S&P downgrades Scotiabank, National Bank & 4 others
Canadian Press | Dec 14, 2012
Standard & Poor’s has downgraded the ratings of six of Canada’s financial institutions by one notch.
The Wall Street Journal says the credit ratings agency cites a softening economy, low interest rates and pressure from the headwinds facing Canada’s economy.
S&P says the risk for the Canadian banking sector is increasing and expects intensifying competition for loans and deposits will pressure profit growth.
The firm lowered its ratings by one notch on Scotiabank to A-plus.
National Bank of Canada, Laurentian Bank of Canada, Central 1 Credit Union, Caisse centrale Desjardins and Home Capital Group were also lowered one notch.
The outlooks for all six financial institutions are stable.
S&P also affirmed its credit ratings on the Royal Bank and TD Bank and raised its outlook to stable from negative.
The agency currently rates both banks at double-A-minus.
In its report, says the Journal, S&P noted loan demand is approaching a cyclical peak and is expected to moderate after several quarters of robust growth
Canadians are carrying more debt than ever before
Julian Beltrame, Canadian Press | Dec 13, 2012
Canadians are more in hock today than ever before, Statistics Canada said Thursday in releasing fresh data on household debt.
The new report shows household debt to annual disposable income reached a new high at 164.6%, from 163.3% the previous quarter.
Bank of Canada governor Mark Carney has named rising household debt a key risk to the Canadian economy, but noted this week he was encouraged that credit growth appeared to be slowing.
Still, Carney has also said he expects the debt-to-income ratio to keep rising over the next couple of years. That is in part because of a lag in time between purchase decisions — such as a new home — and when the debt gets registered.
In the July-September period, households borrowed $27.3-billion, $18.4-billion of that in mortgages, while consumer credit levels increased by $7-billion to $474-billion.
The high debt-to-income number may surprise Canadians who only a few months ago were told it was just above 150%. But Statistics Canada has recently revised how it calculates the measure to make it more representative of actual household finances.