Despite the credit downgrade earlier this year of six banks by Moody’s Investors Service, Canada’s banking sector remains a “bright spot” of financial health,” an executive from Fitch Ratings said on Tuesday.
“It’s one of the only banking sectors globally not to have experienced a migration” of capital to other banks, said Joo-Yung Lee, head of Fitch’s North American financial institutions group.
Fitch gathered about 60 bankers and investors at a conference in Ballroom II of the Grand Hyatt New York in Manhattan to discuss the future of the banking industry.
Moody’s, a competing ratings agency, downgraded six of Canada's large banks in January, claiming the lower rating “reflects our ongoing concerns that Canadian banks’ exposure to the increasingly indebted Canadian consumer and elevated housing prices leaves them more vulnerable to unpredictable downside risks facing the Canadian economy than in the past.”
Lee said Canada’s economy rebounded quickly from the depths of the global recession, but that she, too, fears the increasing spending per income in the country.
“Canada improved very quickly from the recession,” she said. “But the rising debt to personal income is concerning.”