As Canadian banks prepare to report second quarter earnings this week, investors are bracing for higher bad debt provisions and a potential hit to loan growth due to the economic fallout from the coronavirus pandemic. Analysts expect net income to be a mixed bag, with Bank of Montreal likely to be the top performer. TD Bank is in focus after its acquisition of First Horizon failed, and investors are keen to hear how the lender plans to deploy its estimated $20 billion in excess capital. Empty offices in big cities have raised concerns about banks’ commercial property loan exposure, while the Bank of Canada is increasingly worried about the ability of households to pay off their debts.
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