Consumer Debt Binge Draws Moody's Warning for Canadian Banks
- Growing debt and higher interest rates will cut credit quality
- Credit card losses are first in line to weaken Canadian banks
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Canada’s mountain of consumer debt is triggering multiple alarms about the threat to the country’s banks.
Moody’s Investors Service joined the Bank for International Settlements and S&P Global Ratings which have all warned in the last month that Canada’s banking system, dominated by five giants, is facing a growing threat of souring consumer loans amid rising interest rates. The country’s ratio of household debt to disposable income reached a record 171 percent in the third quarter of last year.