Canada's big bank results are expected to bring to light a number of challenges as lenders set aside more funds for bad loans in a tough economy that has also led to a slowdown in dealmaking and forced borrowers to rethink about new mortgages. 'We expect another challenging quarter for the group,' KBW analyst Mike Rizvanovic said, adding that he expects slowing loan growth, higher expenses and higher provisions for credit losses. The shares of the top five banks - Royal Bank of Canada, TD Bank, Bank of Montreal, Bank of Nova Scotia and CIBC - have lost between 2% and 8% so far this year.
TORONTO - Canada's big bank results are expected to bring to light a number of challenges as lenders set aside more funds for bad loans in a tough economy that has also led to a slowdown in dealmaking and forced borrowers to rethink about new mortgages.
"We expect another challenging quarter for the group," KBW analyst Mike Rizvanovic said, adding that he expects slowing loan growth, higher expenses and higher provisions for credit losses. The Bank of Canada has hiked interest rates ten times since March 2022, most recently in June after a brief pause in March. While the rate hikes help improve margins from money banks earn by lending out cash, the rates impact mortgages and borrowing costs.
Of the big five, analysts expect TD to be better positioned on capital, deposits and scale, owing to its acquisition of Cowen and its large U.S. presence.Investors will also watch for any updates on Bank of Nova Scotia's turnaround plan for its international business.
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