Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Pedestrians walk past a Bank of Nova Scotia location in downtown Toronto. (Louie Palu/The Globe and Mail)
Pedestrians walk past a Bank of Nova Scotia location in downtown Toronto. (Louie Palu/The Globe and Mail)

BANKING

S&P lowers ratings on six Canadian financial institutions Add to ...

Bond-rating agency Standard & Poor’s has downgraded six of Canada’s financial institutions, amid a softening economy and persistent low interest rates.

S&P said Thursday it was downgrading Bank of Nova Scotia, the country’s third-biggest bank, and National Bank of Canada, the sixth-largest lender, by one notch. The agency also lowered its ratings on Central 1 Credit Union, Caisse centrale Desjardins, Home Capital Group Inc. and Laurentian Bank of Canada by one grade.

More Related to this Story

It is the latest in a series of downgrades Canadian financial institutions have faced this year, as bond-rating agencies take a harder look at the slumping economy, high consumer debt, and low interest rates, which are expected to cause a slowdown in bank profitability in the coming year. Other agencies, such as DBRS and Moody’s have moved to downgrade their ratings of Canadian financial institutions by one notch in recent months.

“We believe that the Canadian banking sector is encountering incremental pressure from headwinds facing the Canadian economy,” S&P said in its ratings announcement. Those pressures are “heightening economic risk in the banking system. We also believe that industry risk for the Canadian banking sector is increasing. We expect that intensifying competition for loans and deposits will lead to pressure on profitability growth, especially in banks’ retail businesses.”

The Canadian banking sector just turned in a stellar year for profits, but profit growth in Canadian lending operations has started to slow, in part because of a government effort to cool off the housing market. Despite the downgrades, the ratings for Canadian banks remain among the highest in the world.

For example, S&P’s downgrade of Scotiabank moves the lender to A+, still one of the highest ratings possible. Scotiabank has not encountered a ratings downgrade in more than a decade. Other Canadian banks, including some that were downgraded this year by a notch, were reaffirmed at their current levels.

 
  • BNS-T
  • NA-T
  • LB-T
  • HCG-T
  • TTFS-I
  • RY-T
  • TD-T
  • BMO-T
  • CM-T
Live Discussion of BNS on StockTwits
More Discussion on BNS-T
Live Discussion of NA on StockTwits
More Discussion on NA-T
Live Discussion of LB on StockTwits
More Discussion on LB-T
Live Discussion of HCG on StockTwits
More Discussion on HCG-T
Live Discussion of TTFS on StockTwits
More Discussion on TTFS-I
Live Discussion of RY on StockTwits
More Discussion on RY-T
Live Discussion of TD on StockTwits
More Discussion on TD-T
Live Discussion of BMO on StockTwits
More Discussion on BMO-T
Live Discussion of CM on StockTwits
More Discussion on CM-T

More Related to this Story

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories