The banks are widely expected to further unwind the record-breaking amounts of money they set aside last year -- at least $16.5 billion across the Big Six -- to cover widespread loan defaults that never materialized.
Loan growth will be a key area to watch as the economy reopens. Many people and companies have used extra cash during the pandemic to pay down debts, putting pressure on a key area for the financial sector. The Bank of Canada said in a financial review in May that high household debt and imbalances in the housing market both intensified over the past year.
Nigel D'Souza, a financial services investment analyst at Veritas Investment Research, said overall debt levels are a potential concern, but the monthly carrying costs of those debts is the more important factor. Capital markets revenue could fall by seven per cent, quarter over quarter, estimates CIBC analyst Paul Holden, which will help push down overall earnings per share by an estimated average of 2.5 per cent from the previous quarter.
Those restrictions are still in place, but analysts expect them to be lifted at the end of October, when the Office of the Superintendent of Financial Institutions has said it will be adjusting the amount of capital that banks are required to hold.
TSX Return YTD 2021 (Aug-20, 2021): 16.67%. Given the level of current assets under management; coupled with unwinding some loan loss provisions, it would not be surprising to see results beating consensus EPS estimates.
Reopening? We're all gonna be locked down again by October lol
This should be interesting