National Bank of Canada's Q2 provision for bad energy loans soars
May 5 (Reuters) - National Bank of Canada estimated that it would set aside C$250 million ($195 million), before taxes, in the quarter ended April to cover bad loans to the oil and gas industry.
The lender said on Thursday it expects provisions for credit losses, which totals C$183 million after tax, to reduce earnings per share by about 54 Canadian cents in the second quarter.
The provision is much higher than C$17 million National Bank had set aside to cover bad energy loans in the first quarter.
The bank also said it will revise downward its annual credit loss forecast to 20-30 basis points from 25-35 basis points of total loans when it reports second-quarter results on June 1.
RBC Capital Markets said the new provision accounts for 8 percent of National Bank's oil and gas portfolio and brings the total provisions so far to about 10 percent of its energy portfolio, closer to U.S. bank levels of reserving.
Canadian Western Bank's said on Tuesday it set aside more money to cover bad loans to oil companies.
A slide in oil prices since mid-2014 has forced banks to cut credit lines for oil and gas companies. ($1 = C$1.28) (Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza)
© Thomson Reuters 2017 All rights reserved.