Canadian banks to dodge worst case tariff scenario in latest earnings

Canada’s Big Bank reports the third results that starts Tuesdays

Gains that will benefit from the decrease in the provisions of credit loss

Credit growth followed in US tariffs and trade uncertainty

Toronto, 25 Aug (Reuters) – Canada’s major banks are expected to reduce the provisions of credit loss from the previous quarter in the third quarter, as US tariffs cause less damage to their credit portfolios.

According to the data compiled by LSEG, the provisions of a total of $ 5.22 billion CRITURE loss of $ 5.22 billion for the third quarter of Canada’s large banks are expected to leave aside for $ 6.37 billion in the second quarter.

Banks increased the provisions in the last few quarters of potential bad loans in the belief that a possible North American trade war would harm the economy and cause default on commercial loans, credit cards and mortgages.

Data from the US census office showed that Canadian exports were released by Value to the US tariff in June, because the North American Free Trade Agreement was exempted from tariffs.

Prime Minister Mark Carney removed some retaliation tariffs imposed by Canada on Friday’s United States.

Canaccord Genuit Analyst Matthew Lee referred to the Canadian, USA and Mexican Trade Region, “Three months later, we believe that the more cool heads may reign with mutual tariffs that can be applied between Cusma -affiliated countries.” He said.

Lee and other analysts waited for banks to benefit from a sequential decrease in loan loss provisions, but they waited for credit growth to remain weak due to low demand.

Canada banks will start the earning season by starting with Bank of Montreal and Bank of Nova Scotia on Tuesday.

Net interest income – the difference between banks paying on credit and deposits is expected to grow between 9.3% and 57%.

Analysts expected banks to receive support from the capital markets that benefited from wage income and increasing demand.

Canada banks traditionally built excess capital of the world’s best capital banks, but have limited options for investing at home. In the third quarter, they distributed approximately $ 4 billion C cumulatively and returned to the purchase of stocks.

“Considering the solid capital positions, we are looking forward to commenting on capital distribution plans that can help banks’ management teams to meet the medium -term financial objectives of the banks.” He said.

Banks have expanded in the United States over the years because growth at home has been limited in a saturated market and at the same time investing to build asset management businesses. (Reporting by Nivedita Balu in Toronto;