With most of Canada’s biggest banks exposed to the US commercial-property market, the deteriorating quality of some real estate loans could lead to nasty surprises as lenders report fiscal first-quarter results this week.
Commercial-property lending accounts for about 10% of the loan books on average at Canada’s five largest banks. With the sector under pressure amid elevated interest rates and plunging valuations, banks have been booking higher provisions for potential credit losses for several quarters now.
