Canadian bank CEOs expect to put more money aside for potential bad loans this year but still see borrowers overall managing well through higher interest rates.

RBC chief executive Dave McKay, speaking at the bank’s CEO conference, says he expects to see credit loss provisions peak this year as parts of the commercial side of lending remain strained.

He says that borrowers on the mortgage side are having to adapt to higher payments with an average $400 a month on average for its clients renewing this year, but that higher wages along with savings are helping to soften the impact.

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McKay says he expects 2024 to be a little worse on a number of fronts, especially commercial real estate in the U.S., some multi-family residential markets, capital markets and some on the unsecured consumer lending side.

Scotiabank chief executive Scott Thomson says the bank also expects higher provisions for bad loans, but sees a steadier path this year after 2023’s restructuring efforts.

Thomson says the bank’s markets in Latin America are already seeing rates fall to help reduce risk and provide a tailwind on loan loss provisions.