Canada’s big banks have weathered the pandemic on the strength of the country’s heated housing market. This week, they’ll get the chance to show whether they also have other avenues for loan growth.
Surging home prices and strong sales have boosted Canadian residential mortgage and home-equity credit balances at the country’s six biggest banks by CA$151.2 billion in the past year and a half. That 13% growth outstrips the gain of just 2.8% for all other types of loans from the banks’ domestic divisions since before Covid-19 took hold in North America.
Housing gains, along with government support programs that prevented a wave of defaults, have helped Canadian banks return to pre-pandemic levels of profitability and put them in position to increase dividends and resume stock buybacks. As the country’s biggest lenders report quarterly earnings this week, investors are watching to see if the firms’ other business lines can pick up significantly before next year’s expected interest-rate increases threaten to cool the housing market. # SANDI HALPERN # SOLD # LEASED # BANKS # HOUSING MARKET
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