Canada’s big banks defied expectations for first-quarter earnings, despite the collapse in oil prices and its spinoff effects on consumer credit.
In their conference calls, the banks addressed concerns about their exposure to Alberta’s housing market. They reassured analysts that they are actively stress-testing their portfolios given the possibility for sustained low oil prices and increasing unemployment in the province. We have determined that the potential losses would still be manageable and within our risk appetite, said one executive at RBC, which has 19% of its portfolio in Alberta.
RBC was also in the hot seat for leading the banks in only partially dropping prime rate. In January, RBC was the first to lower its prime rate by only 15 basis points following the Bank of Canada’s 25-basis-point rate cut.