One in four unemployed Canadians have been out of a job for more than six months: CIBC Economist
Canadian Imperial Bank of Commerce Chief Financial Officer Hratch Panossian said the pandemic-era buildup in deposits won’t be vanishing any time soon.
The extra cash socked away in bank accounts by consumers flush with stimulus payments and unable to spend the money on activities such as travel and entertainment is likely to remain as long as it isn’t “extracted” by some reversal of government support measures, Panossian said at a Barclays Plc conference.
“It probably works itself out through time, and through a fairly long period of time,” Panossian said Wednesday at the virtual event, adding that it could be a “multiyear” process.
CIBC had about $603 billion (US$477 billion) in deposits on its balance sheet at the end of July, up 21 per cent from January 2020, before the pandemic took hold in North America. Even as deposits are drawn down, CIBC can benefit from the process, Panossian said. Consumers spending that money may help the bank’s business clients, for example. Or, if clients invest the money, that could mean a transfer of the funds to the bank’s wealth business, he said.
“You might see this starting to move around in terms of different forms of cash,” he said, “but still in some way coming back to the bank.”