NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases Mid-Year 2016 Canadian Banking Outlook.
The mid-year 2016 financial outlook is moderately negative for Canadian banks, reflective of the following factors: amplified asset quality risks, uncertainties surrounding government support, relatively high levels of household debt in Canada, a waning Canadian economy, and continued low commodity prices. However, at present, the largest banks in Canada continue to report solid capital ratios, profitable operations, and a relatively low level of impaired loans. Though the banks have overall strong financials, risks hover on the horizon. The Canadian economy is exposed to energy, mining, and other commodities sectors which are generally under considerable pressure and will likely impact asset quality, especially if the commodity downturn is prolonged. Moreover, the housing market in Canada remains frothy and is susceptible to negative trends in commodities especially if these developments translate to higher unemployment over time. Partially mitigating housing market concern is the high proportion of mortgages insured by the Canada Mortgage and Housing Corporation (CMHC), a Crown corporation, and the generally sound mortgage underwriting practices in Canada, particularly when compared to the U.S. before the 2008 financial crisis.
Please click here to view the report.
Follow us on Twitter!
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).