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Alberta’s energy slump is sparking fears about contagion spreading to the broader economy and the big banks, but Bank of Nova Scotia, the first major bank to report earnings for the quarter ended Oct. 31, says it is confident its loan book will withstand the commodity cycle. During a conference call on Tuesday to discuss the bank’s fourth-quarter results, executives said the lender has been improving the quality of its energy loan book since the last oil-price crash, which saw North American benchmark oil prices drop from more than US$100 a barrel to about US$26. As a result, the bank is in a strong position to weather the challenges currently facing Canada’s oil patch, said Dieter Jentsch, Scotiabank’s head of global banking and markets. “We feel very proud of the names that we bank,” Mr. Jentsch said. “They have a disciplined view of capital deployment – and look, I’m very confident that this will withstand a period of unsettlement in the commodities market.” Alberta’s energy companies are being forced to accept a steep discount for their product, as a lack of pipeline capacity and refinery shutdowns in the United States have led to a surplus of oil and gas […]
