Canada’s banks ended the year with their weakest earnings growth since 2016. There may be little improvement next year, as rising loan losses and eroding margins affect bottom lines.
Bank analysts are tempering their forecasts for the next year after a difficult fiscal fourth quarter, when half of Canada’s six largest banks missed expectations. The three months ended Oct. 31 were “sloppy” and a “weak end to a tough year,” with 3% adjusted per-share earnings growth among the Big Six banks, CIBC Capital Markets analyst Robert Sedran said. He now expects those lenders to see average earnings growth of 3.5% in fiscal 2020 and 5.1% in 2021.