🍁 Allowance for Credit Losses (ACL) of Big 6 Banks:
| Bank | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| TD | 0.72% | 0.72% | 0.72% | 0.72% | 0.69% | 0.69% | 0.69% | 0.69% | 0.69% | 0.70% | 0.71% | 0.71% | 0.70% | 0.71% | 0.74% | 1.03% | 1.24% | 1.26% | 1.22% | 1.08% | 1.03% | 0.97% | 0.93% | 0.87% | 0.85% | 0.86% | 0.86% | 0.87% | 0.87% | 0.89% | 0.89% | 0.91% | 0.93% | 0.95% |
| RBC | 0.43% | 0.43% | 0.43% | 0.43% | 0.42% | 0.40% | 0.56% | 0.55% | 0.54% | 0.53% | 0.55% | 0.54% | 0.53% | 0.54% | 0.54% | 0.86% | 0.91% | 0.91% | 0.87% | 0.81% | 0.68% | 0.60% | 0.58% | 0.49% | 0.49% | 0.50% | 0.53% | 0.56% | 0.58% | 0.61% | 0.64% | 0.63% | 0.63% | 0.64% |
| BMO | 0.60% | 0.57% | 0.57% | 0.57% | 0.53% | 0.53% | 0.49% | 0.48% | 0.48% | 0.46% | 0.45% | 0.45% | 0.46% | 0.46% | 0.49% | 0.63% | 0.79% | 0.82% | 0.79% | 0.76% | 0.69% | 0.62% | 0.56% | 0.54% | 0.52% | 0.53% | 0.54% | 0.59% | 0.62% | 0.64% | 0.65% | 0.67% | 0.70% | 0.72% |
| Scotiabank | 0.90% | 0.91% | 0.89% | 0.87% | 0.81% | 0.80% | 0.97% | 0.96% | 0.98% | 0.93% | 0.91% | 0.91% | 0.89% | 0.86% | 0.85% | 0.96% | 1.19% | 1.28% | 1.28% | 1.12% | 0.98% | 0.89% | 0.83% | 0.77% | 0.74% | 0.73% | 0.75% | 0.77% | 0.80% | 0.88% | 0.88% | 0.89% | 0.90% | 0.88% |
| CIBC | 0.57% | 0.53% | 0.51% | 0.49% | 0.44% | 0.44% | 0.44% | 0.43% | 0.43% | 0.43% | 0.44% | 0.44% | 0.45% | 0.48% | 0.48% | 0.72% | 0.80% | 0.84% | 0.82% | 0.74% | 0.65% | 0.61% | 0.58% | 0.56% | 0.54% | 0.58% | 0.59% | 0.63% | 0.69% | 0.72% | 0.74% | 0.71% | 0.71% | 0.70% |
| National Bank | 0.62% | 0.61% | 0.60% | 0.56% | 0.55% | 0.51% | 0.53% | 0.52% | 0.51% | 0.49% | 0.50% | 0.50% | 0.51% | 0.49% | 0.49% | 0.74% | 0.81% | 0.81% | 0.81% | 0.76% | 0.69% | 0.64% | 0.58% | 0.54% | 0.54% | 0.55% | 0.56% | 0.57% | 0.59% | 0.61% | 0.61% | 0.60% | 0.63% | 0.64% |
During the COVID era (2020–2021), ACL levels spiked, but at other times, they have remained between 0.5% and 1% of gross loans. RBC stands out for its conservative risk appetite, while Scotiabank has historically taken on the highest level of risk.
Key Observations:
- 🔹 Then vs. Now: ACL Levels in Context
The latest ACL levels (Q4 2024) are comparable to those in Q4 2016, a notably stable year. However, 2025 presents unique challenges:
- Economic slowdown that began in 2024.
- Population stagnation, with potential negative growth.
- A looming 25% tariff on Canadian exports to the U.S., threatening economic stability.
- 🔹 Preparedness for Defaults
With an ACL of 0.78% of gross loans, banks are equipped to handle short-term defaults at this rate. However, a major economic downturn, potentially triggered by the proposed 25% tariffs, could significantly strain these allowances.
- 🔹 Risk Appetite and ACL Trends
RBC has consistently shown the lowest risk tolerance, reflected in its lower ACL levels. Scotiabank, known for its higher risk appetite, driven partly by its presence in Latin America, has historically maintained the highest ACL. Recently, however, TD has overtaken Scotiabank in ACL levels.
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