Canadian banks cautiously optimistic about economic recovery from coronavirus – National


TORONTO – Canadian banks were optimistic this quarter about the prospects of an economic rebound from the effects of the COVID-19 pandemic, but admitted that a lot of uncertainty awaited them, especially as loan deferrals and efforts Government relief efforts launched at the start of the pandemic came to an end.The Big Six, which revealed their third quarter results this week, said they were encouraged by consumer spending patterns that were approaching pre-pandemic levels and by fewer Canadians seeking relief. loan, but they continued to set aside significant cash reserves to protect themselves from potential. credit losses.

“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.”

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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.

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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.

Banks have already collectively spent $ 16.5 billion in bad debt provisions since COVID-19 spread widely in Canada in March.

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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.

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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

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.

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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.”

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