Valuation and Analysis of the Canadian Banking Sector During the COVID-19 Pandemic

The 2019 coronavirus epidemic is an unprecedented disaster in human history. The economic crisis caused by the epidemic has caused many countries to face financial difficulties. The Bank of Canada has adopted an expansionary economic policy. As an industry that is relatively sensitive to changes in the overall economic market, the banking industry will undergo significant changes in the financial crisis and stimulating fiscal policies brought about by the COVID-19 epidemic. This research will use the price-earnings ratio method to evaluate and analyze all listed banks in Canada during the epidemic. By comparing the P/E ratios of various banks and the composite index of the Toronto Stock Exchange from 2019 to 2021, the study found that the stock prices of the Canadian banking industry are greatly undervalued, and have been undervalued after the implementation of macroeconomic policies. In the short term, Canadian banking industry profitability and stock prices will continue to rise, but will eventually fall. These results shed light on guiding further exploration of impact of COVID-19 on Canadian Banking Industry.