Canadian bank CEOs bet vaccine will 'overtake' virus, aiding economic recovery

Nichola Saminather
·2-min read

By Nichola Saminather

TORONTO (Reuters) - Canadian bank heads forecast a rosier growth outlook for 2021 and 2022 on Monday, counting on the rollout of coronavirus vaccines to help drive an economic recovery and release billions of dollars worth of pent-up consumer demand.

The approval of vaccines to prevent the spread of COVID-19 prompted the banks' chief executives to strike a more optimistic tone at the RBC Capital Markets Canadian bank CEO conference.

"We may see a drastically better economic environment in the back half of 2021," Bank of Montreal Chief Executive Darryl White said. "When we get through the next two to four months, and see the vaccine overtake the virus, then we'll be in a period where loan growth, toward the back end of the year, can begin to be very substantial."

White expects economic growth of as much as 5% in Canada this year while the central bank expects gross domestic product (GDP) to rise 4.2%.

Canada's federal government had distributed enough vaccine to give about 1.5% of the country a first dose, and the most populous provinces have vaccinated roughly 0.7% to 1% of residents, according to data compiled by Reuters, mainly health-care workers and some elderly care-home residents.

Some 4.5 million Canadians have to be vaccinated before the economy opens up, something that can be achieved in 100 days, said Dave McKay, CEO of Royal Bank of Canada, the country's largest lender.

"We're definitely feeling good about things," he said. "There's a lot of frustrated spending sitting on the sidelines that I think it will come back quite quickly."

McKay said continued strength in housing demand, partly driven by immigration growth as travel restrictions are lifted, is fueling confidence the bank will beat its forecast of slower mortgage growth this year.

Canada's biggest banks ended fiscal 2020 with better than expected earnings, but warned of an uneven economic recovery and a slower housing market.

"We're probably better off today in saying there's going to be a steady improvement than we were 90 days ago" when a vaccine was still uncertain, said Bharat Masrani, chief executive of Canada's second-largest lender Toronto-Dominion Bank.

(Reporting By Nichola Saminather; Additional reporting by Allison Martell; Editing by Marguerita Choy and Jonathan Oatis)