Q: CM reported a low provision for estimated loan loss, while BMO reported a higher provision. My question is do all Canadian banks follow the same criteria to determine if a specific loan is bad? If not the same criteria, the amount of provision is quite subjective.
5i Research Answer:
The Canadian banks generally follow similar regulatory frameworks for loan loss provisions, as determined by IFRS and OSFI. But, the application of these criteria can differ between banks, and the amount of provision can be somewhat subjective. BMO's higher provisions may reflect its more conservative approach or difference in macro views.