Canada’s largest banks are brushing off the recent crash in domestic-crude prices, confident that their loan books are in solid shape and that their profits will continue to soar. Collectively, the Big Six banks reported $45-billion in annual profits for fiscal 2018, which ended on Oct 31. Yet on recent conference calls to discuss their fourth-quarter earnings, analysts pressed executives for details about their loan exposures to oil and gas companies, worried that a crisis could be brewing behind the scenes, resulting in large write-downs. All six banks responded in the same fashion: This is not 2016. There was barely a crisis for them then, and there definitely isn’t one now. “Since 2015 and 2016, we’ve ‘up-tiered’ the companies we deal with,” Dieter Jentsch, head of global banking and markets at Bank of Nova Scotia, said on a conference call. “And I have to say to you that the balance sheets that we see in the business have never been as strong, and the management teams are very cost-conscious.” When the global price of crude plummeted below US$30 per barrel in early February, 2016, some analysts and investors worried. At the time, about 80 per cent of Royal Bank […]
