Canada’s largest banks have set aside $2.5 billion to prepare for potential loan defaults as the country continues to face economic challenges due to the COVID-19 pandemic.
The banks, including Royal Bank of Canada, TD Bank, Scotiabank, Bank of Montreal, CIBC and National Bank of Canada, have set aside the funds as a precautionary measure in case of a potential recession.
While the Canadian economy has shown signs of improvement, including job gains and increased consumer spending, there are concerns about the impact of rising COVID-19 cases and ongoing restrictions.
The banks have reported strong financial results in recent months, but have also acknowledged the potential risks of economic uncertainty. The set-aside funds are intended to provide a buffer in case of loan defaults, particularly in industries such as hospitality, tourism, and retail that have been hit hard by the pandemic.
The banks have also committed to providing support to customers who are experiencing financial difficulties due to the pandemic, including loan deferrals and other forms of assistance.
The move by the banks is in line with global trends, as financial institutions around the world prepare for potential economic challenges. Many countries have implemented measures to support businesses and individuals, but the ongoing impact of the pandemic has raised concerns about the potential for future economic downturns.
Overall, the banks’ decision to set aside funds for potential loan defaults is a proactive step to ensure they are prepared for any potential challenges, and to support customers who may be struggling during these uncertain times.