What the Big Six’s Latest Financial Results Say About the Canadian Economy
A Rising Number of Impaired Loans is a Trend
Canada’s top six banks all beat estimates in their fourth-quarter earnings reports.
That marked a solid quarter and year for the Big Six, Carl De Souza, senior vice president and sector lead, North American financial institution ratings at Morningstar DBRS. Still, overall performance on the Canadian banking side was “somewhat modest,” he said, with the Q4 results driven largely by strong earnings in capital markets.
“We’ve communicated that we do expect to see impairments go up in the coming quarters – maybe a bit lumpy here and there,” he said.
And while impaired loans rose, they didn’t spike alarmingly, increasing by about $230 million across the Big Six. That jump was largely expected because of the continuing credit quality deterioration in Canadian banking, especially with mortgages coming off extremely low rates now renewing at higher prices.
Toronto-Dominion Bank (TD), Royal Bank of Canada (RBC), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), and National Bank delivered combined profits to the tune of over $16 billion in Q4 – higher than the same period last year.
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