Consumer Credit Continues to Deteriorate in Canada’s Oil Regions

  • Delinquencies of 90-plus days up 15% year-over-year in Alberta
  • Weakness in oil provinces offset by Ontario and B.C. strength

Consumer balance sheets in Canada’s oil-producing provinces declined for the third consecutive quarter as the commodity rout rolls on.

The rate of consumers in Alberta at least 90 days delinquent on credit payments increased 15 percent to 3.1 percent of all non-mortgage loans in the second quarter from a year ago, according to a report from TransUnion Canada, a unit of the Chicago-based consumer-credit rater. Saskatchewan delinquencies rose 12 percent to 3.4 percent. Those delinquencies outpace a national rate of 2.7 percent, a 3.6 percent increase from the previous year.

"They got themselves into this debt load when oil prices were high and now they need to maintain that, at least make the monthly minimum payments, but consumers are finding even that difficult to maintain," Jason Wang, director of research and analysis for TransUnion in Canada, said in a phone interview.

Credit quality in the oil-producing provinces has deteriorated since the price of crude dropped to about $43 a barrel from above $100 a barrel in mid-2014, leading companies to shutter production and fire workers. That decline is offset by relative strength in Ontario and British Columbia, where the majority of credit consumers are located and knowledge-based and manufacturing industries dominate the economy, according to Wang.

Ontario’s 90-plus-day delinquency rate declined 0.2 percent over the past year to 2.8 percent in the second quarter while British Columbia’s delinquency rate fell 0.6 percent to 2.6 percent.

Debt levels continued to rise. Canadians carried C$21,580 ($16,452) of non-mortgage debt on average in the second quarter, up 2.9 percent from a year ago, with growth led by Ontario and Quebec. Albertans have the highest average with C$27,583 in non-mortgage debt, the data show. The survey didn’t break out data for Manitoba, the Atlantic provinces or territories.

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