DBRS Morningstar Publishes "Large Canadian Banks: Funding and Liquidity Profiles—Better Prepared Now for a Shock"

DBRS Limited (DBRS Morningstar) published a commentary titled “Large Canadian Banks: Funding and Liquidity Profiles—Better Prepared Now for a Shock,” which examines the funding and liquidity profiles of the six large Canadian banks.

Key highlights include:

-- The six large Canadian banks maintain strong liquidity and funding profiles, with almost half of their funding coming from deposits.
-- Usage of wholesale funding by these banks remains manageable, with all banks having access to diversified sources of funding.
-- To add diversity to their funding sources, these banks continue to tap financial markets outside of Canada.
-- To reduce liquidity risk from wholesale funding, these banks have built up unencumbered liquid assets on their balance sheets.
-- These banks meet or exceed recently introduced global regulatory liquidity requirements such as the liquidity coverage ratio. We consider them well positioned to achieve compliance with the net stable funding ratio in 2021.
-- Overall, we view these banks as well positioned to deal with unforeseen shocks in wholesale funding.

“With the large Canadian banks not immune to liquidity risk, we have examined the funding and liquidity profiles of these banks to consider their ability to weather a stressed environment. We currently assess their funding and liquidity profiles as being strong to very strong and view them as well positioned to deal with unforeseen shocks,” said Robert Colangelo, Senior Vice President, Global Financial Institutions Group. “Any significant deterioration in their funding profiles could lead to negative ratings pressure,” he continued.

Notes:
A copy of this commentary is available by contacting us at [email protected].

For more information on this credit or on this industry, visit www.dbrs.com.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada