By the end of this year’s fourth quarter, the Big Six Canadian banks are preparing to report a drop in profits due to shortfalls experienced in the retail and wealth management sectors.
In order to offset these losses, banks are now signalling their desire to increase SME access to commercial lines of credit—as reported by Reuters November 27th, 2022.
That’s because despite the Bank of Canada’s ‘Year of Insanely High Interest Rates’, Canadian SME’s have continuted to access these debt-instruments responsibly—at near double the cost compared to last year.
In fact, CIBC, which has more than 50% of its business in the domestic retail market, is now expected to see a significant decrease in profits year over year due to lower demand on its Mortgage Book, prompting them to increase their debt provisions to protect share value and add to their Mid-Market Lending Portfolio.
The Rest of The 'Big 5' Are In The Same Boat
Although Scotia Bank was more aggressive in its debt provisions earlier this year, we can expect them to loosen credit further as they are now positioned well to build back their loan book and increase market share.
The Royal Bank of Canada, which has the largest Investment book out of the Big Six, is also expected to report a decrease in profits along with TD in the fourth quarter, although TD currently enjoys a strong hedge with profits generated from its US Retail Division.
So how does this benefit the average small to medium-sized Canadian company?
The Perfect Opportunity To Restructure Debt Covenants
What all of this means is that Canadian SME’s now have a great opportunity to reorganize their finances, restructure debt covenants, and increase their access to debt in a way that allows them to take advantage of the growth and acquisition opportunities sure to present themselves during the anticipated 2023 slowdown.
The bottom line is that Canadian banks will look to Mid-Market SME’s to help offset their losses and rejuvinate profits in 2023...
Creating perhaps on of the best opportunities in a generation for SME's to better position themselves for the eventual rebound.
In Finance, Having An Edge Is Everything...
For 18+ years, PubCo Reporting & Finance Solutions has helped companies restructure debt covenants and get access to better financing — accross Canada and throughout the world.
We know how to help your company access the funds it needs to expand and grow, and the best part is that it doesn't cost you a penny to find out about the financing-opportunities we have available to you.
We only get paid on closing and securing the funds that you need.
For a free, no obligation consultation, please feel free to reach out to us at email@example.com with a brief description of your company's financing needs, or call us anytime at 416-829-4749...
And get access to the financing that your company deserves today!
Matthew is president of PubCo Finance Solutions — A Division of PubCo Reporting Solutions, Inc . He has 15 years of progressive accounting experience as a CFO, and 10 years working in commercial banking for TD Securites, CIBC World Markets, and the EDC. If your company needs help with access to better financing, please feel free reach out to Matthew here.
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