Canada banks to improve from Covid quarter

Bloomberg

Canada’s biggest banks are expected to see profits plunge for a second straight quarter due to economic fallout from the Covid-19 pandemic — though there are signs of improvement.
The nation’s six-largest lenders will post an average profit decline of about 30% in the fiscal third quarter from a year earlier when they kick off the reporting season next week, according to the average estimates of seven analysts.
It’ll be one of the worst quarters in modern Canadian banking history, but it marks an improvement from the 50% profit drop in the second quarter when the virus first gripped the North American economy.
Royal Bank of Canada, Toronto-Dominion Bank and four other large lenders built up C$10.9 billion ($8.3 billion) in reserves in the second quarter to brace for bad loans emerging from the coronavirus pandemic. Analysts see fewer loan-loss provisions in the third quarter for most banks, though they are still expected to
remain elevated.

Earnings results for the three months ended July 31 will likely provide some calm after the “stormy” second quarter, Bank of Nova Scotia analyst Meny Grauman said. “While we expect performance to be better on a sequential basis, largely as a result of moderating loan loss provisions after a spike in the second quarter, results may still be down relative to the same quarter last year as the current pandemic-induced recession continues to take its toll.”