Canadian banks are preparing themselves for more bad loans this year - National

Core Insights - Canada's largest banks are increasing their loan loss provisions due to economic uncertainty and rising living costs affecting households and businesses [1][2] - Despite setting aside these provisions, the banks reported multi-billion-dollar profits in the latest quarter [2] Loan Loss Provisions - Royal Bank of Canada added C$1.09 billion to its loan loss provisions, up from C$1.05 billion a year earlier [8] - Scotiabank increased its provisions by C$1.176 billion, slightly higher than the previous year [8] - TD Bank topped up its provisions by C$1.04 billion, a slight decrease from the prior year [8] - CIBC set aside an additional C$568 million, down from last year [8] - National Bank's provision for credit losses was C$244 million, down from C$254 million a year earlier [9] Housing Market Insights - Canada's total mortgage debt reached nearly C$2 trillion last year, with many households expected to apply for mortgage renewals [3] - The housing market is anticipated to remain "subdued" through most of 2026, with a potential housing recession if economic conditions worsen [7] - BMO's chief risk officer noted an increase in delinquencies, indicating stress in the Canadian consumer market [4][6] Economic Conditions - Interest rates significantly impact the affordability of mortgages and loans, with the Bank of Canada's benchmark rate currently at 2.25% [9] - CIBC's chief risk officer acknowledged ongoing economic softness, with fluctuating unemployment rates and uncertainty surrounding trade agreements [10][11]