Peer Review: Canadian Banks (Macro Challenges Loom)

...Risks Manageable: Fitch Ratings believes Canadian banks are at an inflection point, but, barring a broad-based shock to employment or a rise in interest rates, we view the risks as manageable. Fitch has affirmed the ratings of BMO, BNS, CIBC, DESJ, NBC, RY and TD, reflecting the banks' solid operating performance over multiple economic cycles and global shocks. Although the Rating Outlook remains at Stable for these banks, except for RY, Fitch has a cautious view given current macroeconomic trends. RY's Negative Rating Outlook: In Fitch's view, RY's asset quality and future earnings volatility may be higher than those of similarly rated peers due to the bank's growing capital markets business. RY's tangible capital ratio, while satisfactory and supportive of the rating, compares less favorably to that of peers. Oil Lower for Longer: Canada's economy is more reliant on commodities than are global peers, making it vulnerable to the recent steady decline in commodity prices. This trend's impact...

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