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Canadian banks’ earnings could take a hit if oil prices stay low for an extended period, reports the Financial Post.
Citing analysts at CIBC World Markets, the report says losses could be in the 6% to 7% range. “They based their analysis on the oil and gas credit exposure of Canada’s six largest banks, and the impact on loans and recoveries historically when energy prices fell.
“The analysis also took into account the expected decline in underwriting revenues that would affect the capital markets divisions of the financial institutions. The energy sector is pegged at accounting for roughly 10% of capital markets revenue,” explains the report.
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