In an interview on Friday, TD Group President and CEO Bharat Masrani said that given expectations that consumer spending will be released once pandemic restrictions are relaxed and removed, the subsequent surge in economic activity will make it very unlikely that the bank will need to put more money aside. for potentially impaired loans.
“We are seeing great signs in the economy; in North America things are opening up, vaccinations are pouring in, and every time we see any reopening we see very good growth and good activity levels, and we see it in the footprints in which we let’s operate, ”he said. .
“On this basis, we believe that the provisions need to be reduced, and that is what we have done. And frankly, if you look at our blankets in the future, they are more than healthy. I feel based on what we see in the economy, seeing the level of activity is an appropriate level to have.
TD Bank’s provisions for credit losses (PCL) peaked at $ 3.218 billion in the second quarter of 2020, at the height of uncertainty surrounding the impact of the pandemic. The bank backed down in its last fiscal quarter, freeing up $ 377 million of its provisions, which effectively rolled those funds back into its earnings stream.
Masrani said he was encouraged that the increase in the household savings rate would increase overall output in the second half of the year, as consumers who built up their household balance sheet during pandemic restrictions are able to deploy some of this money in newly reopened businesses.
“There is a huge pent-up demand. If you look at the forecast for economic growth, if you look at the activities, you expect the economy to be quite dynamic, ”he said.
“And that should bode well for jobs, and therefore for the growth of the economy. ”