Executives at major Canadian banks believe an economic rebound is on the horizon, but say the short term looks tough and spending won’t pick up until the second half of 2021 or even 2022.
CEOs of the nation’s largest banks believe Canada is benefiting from generous government relief programs that have reduced delinquencies and insolvencies and the arrival of several promising COVID-19 vaccines.
However, they say the coming weeks are not looking good as a growing number of Canadians continue to contract the virus.
“In the short term things won’t be as good as we might have hoped, but overall I think we’re probably on a slow path to becoming more positive as the year progresses,” he said. TD General Manager Bharat Masrani said Monday.
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Masrani made his comments during a virtual appearance at the Royal Bank of Canada’s Canadian Bank CEOs Conference, where CEOs of all major banks across the country presented their economic forecasts for the year.
They all agreed that Canada is in the midst of an economic recovery, but how quickly that recovery takes hold will depend on the country’s ability to bring the pandemic under control.
Vaccines will be essential, they said.
“We believe that roughly four to 4.5 million high risk Canadians will need to be vaccinated before we can really get back to reopening the economy and we can get there within 100 days, if we have the vaccines,” said Royal Bank of Canada CEO Dave McKay said.
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The number of COVID-19 vaccine doses administered in Canada reached 319,938 on Monday. Efforts to secure more gunfire are increasing as new supplies arrive, but at least 38 million people live in the country.
Once people are vaccinated, McKay believes those who ate the money and didn’t spend it because so many things are closed will revert to hobbies like travel and entertainment.
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But when that will happen remains a big question.
Most businesses in provinces like Ontario remain closed and Quebec has gone so far as to institute a curfew to reduce cases. Some public health advocates and politicians are calling for similar measures to be implemented elsewhere.
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Victor Dodig, CEO of the Canadian Imperial Bank of Commerce, believes that a rebound will be slow to materialize in the hotel sector and other sectors considered “discretionary”.
“We’re looking at the next fiscal year before you see any robustness,” he said.
Masrani believes that some consumers will run into credit problems in the second half of 2021 or even 2022, so he builds negativity into TD’s business models.
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While Darryl White, CEO of Bank of Montreal, said he expects the next two to four months to be a “tough” time, he has seen bright spots.
“We’re just not seeing the impaired casualties happening at the rate people expected,” he said.
Rent relief, mortgage deferrals and wage subsidies have helped many Canadians manage the crisis and banks have built up large reserves to deal with bad debts that may arise, he said.
For a rebound to really take shape, McKay believes government assistance will need to continue and focus on sectors of the economy that should take longer to recover such as small businesses, hospitality businesses and retailers. transport companies.
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Dodig has noticed that people are quickly turning to online banking during the pandemic and even those who used digital options before the virus started circulating are doing more online transactions.
CIBC recently turned 250 or a quarter of its banking centers into counseling centers, as digitization was accelerated by the health crisis, he said.
McKay said many bank branches had been temporarily closed or were operating with reduced hours throughout the pandemic.
RBC has closed some branches and McKay expects to cut a further three or four percent in the coming year, he said.
That works out to between 30 and 50 branches, according to McKay.
He believes the branch footprint can be reduced and the bank can gain more flexibility by focusing on shorter leases, but how it should approach branches will depend on the takeover.
“Everything is positioned to see how customers come back and how they use the branch,” he said.
“A lot of customer activity still goes through our branches, but we’ll see what sticks to consumers and what changes through it all.”
© 2021 The Canadian Press