Reuters
Canadian banks are bracing for a few months of uncertainty with loan loss provisions expected to rise if interest rates remain elevated, even as their dealmaking and investment banking business improves, according to executives from major lenders. Most lenders beat earnings expectations in the second quarter, with the exception of Bank of Montreal, but the six major banks set aside a combined C$4.36 billion in loan loss provisions, 26% higher than a year ago. "If rates remain where they are and play out as expected with just a few rate cuts, then provisions are likely going to be elevated for at least the next quarter or two," Veritas Investment Research analyst Nigel D'Souza said, adding that he expects credit losses to peak no earlier than early 2025.