The Financial Post reports in its Saturday edition that as the vaccine rollout gains speed across North America and the economy south of the border reopens, the banks have slashed their provisions, or in some cases released funds from the reserves.
The Post's Stefanie Marotta writes that Bank of Montreal's provisions fell to $60-million in the second quarter, as compared with $1.1-billion in the same period a year earlier and far less than analyst expectations of $219-million. CIBC and National Bank also set aside fewer provisions than expected, recording $32-million and $5-million in provisions respectively.
TD booked the largest reversal in provisions, releasing $377-million that was previously set aside for loan losses. RBC also recovered some of the funds it had previously aside, releasing $96-million, as compared with the $2.8-billion it reported in the same period a year earlier. Analysts expected TD and RBC to set aside $457.8-million and $275.6-million respectively.
The trend signals that the banks are starting to "put the pandemic behind them," according to Scotiabank analyst Meny Grauman. "The economy came through this pandemic on a better footing," which helped moderate credit losses, she said.
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