Canadian banks strong but DBRS sees risks

By Steve Randall

A new report says that Canada’s big banks “compare favourably” with their global peers.

An assessment by ratings agency DBRS also says that Canada’s largest lenders have diversified and resilient business models which continue to deliver strong results; aggregate net income was up 6.5 per cent in FY2016 to $37.3 billion.

The report highlights the capital buffers of the largest Canadian banks, which exceed the requirements of Basel III in anticipation of increased regulation over the remainder of this decade.

However, the report also warns that consumer debt, cooling house prices in Greater Vancouver and rising prices in the Greater Toronto area remain key credit risks.

It also flags higher unemployment in the oil producing provinces as increasing risk of delinquencies in the banks’ retail portfolios.

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