{"id":9810,"date":"2025-02-07T17:45:34","date_gmt":"2025-02-07T17:45:34","guid":{"rendered":"https:\/\/finderica.com\/?p=9810"},"modified":"2025-02-07T17:45:34","modified_gmt":"2025-02-07T17:45:34","slug":"bank-ceos-see-mortgage-risk-easing-as-attention-turns-to-political-uncertainty","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=9810","title":{"rendered":"Bank CEOs see mortgage risk easing as attention turns to political uncertainty"},"content":{"rendered":"
\n

By Ian Bickis<\/strong><\/p>\n

\u201cI think the tariffs can do a lot of damage,\u201d RBC chief executive Dave McKay said Tuesday at a bank CEO conference hosted by RBC Capital Markets.<\/p>\n

\u201cIt\u2019s disappointing to hear the rhetoric intensify, when we thought it was de-intensifying or mitigating to an extent.\u201d<\/p>\n

The worry comes as incoming U.S. president Donald Trump has threatened to impose a 25% tariff on Canadian and Mexican imports over what he says is concerns around border security.<\/p>\n

McKay said it\u2019s not just a question of whether the U.S. will impose tariffs, but whether they\u2019ll be broad or targeted, as well as how long they might stay in place.\u00a0<\/p>\n

\u201cIt\u2019s causing concern among everybody that it will do economic damage, and we\u2019re not sure the objectives it\u2019s trying to achieve,\u201d he said.<\/p>\n

The bank is preparing for a variety of scenarios, said McKay.<\/p>\n

CIBC chief executive Victor Dodig said he is also concerned about the risks, but that he\u2019s hoping it will become clear the damage tariffs would do to both countries.<\/p>\n

\u201cI\u2019m sure that sensible minds will prevail in terms of looking at the integrated nature of our economy, and how do we move things forward for the benefit of American consumers and companies and Canadian consumers and companies.\u201d<\/p>\n

He said whatever the outcome, the bank will manage through it just like it did during the pandemic, by controlling what it can \u2014 and Canada should do the same with actions like an internal free-trade agreement.<\/p>\n

\u201cLet\u2019s get the controllables right at home first.\u201d<\/p>\n

Making progress domestically, however, won\u2019t be easy after Prime Minister Justin Trudeau announced on Monday he had suspended parliament until March 24 and would be stepping down after a Liberal leadership race.\u00a0<\/p>\n

The uncertainty around who will lead the Liberals and what will happen with the election this year will likely affect investments in Canada, BMO chief executive Darryl White said.<\/p>\n

\u201cWhat do people do when they\u2019re uncertain? They wait \u2026 that waiting that is a natural consequence of uncertainty, is starting I think to set in a little bit in Canada.\u201d<\/p>\n

It\u2019s a contrast to the U.S. which he said had more uncertainty a year ago around government, interest rates and regulatory policy but is seeing spending ramp up.<\/p>\n

\u201cLook, you can say what you want about the outcome, but most of that uncertainty has been taken away,\u201d White said. \u201cSet aside the drama, there\u2019s clearly a pro-growth agenda that people are signing up for.\u201d<\/p>\n

The uncertainty on the political front is a contrast to the Canadian mortgage market, which is where much of the fretting has been focused for banks over the past couple of years.<\/p>\n

Mortgage concerns are ebbing after the Bank of Canada started lowering its key interest rate last year to what is now 3.25%, with further rate cuts expected in the months ahead.\u00a0<\/p>\n

Borrowers have managed well through the \u201cgreat renewal\u201d of mortgages, as analysts have called the adjustment for borrowers to much higher rates than they signed on to in the early days of the pandemic. Despite the higher rates, delinquency rates remain below pre-pandemic levels.<\/p>\n

Some 60% of RBC customers should renew at lower rates, McKay noted.\u00a0<\/p>\n

\u201cWhen we look at the overall payment shocks, it\u2019s decompressed significantly.\u201d<\/p>\n

Many Canadians are still struggling with higher payments, which have also been a drag on the economy, but that is only reinforcing the view that the Bank of Canada will keep pushing down rates aggressively in the short term, he said.<\/p>\n

TD Bank chief operating officer Raymond Chun, who is set to take over the top job in April, said the bank already saw activity pick up late last year.<\/p>\n

\u201cCertainly we saw a noticeable pick up in Q4 in sales and mortgage volumes inside of TD and as an industry at large, and that was even before the full effect of the 250 basis points decline had really played through.\u201d<\/p>\n

Chun noted that about a third of mortgages coming up for renewal in the next two years will likely be at lower rates.<\/p>\n

\u201cFrom a credit risk management perspective, you\u2019ve probably already seen the higher end.\u201d<\/p>\n

TD is facing its own challenges though as it works to bring its anti-money laundering program up to standards following a more than US$3 billion fine last year for oversight failures in the U.S.<\/p>\n

The bank also suspended its key financial guidance for the year as it works through a strategic review with updates expected later in the year, but Chun said the bank would provide quarterly updates on what they do know.\u00a0<\/p>\n

There\u2019s no question though about the bank\u2019s commitment to the U.S., Chun said.<\/p>\n

\u201cFirst and foremost, we are 100% committed to our franchise in the United States.\u201d<\/p>\n

This report by The Canadian Press was first published Jan. 7, 2025.<\/em><\/p>\n

Companies in this story: (TSX:RY, TSX:CM, TSX:TD, TSX:BMO)<\/em><\/p>\n

Visited 1,632 times, 1 visit(s) today<\/p>\n

CEO Conference Darryl White Dave McKay Donald Trump mortgage renewals Raymond Chun rbc RBC Capital Markets Canadian Bank CEO Conference RBC mortgage renewals renewals tariffs The Canadian Press victor dodig<\/p>\n

Last modified: January 7, 2025<\/p>\n<\/p><\/div>\n

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By Ian Bickis \u201cI think the tariffs can do a lot of damage,\u201d RBC chief executive Dave McKay said Tuesday at a bank CEO conference hosted by RBC Capital Markets. \u201cIt\u2019s disappointing to hear the rhetoric intensify, when we thought it was de-intensifying or mitigating to an extent.\u201d The worry comes as incoming U.S. president<\/p>\n","protected":false},"author":1,"featured_media":9811,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[216],"tags":[3883,136,3881,3882,417,953,181,2341,2066],"class_list":{"0":"post-9810","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-mortgage","8":"tag-attention","9":"tag-bank","10":"tag-ceos","11":"tag-easing","12":"tag-mortgage","13":"tag-political","14":"tag-risk","15":"tag-turns","16":"tag-uncertainty"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/9810","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9810"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/9810\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/9811"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}