Analysts say Canadian banks may be protected by their diversified structures and the delayed impacts from higher interest rates as they report earnings amid ominous headwinds in the global economy.
John Aiken, head of Canada research at Barclays, said Monday that “the beauty” of Canadian banks is that their diverse set of financial activities sets them up well to withstand tough economic times.
Aiken said U.S. banks, which are not as diversified in their activities, may be more profitable under strong economic conditions, but “Canadian banks always significantly outperform on the down cycles.” The bank’s provisions for credit losses rose $295 million in the quarter, below average estimates for $345 million.
“If I were running a Canadian retail bank, I would still be taking any residential mortgage I can put on the books, because when you look at how the market is structured, the banks are very protected against a crash,” he said.
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