Royal Bank of Canada chief Gordon Nixon says he is “incredibly positive” about the outlook for the Canadian economy despite the problems bubbling up around the globe.
“The next number of years is going to be a difficult period for the world,” the chief executive officer told a Bloomberg conference in Toronto. However Canada “is incredibly well positioned” because of its fiscal flexibility, its low tax rate, natural resources, strong financial sector and growing industrial sector.
“We have ability to really buck the trend” of what is going on elsewhere, he said, particularly because the country is less reliant on the United States than it was in the past.
Mr. Nixon said he is not concerned about a housing bubble that may burst.
“We feel pretty good about the housing market,” he said, noting that Vancouver's condo market is not representative of the entire national housing market. RBC also has relatively little exposure to the condo market, he added.
There are pockets of vulnerability, but over all, the bank is comfortable with its mortgage lending, Mr. Nixon said. The only worry would be a “shock from a significant increase in interest rates over a short period of time,” he said.
Indeed, Mr. Nixon said he would “like to see the rhetoric [about a housing bubble]come down a little bit.”
Mr. Nixon said RBC, which has been more cautious about overseas acquisitions than many of its competitors, will remain that way. It will look at “strategic, tactical” acquisitions, but only ones that can present a reasonable rate of return.
All banks are looking to more capital growth in the current uncertain environment, so the buying action that took place from 2000 to 2008 will not be repeated for some time, he said.