Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Bank of Canada Posts First Quarterly Loss in Its History

Stock Markets Nov 29, 2022 16:19
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Ketki Saxena 

Investing.com -- In a week of earnings from Big Canadian banks, we have the latest results from the biggest bank of all: the Bank of Canada. 

And the picture is far from rosy. For the first time in its  87-year history, the Bank of Canada incurred a quarterly loss. The Bank of Canada lost $522 million in the third quarter of this year, attributing the loss to interest charges on deposits at the bank, which have grown amid rapidly rising interest rates.

In a way, the situation is of the central bank’s own making: this year’s interest rate hikes spree has raised the cost of interest charges the BoC must pay on settlement balances deposited in the accounts of big banks. 

These settlement balances were used to pay for the BoC’s purchasing program of of government bonds, which it dramatically expanded during the pandemic to stimulate demand in the economy (quantitative easing). 

While interest expenses grow, the income received from government bonds remains fixed.The losses on settlement balances interest were enough to outweigh the bank’s increasing revenue from interest on its assets. 

The quarterly loss had been largely expected, with BoC governor Tiff Macklem preemptively addressing the situation at his appearance before the House of Commons finance committee last week. 

At the time, Mr. Macklem noted that "Following a period of losses, the Bank of Canada will return to positive net earnings”. He did not however provide an anticipated timeline for the expected period of losses, noting instead that it will depend on interest rates and the state of the economy. He noted the size and duration of the losses will depend on the path of interest rates and the evolution of the economy. 

Mr. Macklem also emphasized that the loss is an accounting concern, unrelated to the bank’s ability to conduct monetary policy.

Bank of Canada Posts First Quarterly Loss in Its History
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Van Sūka
Van Sūka Nov 29, 2022 16:56
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It's happening...
Dayle Chadbourne
Dayle Chadbourne Nov 29, 2022 16:27
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Im not surprised!
Greta Thunberger
GreenGreta Nov 29, 2022 16:24
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oh, so Trudeau taking on debt at the government level so we didn't have to is both false and recession invoking. Good job.
nick mattina
nick mattina Nov 29, 2022 16:24
Saved. See Saved Items.
This comment has already been saved in your Saved Items
fasten your seat belt this ride is going to be worse than the 1980's
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email