Q: Hi Guys
With all the bank earnings out, and the conference calls occurring, did you get a sense on how credit worthiness is doing? How were banks provisioning for loan losses? Thinking of Propel and Goeasy and whether they will get through this cycle just fine?
Thanks Stuart
With all the bank earnings out, and the conference calls occurring, did you get a sense on how credit worthiness is doing? How were banks provisioning for loan losses? Thinking of Propel and Goeasy and whether they will get through this cycle just fine?
Thanks Stuart
5i Research Answer:
Bank credit seems OK. Total provisions across the big six is generally lower than a year ago, helped by smaller performing (Stage 1/2) reserves as macro assumptions and portfolio quality stabilize. Impaired (Stage 3) credit losses remain elevated, with pressure in Canadian consumer, cards and some residential mortgages, but banks are signaling that losses are manageable and largely within prior guidance. Now, PRL and GSY target a different customer than the banks, and there is not necessarily close correlation here. Both are riskier, overall, but both are also much cheaper on valuation. We are not expecting major issues, but investors are skittish and an uptick in losses would likely worry investors further.