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Scotiabank falls on higher loan loss provisions
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TC Energy and Suncor expect higher costs in 2023
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Annualized Q3 GDP data better than expected
By Johann M Cherian
Nov 29 (Reuters) – Canada’s main stock index rebounded on Tuesday, following crude oil and metals prices, although the Bank of Nova Scotia controlled its gains after announcing an increase in provisions for loan losses in the fourth trimester.
As of 10:09 a.m. ET (1509 GMT), the Toronto Stock Exchange’s S&P/TSX Composite Index was up 82.73 points, or 0.41%, at 20,303.22.
Scotiabank fell 1.7% as a lull in its investment banking division weighed on revenue in its capital markets unit. The financial services sector fell 0.1%.
“If I were the CEO of a Canadian bank right now, I would look at my stock price and earnings which have held up well, and look to take this opportunity to protect the balance sheet in case things get worse.” , said Barry Schwartz. , portfolio manager at Baskin Financial Services.
As profits from Canada’s big banks begin to roll in, Schwartz expects them to increase provisions for bad debts as financial institutions brace for the most anticipated recession of all time.
Among the gainers, the energy and materials sectors rose between 1% and 2%, following oil and metals prices which rose on hopes that a relaxation of China’s strict COVID-19 controls stimulate demand from the main consumer.
However, Suncor Energy Inc and TC Energy Corp fell 1.2% and 3.6%, respectively, on higher 2023 cost guidance due to macro pressures, while TC Energy’s costs were also tied to the delay of its Coastal GasLink pipeline.
“Energy company capital expenditure financing has increased with higher rates and so if the Bank of Canada wanted to slow the economy, I have to say it works,” Schwartz added.
Meanwhile, gross domestic product data rose at an annualized rate of 2.9%, according to a Reuters poll, in the third quarter, led by exports and non-residential structures.
Royal Bank of Canada rose slightly as part of its agreement to purchase HSBC’s operations in Canada for $10.04 billion. ($1 = 1.3441 Canadian dollars) (Reporting by Johann M Cherian in Bengaluru; Editing by Shailesh Kuber)