(Toronto) Canadian bank executives expect to set aside more money this year for possible defaulted loans, but say borrowers are generally doing well despite higher interest rates .
At a conference of bank bosses on Tuesday, Royal Bank of Canada (RBC) President and CEO Dave McKay said he expects loss provisions to hit a record high this year, as some commercial loans find themselves in a precarious situation.
He finds mortgage borrowers are having to adjust to higher mortgage payments, with an average of $400 per month for customers renewing this year. Salary increases and accumulated savings would help soften the impact of rising rates, he said.
Mr. McKay expects modest deterioration on a number of fronts in 2024, particularly in U.S. commercial real estate, some multifamily residential real estate markets, capital markets and some areas of non-consumer lending. guaranteed.
Scotiabank CEO Scott Thomson also expects provisions for defaulted loans to be higher, but he thinks business will be more stable after restructuring efforts in 2023.
Mr. Thomson points out that rates have already started to fall in Latin America, in markets where Scotia is present. This trend would help reduce risks and reduce loan losses, he said.