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Alberta’s energy rout is expected to be front and centre as Canada’s biggest banks report their fourth-quarter earnings over the next two weeks. Falling oil and gas prices and the differential between U.S. and Canadian benchmarks is expected to create headwinds for Canada’s banks, although some will be affected more than others. The Bank of Nova Scotia, which kicks off the earnings parade on Tuesday, and the Canadian Imperial Bank of Commerce, which reports on Thursday, may have the highest exposure to the sector, according to a new report by RBC analyst Darko Mihelic. Analysts will not only be looking at each bank’s direct exposure to the sector, such as the likelihood that loans to oil and gas producers could sour. They’ll also be studying how the possible contagion could spread to other areas of the economy, affecting everything from credit card loans to mortgages to consumer spending. Although the price of U.S. benchmark oil has recovered somewhat from 2016 lows, the Canadian energy sector continues to lag, as a lack of pipeline capacity and refinery shutdowns in the United States are forcing Western Canadian producers to accept steep discounts for their oil and gas. The gap between West […]
