KBRA Releases Research Report: The Case for Canadian Banks

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases The Case for Canadian Banks
research report, which makes the following key points:

  • In KBRA’s opinion, the structure of Canada’s mortgage market
    substantially reduces banking system risk.
  • Canadian banks, which generally are prudent mortgage underwriters,
    dominate the mortgage market. In addition, a large portion of
    mortgages effectively carry a government guaranty.
  • KBRA rates Canada AAA, implying de minimus risk that the
    sovereign would not honor its guaranty.
  • KBRA views the Canadian banking system as having very solid financial
    strength owing to conservative policies, high-quality supervision, and
    the generally strong and stable macro profile of the Canadian economy.
  • KBRA notes that Canada is undergoing a slowdown, which could lead to
    an uptick in unemployment and further fall in housing prices—factors
    that do pose risks, especially in the context of high household debt
    and debt service levels.
  • A continued economic slowdown combined with housing price pressure may
    cause impaired loans and provisions for credit losses to gradually
    normalize from extremely low levels. However, KBRA believes these
    risks are quite manageable in terms of the banking system and the
    sovereign debt profiles.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus. KBRA is also recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.

Contacts

Analytical:
Joanna Drobnik,
CFA, Director
+353 1 588 1250
jdrobnik@kbra.com

Ashley Phillips, Director
+1 (301) 969-3185
aphillips@kbra.com

Joan Feldbaum-Vidra, Managing Director
+1 (646) 731-2362
jfeldbaumvidra@kbra.com

Joe Scott, Managing Director
+1 (646) 731-2438
jscott@kbra.com