The 2019 outlook for Canadian banks is stable, attributable to sound capital and liquidity, strong recurring profits and an abatement of household debt growth, New York-based Moody’s Investors Service says in its annual outlook published Monday.
The rating agency’s outlook is also supported by expectations that housing prices in major cities will continue to moderate, loan loss provisions will rise and monetary policy will continue to normalize, boosting banks’ profits.
“We anticipate the concentrated industry structure will support banks’ market share, pricing power and profitability,” says David Beattie, senior vice-president at Moody’s, in a statement. “The outlook reflects new equilibrium at lower government support assumptions for banks’ deposits and senior debt.”
In a release, Moody’s says, “Concerns regarding high private-sector debt levels and the significant asset risk it presents are expected to lessen amid improved capitalization and higher loan loss provisions which will buffer the banks in an adverse economic scenario.”