Canada’s big five banks this week collectively set aside the most money for loan losses since 2020, as concerns about an economic slowdown and higher defaults in commercial real estate mount.
The country’s top five lenders, which all reported earnings this week, logged a combined C$3.37bn (US$2.48bn) in credit loss provisions in the first three months of 2023, C$1bn more than the previous quarter and up almost 13-fold year on year.
“The higher provisions quarter-over-quarter [are] due to a more unfavourable macroeconomic outlook,” Phil Thomas, the Bank of Nova Scotia’s chief risk officer, said on the bank’s earnings call. “This is driven by our assumptions around the following potential headwinds: increased risk of a recession and a potentially more challenging credit cycle.”
Read More : Significant Surge: Canada’s Big Banks Experience 13-Fold Increase in Loan Loss Provisions