'It's gonna get worse': Banks are bracing for bad loans, but the trouble is only getting started

This advertisement has not loaded yet, but your article continues below.“We’re starting to see some stress on the system and ergo … we’re seeing the uptick in provision for credit losses,” he said.

In a Sept. 5 note to clients, CIBC Capital Markets analyst Paul Holden said his team is assuming an average PCL ratio of 37 bps for 2024, which it categorizes as a soft landing or mild recession. Among the major Canadian banks, Canadian Imperial Bank of Commerce saw the biggest jump in total PCLs in the third quarter.CIBC said the increase in total provisions for the quarter was primarily due to “a more unfavourable change in our economic outlook” and higher impairments across all business units. Most of this came from provisions on performing loans.

The Bank of Montreal’s PCLs of $492 million were up 261 per cent year over year in the third quarter, but now include results from U.S.-based Bank of the West, the acquisition of which was completed in February. Excluding the contributions of the U.S. bank, the annual increase was 190 per cent, while the increase over the second quarter was 34 per cent.

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