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Royal Bank of Canada (RY $208.51)
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Bank of Nova Scotia (The) (BNS $94.03)
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Bank of Montreal (BMO $171.21)
Q: Would you throw some light on “ provision for credit losses “ ( PCL ) that the banks use in their financial statements. It seems to have a significant impact on earnings. How is it determined ? Analysts take it as a poor contributor to earnings. If a bank lowers its PCL how does this actually increase its profitability ? Is there a formula to determine its PCL and how trustworthy is this ? Seems to me that a bank could alter the PCL number to better their numbers. Thanks. Derek.
5i Research Answer:
There is certainly some flexibility, and banks can massage earnings somewhat. Banks'...