Canadian banks are profitable operations, but how much will falling energy prices hurt them? The Banker collected the direct oil and gas exposure for Canada’s largest five banks – Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD Bank), Scotiabank, Bank of Montreal and Canadian Imperial Bank of Commerce (CIBC).
Scotiabank emerges as having the largest corporate exposure. The bank holds C$17.9bn ($13.4bn) in drawn and C$14.1bn in undrawn commitments to oil and gas firms (see chart one). Drawn commitments are known while undrawn commitments are an estimate of the contractual amount that may be drawn by the debtor. Scotiabank is the most internationally active of the 'big five', mostly in emerging markets that are also suffering from the commodity rout. In the first quarter of 2016, Scotiabank had a joint C$68.63bn exposure to Asia, Latin and Central America; however, the bank actually saw a 5% profit gain on the back of the higher international business earnings in the first quarter of 2016.
