian banks regarding foreign expansion?
3) Page 85 of Wiley’s Financial Accounting: Tools for Business Decision-Making tells us that TD Bank’s price-earnings ratio of a couple of years ago. Check out TD’s most current P/E ratio. Does it appear that the US tax cuts may have impacted how investors view TB Bank?