“The last thing we want to point out is pride or arrogance in this kind of environment,” Louis Vachon, CEO of the National Bank of Canada, told analysts Wednesday.
“We called it a very good quarter, but it’s hard to be ecstatic in an environment where a pandemic is affecting a large segment of the population in a very negative way.”
The story continues under the ad
Mortgage deferrals will soon end for many Canadians. So what?
Bank executives, including Vachon, have declared themselves on alert for their fourth quarter due to the risk of a second wave of the virus, which could wipe out the economic gains of recent months.
“We’re not out of it yet. We have the fall to overcome, ”warned the CEO of the Royal Bank of Canada, Dave McKay on Wednesday.
[ Sign up for our Health IQ newsletter for the latest coronavirus updates ]
If COVID-19 cases increase, it could erase some of the rehiring and consumer confidence in Canada in Q3, forcing banks to dig deeper into their coffers to further help consumers and hedge against risk default of payment.
“We’re going to be a little defensive and cautious for what I think will be a pretty tough year,” McKay said.
British Columbia reports 68 new coronavirus cases and one new death
Kyle Rittenhouse charged with murder after shooting dead protesters in Kenosha
Banks have already collectively spent $ 16.5 billion in bad debt provisions since COVID-19 spread widely in Canada in March.
Bank of Canada cuts benchmark mortgage rate for third time in months
The bulk of that money – $ 10.9 billion – was allocated in the second quarter, with the latter quarter seeing $ 5.6 billion added to the total.
TD Bank Group set aside the most money – $ 2.19 billion – in the quarter, followed closely by Bank of Nova Scotia at $ 2.18 billion.
Saskatchewan economy grows amid pandemic
The two figures eclipsed the Bank of Montreal’s $ 1.05 billion, RBC’s $ 675 million and Canadian Imperial Bank of Commerce’s $ 525 million.
National set aside the lowest amount, at $ 143 million.
Even with the end of Canada’s Emergency Response Benefit and the country’s transition to a new EI program in September, banks were okay with what Scotiabank’s Daniel Moore called to “see the tide disappear from here”.
READ MORE: Coronavirus: What will happen to the Canadian housing market in the midst of the pandemic?
“We know that structural damage has been done to the economy. It’s going to take a lot of cleanup quarters from here, but we see this quarter’s PCL as our highlight, ”Moore, the bank’s chief risk officer, said in a conference call Tuesday with financial analysts.
Many banks performed well in their financial markets divisions and strong commercial activity helped offset their exposure to low oil prices and interest rates.
Despite signs of renewed vigor in some industries as companies reopen and Canadians are rehired into their jobs, TD CEO Bharat Masrani has warned that struggles could still be ongoing.
“The road to recovery will not always be easy,” he said on a conference call Thursday.
“The longer-term outlook is still uncertain and a measure of caution is in order.”
Show link »
© 2020 The Canadian Press