Canadian bank earnings at risk from office real estate exposure, says Bay Street analyst

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Canadian bank earnings at risk from office real estate exposure, says Bay Street analyst via financialpost

in March because, according to Goldman Sachs Group Inc. research, banks there with less than US$180 billion in assets hold around 70 per cent of commercial real estate loans in the banking system on their balance sheets. U.S. regional banks with between US$10 billion and US$20 billion in assets have 25 per cent of their loans tied to commercial real estate.Article content

Dechaine said impaired commercial real estate loans aren’t rising substantially for Canadian banks yet, save for some exposure in the U.S. But he added that Canadian financial institutions do not disclose as much as their counterparts in the U.S. when it comes to set-aside provisions in their commercial real estate books, where U.S.

“With the CRE overhang and the ongoing turbulence in the U.S. regional banking sector that could trigger a recession, we believe most investors will maintain a cautious stance towards the Big 6 banks.”Article contentDechaine calculated that a trio of the financial institutions — Bank of Montreal, Toronto-Dominion Bank and National Bank — have roughly 10 per cent exposure to office real estate, while Royal Bank of Canada is at the top of the group with nearly 20 per cent.

Other market watchers have expressed less concern about the ability of Canadian banks to weather exposure to commercial real estate. In an April 5 column, CPA Canada chief economist David-Alexandre Brassard said the big banks were “well positioned” to deal with historically high vacancy rates and higher interest rates, noting that commercial real estate represents two per cent of their overall assets compared to 13 per cent for U.S. banks.

 

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Canadian bank earnings at risk from office real estate exposure, says Bay Street analystCommercial real estate loans represent the second\u002Dlargest lending exposure of Canada’s 6 largest banks, posing a risk to earnings. Read on.
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Canadian bank earnings at risk from office real estate exposure, says Bay Street analystCommercial real estate loans represent the second\u002Dlargest lending exposure of Canada’s 6 largest banks, posing a risk to earnings. Read on.
แหล่ง: nationalpost - 🏆 10. / 80 อ่านเพิ่มเติม »

Canadian bank earnings at risk from office real estate exposure, says Bay Street analystCommercial real estate loans represent the second\u002Dlargest lending exposure of Canada’s 6 largest banks, posing a risk to earnings. Read on.
แหล่ง: financialpost - 🏆 7. / 85 อ่านเพิ่มเติม »

Canadian bank earnings at risk from office real estate exposure, says Bay Street analystCommercial real estate loans represent the second\u002Dlargest lending exposure of Canada’s 6 largest banks, posing a risk to earnings. Read on.
แหล่ง: calgaryherald - 🏆 64. / 52 อ่านเพิ่มเติม »

Canadian bank earnings at risk from office real estate exposure, says Bay Street analystCommercial real estate loans represent the second\u002Dlargest lending exposure of Canada’s 6 largest banks, posing a risk to earnings. Read on.
แหล่ง: calgaryherald - 🏆 64. / 52 อ่านเพิ่มเติม »