Dundee Securities rates RBC Financial Group as an “accumulate” in a new analyst report provided by Multex.com.

The report suggests that Dundee likes RBC’s long-term strategy, but that the short-term environment may be challenging.

“It is understandable that the combination of the blurring of Canada’s traditional ‘four pillars’ and the many acquisitions recently made in the United States has resulted in RBC Financial Group viewing itself as a diversified financial company and not as a bank. This helps to position itself among an elite group of companies (the likes of Citigroup); company they would like to keep. We view this long-term strategic positioning and vision positively. If successfully achieved, it would result in enhanced valuations,” the report says.

“However, as we approach the end of Q1, we must remember that RBC Financial Group does have a banking business,” it says. “Owing to a challenging credit environment, Q1 loan loss provision is forecast to be about 10% higher than a year earlier, exerting some pressure on earnings.”

Dundee notes that RBC Financial Group has established objectives for 2002 that are generally lower than 2001 and lower than their three to five year goals. “This year, or at least the first half of this year, is expected to be challenging from an economic perspective, which will have implications for earnings. Furthermore, RBC Financial Group must continue its efforts to effectively integrate and improve the revenue generation capabilities of the many recently acquired US companies.”

It sees future U.S. acquisitions on the menu for the firm, but likely not for some time. “In the short-term, RBC Financial Group will attempt to maximize U.S. returns by enhancing operating efficiency and leveraging each platform for revenue growth. Thus, significant acquisitions are unlikely. However, longer-term, the focus shifts to building scale and further integrating platforms. Acquisitions could feature prominently in fulfilling this objective.”

Dundee says that RBC’s exposure to Argentina is $193 million, and although it has not disclosed its Enron exposure, Dundee estimates it to be less than its Argentinian loans.