Two of Canada’s largest banks reported first quarter earnings Tuesday, booking higher-than-expected provisions for credit losses
expect loan loss reserves to continue to climb as consumers reel under the strain of tougher economic conditions, with relief on the horizon if central banks cut interest rates later this year.
Scotiabank’s impaired loan provisions were driven by higher reserves for personal loans, credit cards, auto lending and mortgages as consumers grapple with tougher economic conditions. At BMO, consumer loan losses in both Canada and the United States were bolstered by higher delinquencies in credit cards and other personal loans as an increase in customer insolvencies in Canada rose above prepandemic levels.
Scotiabank and BMO were the first banks to unveil first-quarter financial results. Royal Bank of Canada and National Bank of Canada will release their results on Wednesday and Toronto-Dominion Bank and Canadian Imperial Bank of Commerce will close out the week on Thursday. Last year, the bank eased up on mortgage lending to refocus on expanding its deposits by cross-selling products to its customers that held only loans with Scotiabank. It offers a package that bundles a mortgage, chequing account and other personal banking products, which accounted for 70 per cent of all mortgage deals done in the quarter.
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