The Globe and Mail reports in its Wednesday edition that Alberta's energy slump is sparking fears about contagion spreading to the broader economy and the big banks. The Globe's Alexandra Posadzki writes, however, that Bank of Nova Scotia, the first big bank to report earnings for the fourth quarter ended Oct. 31, says it is confident that its loan book will withstand the commodity cycle.
During a conference call with analysts on Tuesday, executives said that the lender has been improving the quality of its energy loan book since the last oil-price crash, which saw North American benchmark oil prices drop from more than $100 (U.S.) a barrel to about $26 (U.S.). As a result, the bank is in a strong position to weather the challenges currently facing Canada's oil patch, said Dieter Jentsch, Scotiabank's head of global banking and markets.
"I'm very confident that this will withstand a period of unsettlement in the commodities market," Mr. Jentsch said. The current downturn has led to concerns that Canada's big banks could see their losses spike on commercial and consumer loans in Alberta, but Mr. Jentsch told investors that the balance sheets of the companies in the bank's loan book are stronger than ever.
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