Losses in the Canadian credit cards could start to fall in the coming months if the economy improves and unemployment began to decline as expected, says CEO of CIBC ( TSX: CM), Gerry McCaughey. If the economy begins next year to find his stride, as required by the bank, the losses from loans on credit cards could start lowering short-term, "said Mr. McCaughey, Tuesday, at the a conference of CIBC for institutional investors.
"If the Canadian unemployment quickly reached its peak and begins to decline - and at the same time the economy is behaving reasonably well - the likelihood that these portfolios continue to grow and that (we) are seeing a drop in loss ratios is important, "he added.
"The impact on the industry in regard to improved profitability due to losses on loans lower, would be significant."
CIBC is considered to be the largest player in the industry of credit cards at home, which means it is more exposed to losses in this sector. While the economy has collapsed, more consumers and businesses have begun to miss their payments accounts credit cards. In the third quarter, losses related to loans on credit cards CIBC totaled $ 547 million.
"If the Canadian unemployment quickly reached its peak and begins to decline - and at the same time the economy is behaving reasonably well - the likelihood that these portfolios continue to grow and that (we) are seeing a drop in loss ratios is important, "he added.
"The impact on the industry in regard to improved profitability due to losses on loans lower, would be significant."
CIBC is considered to be the largest player in the industry of credit cards at home, which means it is more exposed to losses in this sector. While the economy has collapsed, more consumers and businesses have begun to miss their payments accounts credit cards. In the third quarter, losses related to loans on credit cards CIBC totaled $ 547 million.
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