If you do business with one of the country’s big financial institutions, there’s a decent chance you’ve been hit with an increase in bank fees in the past year. As it turns out, you can blame the alterations at least in part on the oil crash.
The country’s “big six” banks are expected to face financial pressure from their exposure to the oil sector – that is, to households and businesses with direct ties to the sector that borrowed from them throughout the boom.
It’s a near-certainty some customers will have difficulty paying back those loans which will dent profits at the bank.
The expected hit will be “hardly apocalyptic,” CIBC World Markets analysts said in a new research note.
But the analysts have cut their outlook for profit growth at the Big Six – comprised of Royal Bank, TD Bank, Scotiabank, the Bank of Montreal, CIBC and National Bank – by one per cent this year and two per cent next.
“We’re not headed for the bomb shelter just yet,” the analysts quipped.
Still, bankruptcy rates are beginning to trend higher in parts of Western Canada hit hardest by the downturn (see chart below), and calls to credit councilors are up substantially in places like Edmonton.
Fee hikes are one way banks are softening the blow from a rise in loan losses.
TD, for example, is implementing a raft of fee hikes TD Canada Trust customers at the beginning of March. The changes are similar to ones implemented by RBC and BMO in June and April, respectively, as oil prices were diving below $50 a barrel.
Among the new fees at TD Canada Trust is a $5 charge to cancel an Interac e-Transfer. If you want the bank to hold a post-dated cheque to be deposited in-branch, it will cost you $5. And if you want to transfer your Tax-Free Savings Account (TFSA) to another institution, it will cost you $75.
Combined, the six largest lenders earned $34.88 billion in net profit last year, up almost five per cent from $33.27 billion in 2014.