Canadian banks prepare for shaky economy, more bad loans

TORONTO, Dec 4 (Reuters) – Canadian banks had a mixed fourth quarter but a common theme underlining all the reports was the rise in bad loan provisions, signalling that lenders were strapping in for a shaky economy.

While some delivered early Christmas presents to investors with better-than-expected profits, a forecast for more savings and improved cost-cutting measures, the overall bad loans provisions spiked to nearly C$4 billion ($3.0 billion) for the quarter, the highest since the pandemic era.

A common factor was also the prospect of the Bank of Canada (BOC) lowering interest rates next year, which could help consumers with mortgages at the time of renewal and help banks recover from a period of uncertainty.

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