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Four out of five COVID-19 deaths have been linked to seniors homes. That says a lot about how Canada regards its elders – National Post

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What went wrong? What can Canada do to fix it before the next wave hits? This look at the tragedy in Canada’s long term care homes and the emergency measures to protect the most vulnerable is part of the Post’s ongoing Lessons from a Pandemic series.

From the first COVID-19 outbreak in British Columbia to the devastation in Ontario and Quebec, seniors in long term care have been hit hardest by the coronavirus pandemic.

The causes for this are not only demographic and epidemiological. They also reveal the weak points of an elder care system that has long been recognized as failing, but never actually made to succeed, until it was too late.

Now Canada’s long term care home system is being remade on the fly through emergency legislation to cope with the pandemic.

Canadian Forces troops are deployed to help as long as needed, to maintain what Ontario Premier Doug Ford called an “iron ring” around long term care homes.


North Vancouver’s Lynn Valley Care Centre where Canada’s first known COVID-19 death occurred on March 8.

Jennifer Gauthier/Reuters/File

Provincial laws have been drawn up to staff long term care homes with more casual labour with lower training requirements, and to loosen the complaint reporting requirements on private management. There are political noises about long term fixes, and major disagreements are being staked out on the role of private providers. What those reforms look like, if they ever come, will say a lot about how Canada regards its seniors.

Canada’s first known death in this pandemic occurred on March 8, when a man in his 80s died at the Lynn Valley Care Centre in North Vancouver.

Briefly, that site was the focus of the public concern, until new focal points emerged — the Pinecrest Nursing Home in Bobcaygeon, Ont., the Résidence Herron in Dorval, Que. — until they all became single stars in a countrywide constellation of seniors home outbreaks, many of them completely overrun by infections, people dying in some cases faster than their bodies could be removed.

Quebec has called in more than 1,000 military medical personnel such as nurses and paramedics, Ontario a smaller number, backed by support troops, which Defence Minister Harjit Sajjan said was “not a typical Canadian Armed Forces operation.”


A Canadian soldier aids a resident at the Vigi Queen Elizabeth care centre in Montreal.

Genevieve Beaulieu/Canadian Armed Forces/AFP via Getty Images

More than four out of five deaths, or approximately 4,000, have been of seniors in long term care homes, plus significant numbers of staff.

The vast over-representation of long term care home residents in Canada’s death toll has revealed a terrible aspect of the pandemic —  that the weakest and most vulnerable in our society are in the most dangerous places.

The institutionalized elderly are a unique class, not quite like inmates in prisons, who are being punished, and not quite like patients in hospitals, who are surrounded by the trappings of high level medical care.

Rather, through nothing more than their own age and infirmity, they are forced to endure the greatest exposure to the coronavirus risk, to live communally with other victims, surrounded by cinderblock walls, attended to by overwhelmed staff who turn to overwhelmed private management for support, and do not always get it, as new litigation has revealed.

In some segments of society, the pandemic’s heavy burden on the aged has created a selfish optimism among the relatively young and healthy, especially in America, where loyalists of President Donald Trump aim to justify an economic re-opening, despite the continued preventable deaths of society’s most accomplished and experienced members.

In Canada, Prime Minister Justin Trudeau has been more empathetic in his messaging about the problem, but was clear not to take over federal responsibility for it, offering only to “help the provinces find lasting solutions” to these “serious, underlying challenges.”

“COVID-19 has exposed some uncomfortable truths about our society, including how we care for seniors in Canada,” Trudeau said this week. “We’ve seen heartbreaking tragedies in long term care facilities and nursing homes right across the country. Overworked staff, understaffed residences, grieving families.”

Jagmeet Singh, the federal NDP leader, told CTV’s Question Period that Canada should end the private provision of long term care and bring all such homes under new federal regulation.

“I think we need to end them, I think there’s no question about it given the results we’re seeing, the evidence we’re seeing that some of the worst conditions that seniors are in and some of the highest deaths have happened in the for-profit long term care homes,” he said

His suggestion illustrated a broad theme of pandemic response in Canada, which is that it has largely been a provincial patchwork rather than a coordinated national program, especially on matters that are federally funded but constitutionally under provincial control, such as health care and education.

This is also partly the result of Toronto’s SARS outbreak in 2003, and efforts by provinces since then to update their emergency management legislation.

But even that is being done again on the fly, in response to new crises and disagreements over how to handle the pandemic at the institutional level.

Ontario moved this week to give the provincial government authority to replace management at long term care homes, but has not used the new power. The Ford government also said it would review its long term care system after the pandemic, but only internally, not via a public or independent inquiry. Minister of Long Term Care Merrilee Fullerton said all forms of review are “on the table.”

“We know the system’s broken,” Ontario Premier Doug Ford said. “We’re going to have a complete review, not just of long term care — I think the whole system of government.”

The problems are not just systemic, they are also architectural. Radio-Canada reported this week that the Vigi Mont-Royal home in Montreal was completely infected, with every single resident and 148 workers testing positive, according to an internal document, which noted a ventilation system was faulty and need to be cleaned and repaired.

We know the system’s broken

Many homes have residents in shared rooms, with common eating areas and washrooms, on wards that were not designed to facilitate isolation.

The problems are also legal, about workers rights and the ability of an industry to protect those who carry out its most crucial functions of feeding and caring for the elderly.

One long term care home in Niagara Falls has been hit with a proposed class action lawsuit over its handling of an outbreak that killed 18 residents, for allegedly failing to train staff and having them move between patient rooms in the same protective gowns.

There is a similar dispute by registered nurses working at four privately owned long term care homes in Ontario, who allege management failed to provide personal protective equipment and failed to launch pre-existing pandemic plans, resulting in widespread exposure of uninfected people to symptomatic patients who had not yet formally tested positive. In some cases, staff were allegedly forced to care for patients who were confirmed positive wearing only surgical masks.

They filed union grievances, but that system takes too long to resolve, so the Ontario Nurses Association asked Ontario Superior Court for what Judge Ed Morgan described as an “unusual” form of urgent action from the bench.

Morgan was scathing as he granted the nurses request and ordered the homes to obey a provincial government directive about providing personal protective equipment.


Words of encouragement and thanks for frontline workers are seen on a fence at Anson Place Care Centre in Hagersville, Ont. More than a dozen residents of the long-term care centre and retirement home have died of COVID-19.

Peter J. Thompson/National Post

The long term care homes had unsuccessfully argued that the balance of convenience should favour their interests, because if nurses decide who gets masks, the entire province could suffer a shortage. As Judge Morgan put it, the long term care homes “suggest that nurses and other medical staff treating COVID-19 patients in LTC homes represent their own narrow, personal interests, while the privately-owned LTC homes represent broad, community-based interests.”

The judge was having none of that.

“I can imagine that the irony of that submission is not lost on the (nurses),” he wrote. “One need only read the affidavits of the individual nurses in this Application record to understand that they spend their working days, in particular during the current emergency situation, sacrificing their personal interests to those of the people under their care. And given the nature of the pandemic, they do this not only for the immediate benefit of their patients but for the benefit of society at large. To suggest that their quest for the masks, protective gear, and cohorting that they view as crucial to the lives and health of themselves and their patients represents a narrow, private interest seems to sorely miss the mark.”

Canada’s latest national numbers show 70 per cent of deaths from COVID-19 have been of people over 80, and 25 per cent of people between 60 and 79.

• Email: jbrean@nationalpost.com | Twitter:

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Some Quebecers won't have their power back until this weekend, Hydro-Québec says – CBC.ca

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Hydro-Québec says crews are still working on restoring power to more than 80,000 customers in the province and that it could take until this weekend to get everyone back on the grid. 

Thousands of residents have been left in the dark since Saturday following a fierce spring storm that swept across large swaths of the province, downing trees and power lines. 

The most affected region remains the Laurentians, where roughly 50,000 customers are still without electricity.  As of Wednesday afternoon, some 18,000 customers in the Lanaudière were without power and more than 15,000 in the Outaouais.

At a news conference Wednesday in Morin-Heights, a small, hard-hit town in the Laurentians, Hydro-Québec president and CEO Sophie Brochu said crews are working “as quickly as possible” to restore power to all households. 

“We will not leave until everyone has been reconnected,” she told reporters. 

WATCH | Hydro-Québec president explains when power will be restored: 

Crews are working ‘as fast as we can,’ says Hydro-Québec president

8 hours ago

Duration 0:45

Sophie Brochu says more crews are expected to be deployed to remote regions to help restore power to affected households, with the goal of being “really far” into the process as of Saturday.

Brochu said the public utility has about 700 crews — or 1,400 people — working around the clock, including crews from private contractors, regions that haven’t been affected by the outages and even some from New Brunswick. 

Régis Tellier, vice-president of operations and maintenance at Hydro-Québec, said he hopes to have 50,000 customers reconnected by the end of the day, “but we cannot hope to reconnect all customers before Friday, perhaps even beyond.”

Residents kept in the dark, says mayor

Morin-Heights was battered by Saturday’s storm. Trees were seen toppled over cars and on roofs, and power lines littered the streets.

Mayor Tim Watchorn said as of Wednesday, 75 per cent of residents are still without power. And while the public utility is urging patience, he said people in the community are starting to feel frustrated.

“[Hydro-Québec] can’t give us a timeline as of now,” he said. “People find it difficult not knowing.”

Mayor Tim Watchorn says 75 per cent of Morin-Heights residents are still without power. (Marika Wheeler/CBC)

Because many residents rely on wells, even showering and using the washroom is impossible for some. With no internet, phones or stoves, many are left feeling cut off from the world.

“It’s hard to not know what’s happening and when you’re going to get your power back,” Watchorn said. 

Chalet Bellevue, the local community centre, has been transformed into an emergency shelter since the weekend storm.  A generator has been hooked up allowing people to charge their phones, cook, get water and take showers.

On Wednesday, Patricia Clark was at the community centre trying to download books to read on her iPad. She was grateful to finally plug back in since she hasn’t had power in her home since Saturday afternoon.

“It was very painful throwing out everything in the fridge and the freezer … but Morin-Heights has been excellent though, they give you, you know, everything.”

Downed trees, terrain causing delays 

Hydro-Québec says the size of the affected area is a key reason for the delays in getting the light backs on. 

The violent storm hit a portion of territory 300 kilometres long by 100 kilometres wide, according to Brochu, ranging from the Outaouais to Quebec City.

She said half a million customers lost power within three to four hours and more than 554,000 customers were without electricity at the height of the event. 

“It was crazy,” she said. “Since the ice storm, that’s pretty much the biggest event we’ve seen.” 

Brochu said the complex nature of the work to be done in some regions could also pose risks and create complications, causing further delays. 

Some 700 Hydro-Québec crews, or 1,400 people, are working to restore power across the province.

Crews must remove power lines that have fallen to the ground under the weight of uprooted trees, replace hundreds of poles and navigate difficult terrain that sometimes prevents work trucks from getting to the affected areas, she said. 

Brochu said repairs in remote areas only restore service to a small number of customers at a time, hence the plateau in the number of customers regaining power. 

“We know you’re there, we’re going to work as hard and as fast as we can,” she assured residents. 

As of Wednesday afternoon, more than 470,000 customers had had their power restored. The power is back on for all households in the Mauricie, Quebec City and Montreal regions.

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Stock market news live updates: Stocks end choppy session higher after FOMC minutes – Yahoo Canada Finance

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U.S. stocks pushed higher at the close of a choppy session on Wednesday as investors considered a slew of company warnings on the impact of inflation to earnings alongside the Federal Reserve’s latest communications about using their policies to rein in rising prices. The Fed’s May meeting minutes reaffirmed that central bank officials saw additional 50 basis point rate hikes as appropriate over the next couple meetings.

The S&P 500 wobbled but then gained Wednesday afternoon after the release of the Fed minutes, which also noted that more aggressive tightening and “a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and risks to the outlook.” The Dow and Nasdaq each also rose. Treasury yields mostly declined, and the benchmark 10-year yield fell to hold just above 2.75%.

Investors this week have also eyed a growing list of companies citing the effects that inflation have had and will have on results going forward. Retailers including from Walmart and Target last week to Dick’s Sporting Goods (DKS) and Abercrombie & Fitch (ANF) this week slashed their earnings forecasts for the year as the companies absorbed rising goods and transportation costs. And elsewhere, Snap (SNAP) warned earlier this week that it would post weaker-than-expected sales and profit results this year as the macroeconomic environment “deteriorated further and faster than anticipated.” This was taken as a harbinger of softer results for a bevy of ad-driven tech stocks, sending the Nasdaq Composite to its lowest close since Nov. 2020 on Tuesday.

As the grim company guidance piles up, Wall Street has been looking for signs that the Federal Reserve’s interest rate hikes and monetary policy tightening will achieve bringing down inflationary pressures. The Fed’s minutes from its early May meeting Wednesday afternoon reaffirmed that most monetary policymakers were considering rolling out additional 50 basis point rate hikes at the next two Fed meetings. The Fed raised rates by 50 basis points earlier this month for the first time since 2000, after having raised rates by just 25 basis point earlier this year.

“The challenge right now is we’re in this new chapter of the inflation story. If you’ll recall, last year it started with whether it’s transitory — turns out, it wasn’t. Then it became about the Fed at the end of last year and earlier this year, whether or not they would tighten significantly. And they did, and now all that’s priced in,” James Liu Clearnomics founder and CEO, told Yahoo Finance Live. “And now what the market is looking at is are basically the fundamentals around how inflation affects corporate profitability and consumer demand.”

And beyond the domestic concerns, a myriad of international concerns — from Russia’s war in Ukraine, to China’s ongoing COVID outbreak — have further infused volatility into the market.

“The Fed can’t really do anything about what’s going on between Russia and Ukraine, they can’t really do anything about China’s COVID zero policies … and a lot of traders are starting to get concerned,” Shawn Cruz, TD Ameritrade head trading strategist, told Yahoo Finance Live.

“The way the market to me is reacting to that, is one, there’s de-leveraging going on. There are some liquidation events out there as well, and that is one of those ‘selling begets more selling’ type of environments. And then the other one is, there’s just not enough confidence out there to come in there and meaningfully put money back to work,” he added. “Once you start to see leverage start going back up, cash coming in from the sidelines, that to me would be an indication that there is at least a little bit more certainty in the outlook for a lot of these people on the sidelines to come back in.”

4:05 p.m. ET: Stocks end choppy session higher after Fed minutes: Nasdaq gains 1.5%, Dow adds 192 points, or 0.6%

Here were the main moves in markets as of 4:05 p.m. ET:

  • S&P 500 (^GSPC): +37.25 (+0.95%) to 3,978.73

  • Dow (^DJI): +191.66 (+0.60%) to 32,120.28

  • Nasdaq (^IXIC): +170.29 (+1.51%) to 11,434.74

  • Crude (CL=F): +$0.97 (+0.88%) to $110.74 a barrel

  • Gold (GC=F): -$11.80 (-0.63%) to $1,853.60 per ounce

  • 10-year Treasury (^TNX): -1.1 bps to yield 2.7490%

2:15 p.m. ET: Fed minutes show support for another two half-point rate hikes while adding ‘a restrictive stance of policy’ could become appropriate

The Federal Reserve’s latest meeting minutes Wednesday afternoon reaffirmed Fed Chair Jerome Powell’s prior assertions that the central bank was weighing two more half-point rate hikes.

“Most participants judged that 50 basis point increases in the target range would likely be appropriate at the next couple of meetings,” according to the minutes. “Many participants assessed that the Committee’s previous communications had been helpful in shifting market expectations regarding the policy outlook into better alignment with the Committee’s assessment and had contributed to the tightening of financial conditions.”

The Fed left room for further policy decisions to be informed by incoming data on the economy, which has recently softened. However, it also emphasized that its primary goal remained on bringing down inflation, and that as a result, a “restrictive stance of policy” could be needed.

“Participants agreed that the economic outlook was highly uncertain and that policy decisions should be data dependent and focused on returning inflation to the Committee’s 2% goal while sustaining strong labor market conditions,” the minutes noted. “At present, participants judged that it was important to move expeditiously to a more neutral monetary policy stance. They also noted that a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook.”

11:11 a.m. ET: Stocks extend gains, Nasdaq rises by 1%

Here were the main moves in markets as of 11:11 a.m. ET:

  • S&P 500 (^GSPC): +23.35 (+0.59%) to 3,964.83

  • Dow (^DJI): +87.30 (+0.27%) to 32,015.92

  • Nasdaq (^IXIC): +110.02 (+0.98%) to 11,374.47

  • Crude (CL=F): +$0.22 (+0.20%) to $109.99 a barrel

  • Gold (GC=F): -$17.20 (-0.92%) to $1,848.20 per ounce

  • 10-year Treasury (^TNX): -0.9 bps to yield 2.7510%

9:31 a.m. ET: Stocks open lower before shaking off losses

Here were the main moves in markets as of 9:31 a.m. ET:

  • S&P 500 (^GSPC): -9.53 (-0.24%) to 3,931.95

  • Dow (^DJI): -114.27 (-0.36%) to 31,814.35

  • Nasdaq (^IXIC): -22.24 (-0.20%) to 11,242.21

  • Crude (CL=F): +$0.89 (+0.81%) to $110.66 a barrel

  • Gold (GC=F): -$13.90 (-0.75%) to $1,851.50 per ounce

  • 10-year Treasury (^TNX): -2.6 bps to yield 2.7340%

9:12 a.m. ET: Durable goods orders disappoint in April

U.S. durable goods orders decelerated in April and were downwardly revised in March, offering an at least early sign that businesses may be pulling back on investments as economic uncertainties mount.

Orders for durable goods, or manufactured products intended to last at least three years, rose by 0.3% in April compared to March, the Commerce Department said Wednesday. This came in below the 0.6% rate consensus economists were expecting, according to Bloomberg data. In March, durable goods orders rose by 0.6%, with this rate revised down from the 1.1% previously reported.

Non-defense capital goods orders excluding aircraft also missed expectations, rising by 0.3% in April versus the 0.5% anticipated. This metric rose by 1.1% in March, and serves as a closely watched proxy for business investment. Still, non-defense capital goods shipments excluding aircraft, which factors into GDP, rose by a better-than-expected 0.8% last month.

“It’s entirely possible that the recent slowing is nothing more than a temporary reaction to the spike in energy prices; firms might be waiting to see how consumers respond,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in an email about the report. “So far, we see no evidence of any hit — housing excepted — but we also can’t rule out the idea higher rates are directly causing some capex [capital expenditures] to be deferred, even though firms are sitting on huge piles of cash accumulated during the pandemic.”

“For now, a decent increase in capital spending on equipment in the second quarter seems assured, given the lags from previous strength in orders, but the outlook for H2 has become a bit more cloudy,” he added.

7:55 a.m. ET: Dick’s Sporting Goods becomes latest retailer to slash full-year outlook given ‘evolving macroeconomic conditions’

Dick’s Sporting Goods shares sank by more than 14% Wednesday morning after the retailer became one of the latest to lower its full-year earnings and sales guidance as economic uncertainty resurged.

The sporting goods retailer said it now sees adjusted earnings totaling between $9.15 and $11.70 per share for the 2023 fiscal year, with this range coming in well below the $11.70 to $13.10 a share seen previously. Comparable store sales will likely fall between 2% and 8% this year, the company added, compared to a prior outlook for sales to come in between unchanged and down 4%. Dick’s Sporting Goods said it updated its outlook “to reflect the impact of evolving macroeconomic conditions,” according to its earnings release Wednesday morning.

Following the release, the stock was on track to post a sixth straight day of losses, or its longest losing streak since early Dec. 2021, as shares fell in sympathy with other major retailers over the past week.

7:23 a.m. ET: Stock futures edge lower

Here’s where markets were trading Wednesday morning:

  • S&P 500 futures (ES=F): -5.25 points (-0.13%) to 3,935.25

  • Dow futures (YM=F): -55 points (-0.17%) to 31,825.00

  • Nasdaq futures (NQ=F): -9.5 points (-0.08%) to 11,761.50

  • Crude (CL=F): +$1.47 (+1.34%) to $111.24

  • Gold (GC=F): -$14.10 (-0.76%) to $1,851.30 per ounce

  • 10-year Treasury (^TNX): -2.6 bps to yield 2.734%

NEW YORK, NEW YORK - MAY 23: Traders work on the floor of the New York Stock Exchange (NYSE) on May 23, 2022 in New York City. After a week of steep losses, markets were up in Monday morning trading.  (Photo by Spencer Platt/Getty Images)NEW YORK, NEW YORK - MAY 23: Traders work on the floor of the New York Stock Exchange (NYSE) on May 23, 2022 in New York City. After a week of steep losses, markets were up in Monday morning trading.  (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – MAY 23: Traders work on the floor of the New York Stock Exchange (NYSE) on May 23, 2022 in New York City. After a week of steep losses, markets were up in Monday morning trading. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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Bankers buck gloomy trend by forecasting growth amid concerns about economic slowdown – The Globe and Mail

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Bank of Montreal reported a modest increase in second-quarter profit on Wednesday.Nathan Denette/The Canadian Press

Top executives at two major Canadian banks predict they can keep adding new loans and increasing profits in the coming quarters, offering an optimistic outlook for the financial sector that is at odds with economists’ increasingly gloomy forecasts of a downturn ahead.

Bank of Nova Scotia BNS-T and Bank of Montreal BMO-T both reported higher second-quarter profits on Wednesday, underpinned by robust demand for personal and commercial loans as well as lower loan loss reserves than analysts anticipated. Profits increased 12 per cent compared with those in the same quarter a year earlier at Scotiabank, and 4 per cent after adjustments at BMO, as rising interest rates helped increase margins on loans.

Growth slowdown fears temper bullishness on commodity currencies

Canada considers new measures to protect economy from national security threats

That marked a strong start to the major banks’ earnings season, but analysts cautioned those results, which cover the three months ended April 30, already look distant in the rear-view mirror. They pressed senior executives about how the banks are bracing for a deteriorating economic environment marked by war in Ukraine, high inflation, rapid central bank rate hikes and the increasing prospect of a recession that could curb customers’ appetite to borrow.

Bank chief executives and finance chiefs stressed they still expect economies to grow as COVID-19-related headwinds ease. They noted that most households are in good financial health, as many stashed away extra savings during the pandemic, while unemployment remains low in a tight labour market. Businesses are borrowing to bulk up inventories as demand for products outstrips supply, and some sectors, such as commodities, are booming.

“The macroeconomic backdrop for our key geographies remains positive,” said Scotiabank chief executive Brian Porter, on a conference call with analysts on Wednesday. “Despite the macroeconomic and geopolitical uncertainties in recent months, we are encouraged by the resilience of our businesses.”

The mood among economists is much more downbeat as the threat of a global recession mounts, even though few are predicting that is highly likely. The tone has also been sombre as business leaders and policy makers rub elbows at the World Economic Forum’s gathering in Davos. And the former governor of Canada’s central bank, Stephen Poloz, recently predicted the country is heading for a period of stagflation – a mix of slow growth and high inflation.

Yet increases in banks’ loan balances have been broad-based, and BMO chief financial officer Tayfun Tuzun said in an interview that he still expects “high-single-digit loan growth” year over year – the same guidance he gave three months ago.

“All in all our clients are telling us that they’re still interested in investing in their businesses,” said Mr. Tuzun. He added that there are “a lot of good indicators for what’s to come” for the bank.

A particular bright spot is commercial lending in Canada, where loan balances rose 13 per cent at BMO and 19 per cent at Scotiabank in the second quarter. Scotiabank’s chief financial officer, Raj Viswanthan, said corporate clients and consumers have “very strong” balance sheets at the moment, “so we see a lot of pent up demand.”

Mortgage balances rose 16 per cent year over year at Scotiabank, benefitting from the tail end of a red-hot streak for housing markets.Chris Young/The Canadian Press

The disruptions caused by COVID-19 and war in Ukraine have also increased demand in key areas, Mr. Viswanathan said. “It’s supply chain issues, it’s the rise of e-commerce, it’s the demand for food.”

Bankers aren’t blind to the gathering economic storm clouds. BMO chief risk officer Pat Cronin said his bank is giving greater weight to a hypothetical scenario that predicts the impact of a severe downturn, and has lowered expectations for parts of its forecast it considers the base case.

When U.S. banking giant JPMorgan Chase & Co. hosted an investor day this week, chief executive Jamie Dimon summed up the outlook as, “strong economy, big storm clouds,” saying those clouds “may dissipate. If it was a hurricane, I would tell you that.” But he acknowledged “they may not dissipate, so we’re not wishful thinkers.”

The Bank of Canada published a paper this month that suggests the country’s banks are strong enough and well capitalized to withstand even a severe, prolonged downturn in which unemployment peaks at 13.5 per cent and house prices fall 29 per cent.

Gabriel Dechaine, an analyst at National Bank Financial Inc., wrote to clients that, “in a normal environment, such optimism would be met with positive expectations for stock price appreciation,” but he remains “more cautious … as long as the disruptive forces of inflation that heighten recession expectations persist.”

In the fiscal second quarter, Scotiabank earned $2.75-billion, or $2.16 per share, compared with $2.46-billion, or $1.88 per share, in the same quarter last year. Adjusted to exclude certain items, Scotiabank said it earned $2.18 per share, well above the consensus estimate of $1.98 per share among analysts, according to Refinitiv.

In the same quarter, BMO earned $4.76-billion, or $7.13 per share, compared with $1.3-billion, or $1.91 per share, a year earlier. After adjusting to exclude one-time items that include a $2.6-billion gain on a financial instrument tied to BMO’s US$16.3-billion acquisition of California-based Bank of the West, profit was $2.187-billion, or $3.23 per share. On average, analysts expected $3.24 per share on an adjusted basis.

Former Bank of Canada governor Stephen Poloz recently predicted the country is heading for a period of stagflation – a mix of slow growth and high inflation.Sean Kilpatrick/The Canadian Press

Both banks raised their quarterly dividends, by 3 cents per share to $1.03 at Scotiabank, and by 6 cents per share to $1.39 at BMO.

Two key factors that have supported banks’ rising profits through much of the pandemic – rapidly rising mortgage balances and unusually low losses from defaulting loans – appear to have reached peaks, and are set to return to more normal levels.

Mortgage balances rose 16 per cent year over year at Scotiabank and 8 per cent at BMO, benefitting from the tail end of a red-hot streak for housing markets. But that yearly growth rate is “slowly slowing,” said Dan Rees, Scotiabank’s head of Canadian banking, and is likely to revert to a pace in the range of 6 to 9 per cent in the coming quarters even as some economists are predicting housing prices will fall.

Provisions for credit losses – the funds banks set aside to cover losses in case loans default – “reached the floor this quarter,” said Phil Thomas, Scotiabank’s chief risk officer. He and his BMO counterpart, Mr. Cronin, expect loan loss reserves will gradually drift higher. But with write-offs and delinquencies still very low, neither risk officer is predicting a spike in loan losses, even though it will rapidly get more expensive for consumers to service their debts.

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