TEXT-Fitch: Canadian bank earnings growth to moderate in 2013

Tue Feb 26, 2013 1:30pm EST
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Link to Fitch Ratings' Report: Canadian Banks: 2012 Results and Performance
OutlookFeb 26 - Earnings growth for the top-six Canadian banks will moderate in
2013, according to Fitch Ratings. Fitch's ratings, however, incorporate the
expectation that profitability at these institutions will remain at sound

Fitch expects future earnings performance will come against a relatively less
favorable backdrop of various market conditions. These include ongoing risks in
the Canadian housing market, global economic headwinds, slowing loan growth,
margin compression, increased provisions, and greater competition.

In Fitch's view, the main domestic threat to Canadian bank stability is the
record level of consumer indebtedness and the risk of overvaluation in the
housing market. The increased vulnerability of Canadian households to an adverse
shock could pressure Canadian banks' ratings should borrowers' ability to pay
weaken due to a worsening of domestic or global economic conditions.

Capital levels are commensurate with the Canadian banks' asset mix and loss
experience and leave the banks well positioned to withstand a moderate housing
stress. Continued profitability has aided in preparing for higher capital
requirements under Basel III rules effective in 2013, ahead of the international
2019 deadline.

Following a peer review, Fitch affirmed its ratings on the big six Canadian
banks with a Stable Outlook on Jan. 28, 2013. Fitch views the risk associated
with the Canadian housing market and the global economic headwinds to be
mitigated by the banks' solid capital levels, sufficient liquidity positions,
and consistent earnings profiles.

The 'Big-Six' banks in Fitch's portfolio are: Bank of Montreal, Bank of
Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of
Canada, Toronto-Dominion Bank and National Bank of Canada

The full report 'Canadian Banks: 2012 Results and Performance Outlook' is
available at 'www.fitchratings.com.'

Additional information is available at 'www.fitchratings.com'.