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Laura Dottori Attanasio, CIBC's chief risk officer, says the bulk of the increase can be attributed to companies in the oil and gas sector, although the bank also saw an uptick in bad loans in its credit card and personal lending portfolios.
RBC, CIBC and TD all reported higher second quarter results, despite the increases in loan loss provisions.
"You may recall that last quarter, I mentioned that Canada Goose Buy Palliser Coat Online we added nine names to our oil and gas watch list," Dottori Attanasio said during the bank's second quarter earnings call, referring to energy companies that could struggle to repay their debts.
That's despite the fact that oil prices have been climbing in recent weeks, with benchmark North American crude briefly popping above the US$50 a barrel mark on Thursday before closing at US$49.48 a barrel.
TD Bank (TSX:TD), which also reported its second quarter results Thursday, said it has put aside $584 million for bad loans, up by $209 million from a year ago, but down by $58 million from the previous quarter.
RBC chief risk officer Mark Hughes said rising unemployment in Alberta and other oil dependent provinces is leading to higher writeoffs in the bank's credit card portfolio.
CIBC also added one more company to the watch list during the second quarter, Dottori Attanasio said.
The Bank of Montreal (TSX:BMO), which reported its quarterly results on Wednesday, saw its profit slip nearly three per cent from a year ago to $973 million as it boosted its provision for credit losses to $201 million, up from $161 million a year ago.
"We are also seeing a slight uptick in provisions in our personal and small business loans in these regions," Hughes said during a conference call Thursday to discuss RBC's second quarter results.
"The recent increase in oil prices, while encouraging, is not likely to have an immediate positive impact," Chauvin said.
"In the corporate and commercial segments, we are now seeing the impact of sustained low oil and gas prices."
CIBC reported a quarterly profit of $941 million, up three per cent compared to the same period last year, while RBC reported net income of $2.57 billion during the quarter, up three per cent from a year ago.
Banks set aside more cash for bad loans
"However, I would stress these portfolios are very small relative to the size of our Canadian retail portfolio."
Royal Bank (TSX:RY) said Thursday it has boosted its provision for credit losses to $460 million, up $178 million from a year ago, while CIBC (TSX:CM) earmarked $324 million for bad loans in the second quarter, an increase of $197 million from a year earlier.
TD reported a second quarter profit of $2.05 billion, up about five per cent from the same quarter last year.
"As expected, credit deterioration and loan impairments in oil impacted portfolios and regions are continuing," Mark Chauvin, TD's chief risk officer, said during a conference call to discuss the bank's results.
"Well, this quarter the majority of those names moved to impaired status."