TORONTO — While there’s still room for surprises, Canadian banks are set to report results after a second quarter that was notable for its economic steadiness.
“We believe credit quality is still top of mind for investors,” said RBC analyst Darko Mihelic in a note on the upcoming bank earnings, which kick off Thursday with TD. Residential mortgages were at 0.34 per cent gross impaired in the first quarter, compared with 0.43 per cent at the end of 2019 or the 0.85 per cent hit after the global financial crisis, the report said.But strain is increasing on borrowers and banks as high interest rates persist, especially on smaller banks that sometimes specialize in higher-risk borrowers. Residential mortgages more than 90 days past due stood at 0.17 per cent at large banks and 0.
He said he expects a more cautious view from banks on credit as consumers face a “more daunting economic landscape,” something he’s concerned about too. “Between plunging productivity, unsustainable fiscal policy including exploding public sector job growth, and one of the world's most expensive housing markets, we believe that it is now fair to ask, 'Is the Canadian economic miracle over?'” he said in a note.
Source: Loan Digest (loandigest.net)
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