Bank of Montreal CEO Says Oil's Impact on Lenders Is Overblownby
The effect of falling oil prices on lenders including Bank of Montreal has been overblown, due largely to nonstop news reports and analysts’ dire warnings, Chief Executive Officer William Downe said.
“Analysts and the financial media have been singularly focused on the impact of lower oil and gas prices,” Downe said Tuesday at the bank’s annual meeting in Toronto. “The level of apprehension about markets has been disproportionate to the evidence, largely, I think, because we’ve all become captive to the 24-hour news cycle.”
Downe reiterated that lower energy prices will lead to Bank of Montreal setting aside more money for soured loans, but said the impact will be moderated by the firm’s relatively low exposure to the oil industry and its experience dealing with cyclical commodity markets.
“We’re anticipating that loan-loss provisions will rise from a very low level to one more consistent with this point in the commodity cycle," Downe said, adding that outstanding energy loans represent about 2 percent of the lender’s total.