(Source: The Canadian Press)

Canadian bank earnings, due out this week, are expected to hit bottom this quarter amid significant loan losses due in large part to the declining value of commercial real estate.

Canada’s well-capitalized banks have fared much better than their counterparts south of the border throughout the recession, but are still taking hits as the downturn begins to slow.

One of the major factors expected to push banks’ earnings lower for the quarter quarter ended July 31 is mortgages on commercial real estate.

Unlike residential real estate in Canada, which has rebounded sharply in recent months – residential resale activity jumped 18.2 per cent in July from a year earlier – commercial real estate, mainly the office building sector, is still struggling.

Read Kristine Owram’s full article “Bank earnings expected to hit bottom in Q3 on commercial real estate loan losses” in the Canadian Press (August 23, 2009).

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