TD CEO: Canada has lost some of its appeal for foreign investors
The chief executive officer of Toronto-Dominion Bank is dismissing the bear case against Canada's big banks.
In an interview with BNN Bloomberg, Bharat Masrani brushed off fears this country's lenders could be dragged down by a looming wave of losses in their loan books.
"We are not sensing it. You know, this credit environment has been extraordinarily benign," he told Amanda Lang. "Having been in the risk business many years ago, I'll say it is remarkable."
The so-called Great White Short has fetched plenty of attention in recent years, as global investors have warned Canada's economy would be thrown off track by an inevitable housing market collapse.
While that bet hasn't panned out as hoped, a Bay Street analyst recently made headlines with sell ratings on all of the Big Six banks. Veritas Investment Research's Nigel D'Souza based his recommendation for clients to lighten up on bank stocks on an expectation loan loss provisions will rise amid punishing debt-service ratios in Canada. And in an interview with BNN Bloomberg, he warned shares of the Big Six could fall 20 per cent this year.
Rising provisions for credit losses were indeed a theme in the banks' most recent quarterly reporting season, but Masrani argued TD's uptick in cash set aside for sour loans was seasonal in nature.
"We are not seeing any signs to suggest that there's a major credit problem emerging here," he told BNN Bloomberg.
Masrani also applauded regulatory intervention that has tamed prices in Canadian housing markets as "very positive" policies.
"I'm not worried that we're going to see the bottom fall out of housing," he said.
"There's lots of publicity around this. There is, I'm sure, lots of trading strategies that get written on what's going to happen to Canadian housing and, by implication, Canadian banks. I personally feel this is a very manageable situation for TD. I can say that with confidence."