Analysts predict that Canada's major banks will set aside approximately C$4.5 billion in loan loss provisions for the third quarter, marking a 27% increase from the previous year. This rise is attributed to a challenging economic environment characterized by increasing insolvencies and anticipated delinquencies in credit card and other loans. The banks are facing pressures from elevated borrowing costs, slowing employment rates, and the looming possibility of a recession, which is impacting both consumer and business confidence. Analysts expect third-quarter results to reflect sluggish loan growth, with rising credit costs becoming a significant concern. Notably, TD Bank's upcoming report will be closely watched due to ongoing investigations into its anti-money laundering practices, while Bank of Montreal is also expected to report increased provisions related to a loan to a U.S. solar company. Overall, the outlook remains cautious as banks navigate these economic challenges.
Read the full article here.