Banks' Valuation Imply a 21% Earnings Decline or 10-year Bond Yield of 5.8% to 6.5%

Scotia Capital, 26 June 2007Event� Bank earnings have been extremely strong in the first half of 2007, significantly better than expectations. Earnings growth in the second quarter was high at 17%, although down from the first quarter blockbuster with 24% growth.What It Means� One of the keys to the bank earnings growth picture has been the acceleration in risk-weighted assets and revenue growth,