{"id":7634,"date":"2021-02-23T23:35:05","date_gmt":"2021-02-23T23:35:05","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2021\/02\/23\/bmo-scotiabank-see-economic-winds-favouring-u-s-amid-speedier-vaccine-rollout\/"},"modified":"2021-02-23T23:35:05","modified_gmt":"2021-02-23T23:35:05","slug":"bmo-scotiabank-see-economic-winds-favouring-u-s-amid-speedier-vaccine-rollout","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2021\/02\/23\/bmo-scotiabank-see-economic-winds-favouring-u-s-amid-speedier-vaccine-rollout\/","title":{"rendered":"BMO, Scotiabank see economic winds favouring U.S. amid speedier vaccine rollout"},"content":{"rendered":"<div style=\"text-align:center\"><\/div><p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> Economy <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> Canada&#8217;s recovery may lag its southern neighbour by up to six months <\/p>\n<div class=\"article-meta\">\n<div class=\"published-by\">\n<p>Author of the article:<\/p>\n<p> <span class=\"published-by__author\">Geoff Zochodne<\/span> <\/div>\n<div class=\"published-date\">\n<p>Publishing date:<\/p>\n<p> <span class=\"published-date__since\">Feb 23, 2021<\/span> \u00a0\u2022\u00a0 <span class=\"updated-date__since\">5\u00a0hours ago<\/span> \u00a0\u2022\u00a0 <span class=\"published-date__word-count\">4 minute read<\/span> <\/div><\/div>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio featured-image-category__economy\"><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">People line up outside Yankee stadium for vaccines amid the coronavirus disease pandemic in the Bronx borough of New York City in February, 2021. Data show Canada had administered only 3.72 doses per 100 people as of Feb. 19, whereas U.S. deployment as of Feb. 21 was 18.86 doses per 100 people.<\/span> <span class=\"credit\">Photo by Reuters\/Carlo Allegri<\/span> <\/figcaption><\/figure>\n<\/header>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Two of Canada\u2019s biggest banks see a brightening economic picture in 2021, but expect the country\u2019s recovery to lag that of the United States, where the rollout of COVID-19 vaccines has been more rapid.<\/p>\n<p>The improving overall economic outlook helped both Bank of Montreal and Bank of Nova Scotia report better-than-expected earnings for their fiscal first quarters, which ended Jan. 31.<\/p>\n<p>However,\u00a0both banks \u2014 which on Tuesday became the first of Canada\u2019s Big Six lenders to report their first-quarter financials \u2014\u00a0see the U.S. economy faring better overall this year,\u00a0even though\u00a0Canada did a better job of containing the virus.<\/p>\n<p>\u201cIn Canada, there is a slower pace of vaccine rollout, as you know, but we are equally positive in time, we just think there\u2019s a little bit of a lag, maybe it\u2019s three months, maybe it\u2019s six months, before you get the same level of economic backdrop that you have in the U.S.,\u201d said Darryl White, BMO\u2019s CEO, in response to an analyst\u2019s question during a conference call.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-1\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Canada\u2019s big banks earn sizeable chunks of their profits in the U.S., giving them unique insight into relative economic conditions between the two countries and making their results something of a bellwether.<\/p>\n<p>Scotiabank is projecting Canadian real gross domestic product shrank an estimated 5.4 per cent in 2020 compared to a year earlier, figures included in its first-quarter investor presentation show. For 2021 and 2022, the forecast calls for the economy to expand by 5.3 per cent and 4.3 per cent, respectively.<\/p>\n<p>Meanwhile, Scotiabank estimates that U.S. real GDP contracted 3.5 per cent in 2020, but projects it to grow at 5.8 per cent in 2021 and 4.3 per cent in 2022.<\/p>\n<section aria-labelledby=\"moreTopicLabel\" class=\"more-topic\"><button aria-hidden=\"true\" class=\"more-topic__button-prev\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/><button aria-hidden=\"true\" class=\"more-topic__button-next\" tabindex=\"-1\" title=\"next\" type=\"button\"\/><\/section>\n<p>Although the U.S. economic recovery may be helped by President Joe Biden\u2019s stimulus plans, it will be affected as well by vaccination levels.<\/p>\n<p>While both countries have secured access to significant amounts of vaccine, Scotiabank cited figures from University of Oxford-based Our World in Data indicating that Canada had administered only 3.72 doses per 100 people as of Feb. 19, whereas U.S. deployment as of Feb. 21 was 18.86 doses per 100 people.\u00a0In Chile, where the bank also does business, it was 15.12.<\/p>\n<p>BMO\u2019s economic forecast called for Canada\u2019s unemployment rate to fall from 9.4 per cent in January to seven per cent at the end of 2021, which is \u201cstill high historically,\u201d it noted. In the U.S., the lender sees unemployment falling from 6.3 per cent in January to 4.7 per cent by year\u2019s end.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>White said a consequence of Canada\u2019s vaccine-related lag is that it will probably be longer, relative to the U.S., before the country\u2019s unemployment rate gets back to pre-COVID-19 levels.<\/p>\n<blockquote>\n<p>In 2022 &#8230; we&#8217;re pretty equally confident in both economies and very positive based on everything we can see<\/p>\n<p>Darryl White, BMO\u2019s CEO<\/p>\n<\/blockquote>\n<p>\u201cBut in 2022 \u2026 we\u2019re pretty equally confident in both economies and very positive based on everything we can see,\u201d White added.<\/p>\n<p>BMO said adjusted earnings per share for its fiscal first quarter clocked in at $3.06, up 27 per cent from the prior year. The consensus estimate of banking analysts had been for EPS of $2.15.<\/p>\n<p>The bank\u2019s results were boosted by a sharp drop in the amount of money it had to set aside for possible loan losses. In addition to its provisions for credit losses (PCLs), BMO also got a lift from its U.S. personal and commercial banking unit, which saw net income rocket up by 66 per cent from the prior year, to $582 million.<\/p>\n<p>\u201cWe are clearly looking at a much lower full-year PCL figure than we\u2019d previously anticipated,\u201d National Bank Financial analyst Gabriel Dechaine wrote in a note to clients on BMO. \u201cHowever, we could still be surprised to the upside if the pace of vaccinations accelerates.\u201d<\/p>\n<p>Scotiabank, meanwhile, said adjusted earnings per share was $1.88 for its first quarter, an increase of three per cent compared to the prior year. Analysts had been expecting adjusted EPS of $1.57.<\/p>\n<p>Like BMO, Scotiabank saw credit costs decline in the face of a more favourable economic outlook, which influences how much lenders set aside for potential losses.\u00a0The positively revised economic forecast also \u201cbodes very well\u201d for asset growth in Scotiabank\u2019s key markets, CEO Brian Porter said, including in the U.S., the lender\u2019s second-biggest in terms of earnings.<\/p>\n<p>\u201cEconomic conditions continue to improve across our Americas footprint,\u201d Porter said during his company\u2019s conference call. \u201cForecasts for economic growth have been revised higher since Q4, as reflation takes hold.\u201d<\/p>\n<p>National Bank of Canada and Royal Bank of Canada are scheduled to report their first-quarter results on Wednesday, followed by Canadian Imperial Bank of Commerce and Toronto-Dominion Bank on Thursday.<\/p>\n<p data-async=\"\"><em>\u2022 Email: gzochodne@postmedia.com | Twitter: <a class=\"twitter-follow-button\" data-evt=\"click\" data-evt-typ=\"User Interaction Click\" data-evt-val=\"{\" click=\"\" source=\"\" type=\"\" link=\"\" name=\"\" layout=\"\" element=\"\" null=\"\" feed=\"\" list=\"\" id=\"\" target=\"\" url=\"\" title=\"\" story=\"\" position=\"\" vertical=\"\" pixels=\"\" href=\"https:\/\/twitter.com\/geoffzochodne\" rel=\"noopener nofollow\">GeoffZochodne<\/a><\/em><\/p>\n<\/section>\n<section class=\"article-content__share-group article-delimiter\" data-evt=\"beforeunload\" data-evt-typ=\"scroll-depth\" data-evt-val=\"{\" control_fields=\"\" of=\"\" page=\"\" viewed=\"\" story=\"\">\n<h2 class=\"visually-hidden\">Share this article in your social network<\/h2>\n<\/section>\n<div class=\"widget article-content__widget-group article-content__widget-group--slot1\">\n<section aria-labelledby=\"TheLogic9938854360571119337954890801840489\" class=\"feed-section feed-section--partner-story list-widget--partner-story the-logic\" data-async=\"\">\n<div class=\"widget-title widget-title--partner-story flex-align-center row row--no-padding--left row--no-padding--right\">\n<p> In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n<div class=\"widget article-content__widget-group article-content__widget-group--slot2\">\n<section aria-labelledby=\"TopStoriesNewsletter5839858243574805093218653415241431\" class=\"newsletter-widget\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-target-list=\"FP_HeadlineNews\" data-widget=\"newsletter\">\n<div class=\"newsletter-widget__body\">\n<h2 id=\"TopStoriesNewsletter5839858243574805093218653415241431\">Top Stories Newsletter<\/h2>\n<p class=\"newsletter-widget__text\">Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n<div aria-hidden=\"false\" class=\"newsletter-widget__bottom js-form-main\">  <small> By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. 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