The Globe and Mail reports in its Thursday, June 6, edition that Credit Suisse analyst Mike Rizvanovic says the second quarter results for Canadian banks "point to a deteriorating outlook." The Globe's David Leeder writes in the Eye On Equities column that Mr. Rizvanovic says in a note: "Coming out of the quarter we have grown increasingly concerned about 1) decelerating growth in Canadian P&C Banking, which for most of the Big Six was even weaker than our below-consensus expectations; and 2) further signs of credit loss normalization, which we believe is still in its very early stages and will become an increasingly prominent headwind over the next couple of years."
Mr. Rizvanovic sees signs of normalization in loan losses. He is projecting a "gradual uptick" toward the 40 basis points range by the end of fiscal 2020.
He says Canadian P&C results were much weaker than anticipated, noting, "We now have more conviction that growth will slow further (to less than 2 per cent in F2020), particularly given the growing potential for margin contraction." Mr. Rizvanovc sees a rebound in capital markets despite a "modest" outlook. He sees scant "meaningful upside for the group."
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