In This Article:
Ottawa needs to appoint a “non-partisan head of deregulation” to help remove red tape and boost Canada’s struggling productivity levels in the face of United States President Donald Trump’s crippling tariffs, says the head of one of the country’s Big Six banks.
Laurent Ferreira, chief executive of National Bank of Canada, said Canada also needs to reduce taxes on businesses, accelerate permits, remove interprovincial trade regulations, adopt a Buy Canada Act and focus on ways to utilize its natural resources to boost its economy.
“There has been a considerable decline in our productivity and GDP per capita,” he said on a call with investors on Wednesday. “Canadian companies are facing excessive regulation and oversight. Added to the mix, we face a U.S. administration with a pro-business and protectionist agenda.”
Canada’s biggest banks are releasing their first-quarter earnings results this week, with United States President Donald Trump expected to impose tariffs on Canadian exports to the U.S. next week, a move some economists say could trigger a recession in Canada.
Results released by the Bank of Montreal and Bank of Nova Scotia on Tuesday included a slight monetary cushion in case Trump approves his planned tariffs. If the proposal to apply a 25 per cent tariff on most Canadian products goes through, both banks expect to keep more money aside in the second quarter to tackle credit losses.
National Bank’s provisions for credit losses (PCLs) — the money lenders keep aside to tackle loans that may go bad — jumped to $254 million in the first quarter from $120 million in the same quarter a year ago and was higher than analysts’ expectation of $193 million. The bank did consider the impact of Trump’s tariffs while assessing its PCLs, but it didn’t incorporate any “material impact.”
However, the Montreal-based bank beat analysts’ expectations otherwise on higher revenue growth in all business segments.
Its net income for the three months ending Jan. 31 was $997 million, up from $922 million during the same period a year ago, resulting in net earnings per share of $2.78.
Adjusted earnings, which exclude certain items related to National Bank’s acquisition of Canadian Western Bank, were $1.05 billion, down from $922 million a year ago, resulting in adjusted earnings per share of $2.93 compared to analysts’ expectations of $2.65 per share.
While analysts described National’s beat as a positive, they were concerned about the jump in PCLs.
“We don’t want to totally dismiss (National Bank’s) Q1 beat, but the fact that … PCLs and expenses missed certainly colours our view,” Meny Grauman, an analyst at the Bank of Nova Scotia, said in a note on Wednesday that called the results a “modest negative.”