No recession in sight, says the National Bank

The head of the National Bank does not yet see a recession on the horizon. At least not yet.

Posted at 6:54 am
Updated at 4:09 p.m

Richard Dufour

Richard Dufour
The press

“The most likely scenario for the Canadian economy is a slowdown, a soft landing,” Laurent Ferreira said Wednesday on the sidelines of the National Bank’s quarterly earnings presentation.

“Although inflation has shown signs of slowing recently, it remains too high. The Bank of Canada is expected to hike interest rates further next month to dampen demand and ease inflationary pressures. Central banks will begin to focus on the impact of rate hikes on unemployment and may adjust accordingly. »

In his opinion, interest rates should normalize to just above the 3% mark in the autumn. In that scenario, the unemployment rate should stabilize at just over 5.5% in 2023, he said.

The Canadian economy remains strong in the eyes of the CEO. “There is an excess of savings. The unemployment rate is very low. And the high commodity prices are a godsend for the country’s economy. »

However, he notes that the current environment is “complex and uncertain”, dominated by high inflation, rising interest rates and heightened geopolitical risks.

As the official start of the Quebec election campaign approaches, Laurent Ferreira believes that near-term uncertainty (next 6 to 12 months) should be pushed aside and that the key economic issue must be long-term growth.

“I firmly believe in the reindustrialization of Quebec,” he said in an interview.

This is also a priority of the current government, adds Laurent Ferreira. “We have a lot to contribute to the energy transition. The province could exercise leadership. And even globally. »

For him, creating wealth in industries that benefit Quebec’s economy over the long term is the best way to position yourself against inflation.

“The energy transition is a very important phenomenon for the planet. But it’s also very inflationary for the economy in the long run. The best way to position yourself is to participate in the supply chain. Based on this energy transition, if we implement promising strategies that attract capital and talent to Quebec, we will be well-positioned to create long-term wealth and fight inflation. »

He is thinking in particular of the battery sector and new energy sources.

Results are in line with expectations

Profits at the country’s sixth-largest banking institution totaled 826 million for the months of May, June and July, down 2% from a year earlier.

Those earnings translate to $2.35 per share versus $2.34 that analysts had been expecting.

Management notes that the deteriorating macroeconomic outlook has led to higher loan loss provisions. A year ago, the more favorable macroeconomic environment had led to a release of loan loss provisions on non-impaired loans.

Stifel analyst Mike Rizvanovic described the quarterly performance as “solid” overall, noting that it’s also better than those previously reported by Canada’s other big banks, Royal and Scotia.

CIBC and TD will release their results on Thursday, while BMO will follow next Tuesday.

While shares in Royal fell 2.6% on the Toronto Stock Exchange on Wednesday, shares in National Bank lost 1%.


The National Bank also announced on Wednesday the appointment of Étienne Dubuc as Senior Executive Vice-President and Co-Head of Financial Markets. He will officially take up the position alongside current incumbent Denis Girouard on 1st January 2018ah November.

Étienne Dubuc will join the bank’s management team and report to the CEO.

Étienne Dubuc is currently Executive Vice-President and Managing Director, Head of Equities, Currencies and Commodities and Co-Head of Financial Markets Risk Management Solutions. He has been with the bank for 23 years.

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