Photographer: Negative Space
“Moody’s says high debt levels and soaring house prices could be bad news for Canada’s big banks, and has downgraded their credit rating as a result,” wrote Pete Evans for CBC News on May 11, 2017.
Evans continued, “Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and Royal Bank of Canada all saw their credit ratings cut by one notch late Wednesday.
Moody’s cited a “more challenging operating environment for banks in Canada for the remainder of 2017 and beyond.”
“Today’s downgrade of the Canadian banks reflects our ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future,” Moody’s vice-president David Beattie said.
High consumer debt a concern
“Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.”
Moody’s noted Canada’s record-high debt-to-income ratio of 167 per cent as cause for concern, and said debt levels are now beyond the usual risk models in place to determine whether businesses could withstand a crisis.”
Read the full article here.
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