Canadian Banks’ Revenue Threatened By Falling Oil Prices.
TORONTO – Oil prices that reached a five-year low on Friday are starting to take a bite out of profits at TD Bank (TSX:TD) and raising concerns for the rest of the country’s top lenders.
Canada’s biggest banks earn up to 20 per cent of their revenues through providing investment and corporate banking services, with oil and gas companies an important part of that client base.
But with oil prices slipping — they have tumbled roughly 35 per cent to under $70 a barrel from their mid-summer highs due to a strong U.S. dollar, low demand and a glut of global supply — TD Bank says it will have to look beyond the oilpatch to make up its investment banking revenue.
“With the current activity going on in oil pricing, it certainly is impacting activity levels in the business,” Bob Dorrance, the head of TD’s wholesale banking division, told investors during a conference call earlier this week after the bank reported its fourth quarter results.
“Things have slowed down.”
Scotiabank was the last of Canada’s five big banks to report its quarterly earnings this week, wrapping up a series of conference calls that were peppered with talk about falling oil prices.
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