Canadian banks expected to build reserves to cushion tariff uncertainty
Canada's big six banks are expected to build more credit loss provisions as they brace for uncertainty surrounding the U.S. tariff threat, analysts said, potentially weighing on first quarter earnings. The banks have already been putting aside more funds to cover any souring loans due to continued high Canadian unemployment, which has fuelled investor concerns despite some more robust economic data recently. A rise in credit loss provisions would dent profits for the banks as they prepare for potential losses.
- This move highlights the delicate balance between economic growth and protectionist policies, where banks are caught in the middle of a trade war that could have far-reaching consequences for the Canadian economy.
- How will the long-term impact of these tariffs on Canada's financial sector be measured, particularly if other countries follow suit with their own trade restrictions?