Name: Frontline Perspectives: Large Canadian Banks Q2 2024 Earnings Round-Up
Start: 2024-06-27T13:30:00Z
End: 2024-06-27T13:30:44.000Z
Location: BrightTALK
Rating: 5

Morningstar DBRS is a leading provider of independent rating services and opinions for corporate and sovereign entities, financial institutions, and project and structured finance instruments globally. Rating more than 4,000 issuers and 60,000 securities, we are one of the top four credit rating agencies in the world and a market leader in Canada, the U.S. and Europe in multiple asset classes.



Morningstar DBRS is pleased to present the latest Frontline Perspectives webinar focused on the key policy changes from the UK General elections held on Thursday 4th July, 2024.

Nichola James, Managing Director of Global Sovereign Ratings, and Adriana Alvarado, Senior Vice President, Sector Lead of Global Sovereign Ratings reviewed the overarching themes observed during the elections. The webinar provides valuable perspectives on the implications and challenges for the UK. The presentation is 20 minutes.

Frontline Perspectives: The UK General Election - Key Policy Challenges

During the first quarter of 2024, Morningstar DBRS issued and refreshed a total of 316 credit estimates (CEs) across 310 borrowers for 31 lenders including collateralized loan obligations (CLO) and fund managers. Total volumes include new CEs assigned for new and existing borrowers and existing CEs refreshed for periodic review and amendments. Currently, we assign CEs to about 1,400 leveraged corporate borrowers. CEs are not credit ratings, but rather point-in-time assessments of credit quality, which are used to estimate borrower default likelihood in CLOs, rated feeder funds, investment fund debt, equipment leases, and other structured finance transactions 

Join DBRS Morningstar on June 27 for a Frontline Perspectives webinar detailing the first quarter CE activity and performance, presented by Jerry van Koolbergen and Orest Gavrylak. The discussion will highlight overall credit quality, financial metrics year-to-date, revenue growth, and anticipated CE volume in the second half of 2024.  

A Q&A session will follow the presentation for the audience to participate in the conversation.

Frontline Perspectives: Credit Estimate Quarterly Snapshot - April 2024

A challenging macroeconomic environment is impacting Canadian credit unions as deposit repricing has pressured net interest margins. However, not all credit unions have been affected equally. 

Join us for a discussion on factors impacting the variations in the financial performance of our rated Canadian credit unions including provisions for credit losses, asset spreads, and balance sheet composition. We will also cover our outlook on earnings and credit risks as we move through 2024. 

The discussion will be followed by a Q&A for all who wish to participate, and a recording will be provided at the same link for those unable to attend.

Canadian Credit Unions 2024 Outlook: A Period of Headwinds for Earnings

Morningstar DBRS invites you to attend a webinar on 18 June at 03:30 p.m. BST | 04:30 p.m. CEST | 10:30 am EDT. The webinar will be hosted by Marcos Alvarez, Managing Director, Global Insurance Ratings at Morningstar DBRS, and guest speaker Phil Baker, President of BOXX Canada & Global Chief Underwriting Officer.

Businesses and governments across the globe have experienced a significant surge in cyber incidents in recent years, resulting in a dramatic increase in the demand for cyber insurance products. While cyber insurance is an attractive market opportunity for insurers, it also presents a different type of risk to manage. One that can be more difficult to price than most other insurance risks, given the relative lack of comprehensive data, the evolving nature of cybercrime, the potentially catastrophic nature of cyber-attacks, and the high level of technical expertise required to value this risk correctly.

Join us for a discussion about the current state of the cyber insurance market. We will examine potential opportunities for insurance companies and how they can provide value to clients looking to manage their increasing exposure to cyber risks and enhance their insurability.

The discussion will last approximately 30 minutes, followed by an interactive question-and-answer session. Morningstar DBRS welcomes all who wish to participate.

Frontline Perspectives: Cyber Insurance 2024: Opportunities, Risks, and Insights

Morningstar DBRS is pleased to present the latest Frontline Perspectives webinar focused on the key takeaways from the European Parliament elections held from 6 June to 9 June 2024.

Nichola James, Managing Director of Global Sovereign Ratings, and other Morningstar DBRS senior analysts reviewed the overarching themes observed during the elections. The webinar provides valuable perspectives on the implications and challenges for Europe, with a specific focus on countries like France and Italy. The presentation is 25 minutes.

Frontline Perspectives: Key Takeaways from the European Parliamentary Elections

Following the conclusion of the 28th annual Global ABS conference, Morningstar DBRS is pleased to invite you to a Frontline Perspectives webinar on the key takeaways from Barcelona last week. Join Mudasar Chaudhry, Head of European Structured Finance Research in conversation with senior DBRS Morningstar analysts as they recap the highlights and key themes at the conference.

Join Morningstar DBRS on 13 June 2024 at 3:00 p.m. BST to catch up on topical trends and panel discussions at the Global ABS event. The presentation will last approximately 45 minutes and will be followed by a Q&A session for the audience to participate in the conversation.

Frontline Perspectives: Global ABS 2024 Conference – Key Takeaways

Stephanie Mah, Senior Vice President, Structured Finance Research, will host a discussion with senior analysts, Hylton Heard, Senior Vice President, US ABS and David Laterza, Senior Vice President, North America Financial Institutions on the state of the aviation market, including aircraft lessor financial performance, supply/demand, asset values, and recoveries against the backdrop of ever changing macroeconomic and geopolitical risks.

Frontline Perspectives: Aviation Structured Finance Mid-Year Update

Climate change presents both physical and transitional risks for the aviation industry. In striving to reach net zero by 2050, airlines are undergoing major technological transformation in the medium and long term. Physical climate risks continue to test the industry’s operational resilience while the evolving regulatory landscape could also negatively affect air travel demand.

Join us for a climate change webinar as we discuss Morningstar DBRS’ climate risk considerations for the airline and airport sectors, presented by Rohit Kumar, Assistant Vice President, Diversified Industries, Valiant Ip, Vice President, Asset Finance, and Kevin Li, Senior Vice President, Asset Finance. Our discussion will cover relevant industry trends, key drivers of decarbonization, potential credit impact and risk mitigations. Following the presentation, the audience is invited to participate in a Q&A session.

The Green Takeoff: Challenges and Opportunities for the Aviation Sector

German Banks have significant exposure to commercial real estate, including the office segment which is currently under pressure due to the hybrid work environment and higher interest rates. The US office market has experienced particular stress, which has adversely affected most German banks with operations in the US.

 

Join us for a discussion hosted by Erin Stafford, Managing Director, North American Real Estate Ratings and Sonja Förster, Vice President, European Financial Institutions. We will review trends in the US office market, the current financing situation for office properties, and the protection for lenders. We will then discuss the real estate exposure and performance of German banks, with particular focus on US office exposure.

German Banks’ CRE Lending: U.S. Office Loans Driving Increasing NPLs

In line with International Women’s Day, Morningstar DBRS researched female representation in the Canadian banking sector. While in Canada we see greater representation than global counterparts, there is still work to be done. Despite initial representation, gender diversity often stops progressing and hits a ceiling that is likely to bounce off. 

Join us for this Frontline Perspectives conversation hosted by Jiani Wu, Vice President, North American Financial Institutions and Sailie Ashtekar, Senior Analyst, North American Financial Institutions. We will review our findings, including data broken down by different levels of the talent pipeline. We will also explore how gender diversity can be attained at all levels of the banking organization including through DEI initiatives, stakeholder scrutiny and building an equitable talent pipeline. A Q&A will follow for all who wish to participate in the conversation.

Frontline Perspectives: Women at Canadian Banks: Fortified Glass Ceiling?

In February 2024, Morningstar DBRS published an updated methodology to rate subscription loans titled “Rating Debt Issued by Investment Funds, Appendix I – Subscription Loan Facilities”.  The updated methodology supersedes “Rating and Monitoring Subscription Loans (Capital Call) along with the predictive model, “Diversity Model for Capital Calls.” 

The changed methodology expands the criteria for the subscription loan asset class globally and moves the criteria to an appendix of the “Global Methodology for Rating Debt Issued by Investment Funds” (the Fund Methodology). With the move to an appendix of the Fund Methodology, the ratings assigned to subscription loan transactions will be corporate ratings instead of structured finance ratings. 

Join Morningstar DBRS for a Methodology Review webinar as we highlight the changes to our approach to rating and monitoring subscription loans. Presented by Jerry van Koolbergen, Managing Director, Structured Credit, and Stuart Rothenberg, Senior Vice President, Structured Credit, our discussion will feature the material changes including updates to (1) Morningstar DBRS’ approach for modeling high net-worth individuals (HNWIs), (2) the recovery rate and correlation assumptions for LP investors, and (3) the jurisdictions used for recovery rates. Additionally, the methodology update proposes the utilization of the CLO Insight Model to assess the credit risk of the LP investors and to derive a range of asset coverage ratios.

Following the presentation, the audience is invited to participate in a Q&A session to participate in the conversation.

Methodology Review: Subscription Loans

With the announcement of the Electric Vehicle Availability Standard, Canada joins the U.K along with other European and US jurisdictions in mandating a 100% zero-emission vehicle sales target for light-duty vehicles by 2035. The sale of fully or partially electric-powered vehicles is gaining traction in Canada, with most early adopters leaning toward hybrids instead of fully electrified vehicles. However, the U.K. and Europe are ahead in the transition and those insurers are already experiencing emerging effects. 

Join Morningstar DBRS for a discussion on how momentum in zero-emission and hybrid vehicle sales could affect Canadian auto insurance premium rates. We will review the implications for both buyers and insurers and explore nuances unique to the Canadian market, such as the highly regulated nature of the industry. The conversation will be moderated by Marcos Alvarez, Managing Director, Global Insurance Ratings, and will include Victor Adesanya, Vice President, North American Insurance Ratings and Robert Streda, Senior Vice President, Diversified Industries. A Q&A will follow for all who wish to participate.

Frontline Perspectives: How Will the EV Transition Effect Auto Insurance Rates?

In October 2023, Morningstar DBRS finalized its “Global Methodology for Rating CLOs and Corporate CDOs” (the CLO Methodology) and Morningstar DBRS CLO Insight Model.  We use both to assign new credit ratings and monitor outstanding collateralized loan obligation (CLO) credit ratings globally. 

We changed our methodology to expand our analytical approaches to address broadly syndicated loan (BSL) CLOs.  We also updated certain assumptions including default probabilities for publicly rated borrowers, recovery rates for covenant-lite loans, country tiering, industry classifications, credit dispersion, amortization and prepayment rates, and our surveillance approach.  The updated methodology addresses BSL CLOs, middle market and private credit CLOs, corporate significant risk transfer (SRT) transactions and middle market loan/BSL financing facilities.  

Join us on March 7 at 10:00 a.m. EST for a methodology review webinar as we explore Morningstar DBRS’ approach to rating CLOs, presented by Jerry van Koolbergen, Glen Leppert, and Carlos Silva. Our discussion will showcase the new analytical approaches and material changes to the CLO Methodology, including expansion in approaches to address BSL CLOs and MM CLOs.

Methodology Review: Collateralized Loan Obligations

Across commercial ABS, we have negative collateral performance outlooks on the equipment lease (primarily small ticket and transportation-backed transactions) and small business loan sectors, as we expect higher delinquencies and defaults coincided with lower recovery rates in 2024. However, we have stable credit rating outlooks on both sectors because of the relatively short term of collateral assets and generally deleveraging transaction structures. Meanwhile, we have stable outlooks on both aviation and 
 C-PACE ABS.

Join Morningstar DBRS at 2:00 p.m. EST for a Frontline Perspectives webinar on the U.S. Commercial ABS 2024 Outlook as we address the challenges facing each sector. Moderated by Stephanie Mah, Senior Vice President, Structured Finance Research, our presentation will include shared perspectives from  senior Morningstar DBRS analysts, presenting an overview of major factors affecting commercial ABS sectors including aviation, commercial PACE, equipment leases, and small business ABS. The discussion will be followed by a Q&A session for the audience to participate in the conversation.

U.S. Commercial ABS Outlook 2024

In the past several years, interest in rating transactions backed by data centers has surged, as these facilities are considered a critical component of digital infrastructure worldwide. Growth in the data center market is driven by several different factors, and technological advances within digital infrastructure will have impacts on credit risk and opportunities, especially with increasing capital costs to meet high power and processing requirements of AI. 

Join us on February 15 at 10:00 a.m. EST for a methodology review webinar as we explore Morningstar DBRS’s approach to rating data center transactions, presented by Ed Dittmer, Senior Vice President, North American CMBS, and Victor Leung, Senior Vice President, Infrastructure. Our discussion will showcase the different types of data centers and the analysis behind each, the unique rating approach to data center backed transactions, and the relevant considerations for how and when a methodology may be applied across sectors.  Following the presentation, the audience is invited to participate in a Q&A session to participate in the conversation.

Methodology Review: A Cross-Sector Primer on Data Centers

Join us for a discussion on large and medium-sized Canadian banks. 

The 2024 banking outlook and challenging operating environment is affected by a weakening economy, amid an uncertain macroeconomic outlook, along with an interest rate environment that has materially increased debt servicing costs. 

For Canadian banks, profitability will be pressured as credit quality deterioration progresses and results in higher provisions for credit losses.  Additionally, net interest income growth is likely to moderate on expectations of tepid loan growth and flattening net interest margins as interest rates stabilize and are potentially cut during F2024, while some fee income sources will likely continue to remain a headwind.  Expense discipline will be key as Canadian banks look to return to positive operating leverage. While the banks continue to maintain adequate liquidity and sound capital levels, heightened regulatory capital requirements are expected for the larger banks going forward.

The discussion will be followed by a Q&A for all who wish to participate, and a recording will be provided at the same link for those unable to attend.

2024 Canadian Banking Outlook

With a slowing macroeconomic environment, inflationary pressures, high interest rates, and geopolitical tensions in 2024, Morningstar DBRS anticipates another year of challenging conditions for U.S. corporate credit.

Please join Morningstar DBRS on January 31 at 2:00 p.m. EST for a Frontline Perspectives webinar on the Structured Credit Outlook for 2024, presented by Stephanie Mah, Senior Vice President, Structured Finance Research, and Jerry van Koolbergen, Managing Director, Head of U.S. Structured Credit. The presentation will include credit rating outlooks for Broadly Syndicated Loan (BSL) CLOs, investment fund debt, Middle Market CLOs, subscription loans, and resecuritizations, along and the key risks and opportunities that will shape the Structured Credit market in 2024. The discussion will be followed by a Q&A session for the audience to participate in the conversation.

Structured Credit Outlook 2024

Heading into the second half of 2024, the Big Six banks are still facing a challenging operating environment but continue to maintain ample liquidity and solid capital. Q2 2024 sequential adjusted earnings increased modestly driven by higher noninterest income, paired with a slight reduction in noninterest expenses. However, credit deterioration progressed further in Q2 2024, with impaired PCL increasing for the seventh-consecutive quarter. Following the Bank of Canada's 25 bps interest rate cut on June 5, 2024, some much needed relief should be provided to heavily indebted Canadian borrowers as debt continues to reprice at maturity, along with a potential boost to muted loan growth and moderating net interest income. 

Join us for a discussion on the Large Canadian Banks Q2 2024 Round-Up. Carl De Souza, Senior Vice President and Sector Lead, North American Financial Institution Ratings will discuss capital levels, funding and liquidity, and credit quality trends, as well as what can be expected moving forward with monetary policy uncertainty. 

The discussion will be followed by a Q&A session.

Frontline Perspectives: Large Canadian Banks Q2 2024 Earnings Round-Up

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Frontline Perspectives: Large Canadian Banks Q2 2024 Earnings Round-Up

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