Scotiabank CEO sees Canadian housing slowdown, not crash

Tue Apr 9, 2013 2:45pm EDT
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By Cameron French

TORONTO (Reuters) - Bank of Nova Scotia (BNS.TO: Quote) Chief Executive Rick Waugh said on Tuesday that mortgage delinquencies have risen at Canada's third-biggest bank, but that he does not foresee a U.S.-style housing crash.

"We still anticipate what I would call in terms of housing, a soft landing, and all the metrics which we watch daily confirm that," Waugh told the bank's annual general meeting in Halifax, Nova Scotia.

His comments, part of an answer to a shareholder question about risks for the bank from the domestic housing market, came as data showed Canadian housing starts edged higher in March, offering some reassurance that the housing market is cooling rather than crashing.

Waugh said the rate of late payments at the bank has picked up, but said it anticipates no significant losses.

"Our delinquency rates with our customers are showing slightly elevated, but not significant, rises, and are well under control," he said.

Scotiabank, the No. 3 bank in Canada by market capitalization, is the most internationally focused of the country's banks, with operations in about 50 countries. But it still generates much of its income domestically and is heavily dependent on mortgage lending.

Canada's formerly hot housing market has begun to lose steam over the past year after the Conservative government, fearing the possibility of a property bubble, tightened mortgage rules.

While the decline in activity has been modest so far and prices have held steady in most markets, some point to Canadian consumers' record-high debt-to-income levels as a warning of a potential crash.   Continued...

Scotiabank's Chief Executive Officer Rick Waugh (L) talks prior to their annual general meeting at the World Trade and Convention Centre in Halifax, Nova Scotia, April 9, 2013. REUTERS/Michael Creagen