<strong>The</strong> International News Weekly MONEY/REAL ESTATE December 01, 2017 | Toronto 18 RBC says mortgage demand up ahead of new rules <strong>The</strong> <strong>Canadian</strong> Press TORONTO: Royal Bank of Canada saw an uptick in demand for mortgages this fall as borrowers look to secure loans before tougher rules — including a stress test — take effect in the new year, one of the bank's executives says. Neil McLaughlin, RBC's head of personal and commercial banking, told analysts on its fourth-quarter earnings call there is a heightened awareness of the banking regulator's revised mortgage underwriting guidelines, which is expected to reduce the maximum amount homebuyers who don't need mortgage insurance will be able to borrow. "We have seen a little bit of pull forward this fall," McLaughlin told analysts on the call Wednesday. "As we talk to customers, some of them are surprisingly aware of what the stress test is about and have decided to move more quickly." McLaughlin's comments came as RBC beat analyst expectations with a 12 per cent jump in its fourth-quarter net income to $2.84 billion, driven by double-digit year-overyear increases in personal and commercial banking, wealth management and capital markets. Its latest earnings for the threemonth period ended Oct. 31 helped to cap off its fiscal year with a record $11.5 billion profit, up 10 per cent from fiscal 2016. It also comes as the banking regulator in October finalized changes to its mortgage underwriting guidelines — moves aimed at reducing risk amid high household indebtedness and rising home prices, particularly in Toronto and Vancouver. <strong>The</strong> revised guidelines, called B-20, require wouldbe homebuyers to prove they can still service their uninsured mortgage at a qualifying rate of the greater of the contractual mortgage rate plus two percentage points or the five-year benchmark rate published by the Bank of Canada. An existing stress test requires those with insured mortgages to qualify at the Bank of Canada benchmark fiveyear mortgage rate. Meanwhile, the Bank of Canada has raised interest rates twice in recent months to the current overnight lending rate of one per cent. On Tuesday, the central bank said in its semi-annual review of the financial system that the steady climb of household debt and still-hot housing markets remained top vulnerabilities. However, it said the new mortgage guidelines would help mitigate the risks associated with low-ratio mortgages (with down payments of 20 per cent or more). McLaughlin told analysts Wednesday that more than 90 per cent of its mortgages are already underwritten at these higher rates, and expects the overall impact of these guidelines to be "fairly modest." "<strong>The</strong> vast majority of our portfolio and loan originations are not really going to be impacted," he said. <strong>The</strong> Bank of Nova Scotia's chief executive, Brian Porter, told analysts on its earnings call Tuesday that he expects the new guidelines to create a "five per cent headwind" to mortgage originations. McLaughlin told analysts that RBC expects "a similar number". Dave McKay, RBC's president and chief executive, said he expects mortgage growth to "slightly moderate." Canada's biggest lender by market capitalization had $142.1 billion in uninsured mortgages as of Oct. 31, up 11 per cent from $128 billion a year earlier. Bank of Canada releases white paper on digital currency Agencies CALGARY: <strong>The</strong> Bank of Canada is considering the merits of establishing a digital currency as interest in crypto-currencies like bitcoin reaches a fevered pitch. 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Agencies "With no transaction fees charged by the central bank, the benchmark CBDC would probably be less expensive for merchants than cash and credit cards." Some of the benefits overlap with those of bitcoin, ether and the myriad of other digital currencies based on cryptography that have emerged, though one of the central benefits of bitcoin and the like is that it is decentralized and NEW DELHI: Breaking a five quarters slump, a rise in the manufacturing sector's output pushed India's growth rate higher to 6.3 per cent during the second quarter of 2017-18, official data showed on Thursday. On a sequential basis, India's GDP growth for Q2 of the current fiscal went up to 6.3 per cent, from 5.7 per cent reported during the first quarter of 2017- 18. According to data from the Central Statistics Office (CSO), the GDP for Q2 stood at Rs 31.66 lakh crore, or a growth of 6.3 per cent. "<strong>The</strong> economic activities not controlled by any bank. <strong>The</strong> value of bitcoin, the most well-known cryptocurrency, has skyrocketed this year, rising from about US$1,000 per coin at the start of the year to crest at over US$11,000 per coin this week. <strong>The</strong> interest has led to many new entrants into the sector and a few stumbles in the rush to get in on the rising valuations. Toronto-based blockchain investor NextBlock Global said in early November that it had suspended its initial public offering after allegations that it made misleading statements in its marketing materials. <strong>The</strong> report Thursday said given the complexity and uncertainty around introducing a central bank digital currency, central banks should proceed cautiously and incrementally. India posts 6.3 percent growth, reverses 5 quarters' slump Agencies TORONTO: <strong>The</strong> <strong>Canadian</strong> Imperial Bank of Commerce's 25 per cent rise in fourth-quarter profits was helped by better-thanexpected performance in the U.S., while rival Toronto-Dominion Bank's double-digit profit lift fell short of market expectations amidst a retracement in its earnings south of the border. CIBC, Canada's fifth-largest lender, reported net income of $1.16 billion in the three months ended Oct. 31, up from $931 million during the same time in 2016. On an adjusted basis, CIBC's profit amounted to $2.81 per share, up eight per cent from the fourth quarter of 2016 and beating the $2.59 in adjusted earnings per share expected by analysts surveyed by Thomson Reuters. <strong>The</strong> major contributor to CIBC's earnings continued to be its <strong>Canadian</strong> personal and small business banking division, which earned an adjusted quarterly profit of $6<strong>23</strong> million, up 11.3 per cent from a year earlier. But it was CIBC's U.S. commercial banking and wealth management unit that saw a major bump in profit, with net income for the quarter of $107 million — more than four times the $<strong>23</strong> million reported during the same quarter a year earlier. That reflected a full quarter of "strong performance" from <strong>The</strong> PrivateBank, after CIBC purchased its parent PrivateBancorp for roughly US$5 billion in June and rebranded it in September as CIBC Bank USA."U.S. commercial banking and wealth management continue to exceed our expectations ... <strong>The</strong> former PrivateBank showed one of its best quarters ever," CIBC president and chief executive Victor Dodig told analysts on a conference call Thursday. That purchase, along with the acquisition of private wealth management firm Geneva Advisors also headquartered in Chicago, was part of CIBC's strategy to deepen its presence in the U.S. and generate 25 per cent of its profits from south of the border in the medium term. Meanwhile, its larger rival TD earned $2.71 billion in its latest which registered growth of over 6 per cent in Q2 of 2017-18 over Q2 of 2016-17 are 'manufacturing', ‘electricity, gas, water supply & other utility services' and ‘trade, hotels, transport & communication and services related to broadcasting'," the document on the estimates of GDP for the Q2 of 2017-18 said. "<strong>The</strong> growth in the 'agriculture, forestry and fishing', 'mining and quarrying', 'construction', 'financial, insurance, real estate and professional services' and 'public administration, defence and other services' is estimated to be 1.7 per cent, 5.5 per cent, 2.6 per cent, 5.7 per cent and 6 per cent respectively, during this period," the data said. CIBC beats expectations, TD falls short quarter, up 17.8 per cent from $2.3 billion a year ago, boosted by its <strong>Canadian</strong> and U.S. retail banking business. Canada's biggest lender by assets (TSX:TD) said Thursday the profit amounted to $1.42 per diluted share for the quarter ended Oct. 31, up from $1.20 per diluted share in the same quarter last year. "Q4 was a great quarter for TD and a strong finish to fiscal 2017," said TD president and chief executive Bharat Masrani on a call with analysts. On an adjusted basis, TD said it earned $1.36 per diluted share, compared with $1.22 per diluted share a year ago. Analysts had expected an adjusted profit of $1.39 per diluted share, according to those surveyed by Thomson Reuters.
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