Banking head warns of over-regulation as trade tensions rise
National Bank of Canada’s CEO, Laurent Ferreira, is urging the federal government to appoint a dedicated official to remove regulatory barriers, warning that excessive oversight is hampering economic growth amid rising trade tensions with the US.
During the bank’s first-quarter earnings call, Ferreira highlighted Canada’s lagging economic performance compared to the US and other G7 nations. He attributed this slowdown to declining productivity and GDP per capita, exacerbated by stringent regulations that burden Canadian businesses.
“Canadian companies are facing excessive regulation and oversight,” Ferreira said. “Added to the mix, we face a US administration with a pro-business and protectionist agenda.”
He proposed that the government appoint a non-partisan deregulation official tasked with identifying and reducing unnecessary bureaucratic constraints. Ferreira also called for initiatives aimed at enhancing economic growth, including reducing capital gains taxes for business owners, dismantling interprovincial trade barriers, and enacting a “Buy Canada Act” to prioritize local businesses and defence procurement.
Among his recommendations, Ferreira suggested deferring taxes on the transfer of businesses to future generations or employees to maintain Canadian ownership.
Growing uncertainty amid trade tensions
As geopolitical risks and the looming threat of a trade war create economic uncertainty, National Bank has significantly increased its provisions for potential credit losses. The bank set aside $254 million in provisions—more than double the amount from the same period last year—anticipating higher loan defaults.
“The increase is driven by uncertainty we’re observing,” said Jean-Sébastien Grisé, National Bank’s chief risk officer. “We really don’t know what the tariffs will look like, but it creates uncertainty.”
The bank also adjusted its forecast for impaired provisions in 2025, raising the expected range by five basis points to 25-35 basis points. Rising consumer credit deterioration in retail banking and financial strain in commercial banking—particularly in technology, real estate, and manufacturing—have been attributed to the increase in impaired loans.
Following the earnings announcement, National Bank’s share price fell 4.6% on the S&P/TSX Composite Index.
Strong earnings
Despite the higher credit loss provisions, National Bank reported an 8% increase in net income, reaching $997 million, or $2.78 per share, for the quarter ending Jan. 31. Adjusted earnings came in at $2.93 per share, surpassing analysts’ expectations of $2.66 per share, according to Refinitiv.
The bank’s strong performance in capital markets and wealth management has been attributed to heightened market volatility following the US presidential election in November.
National Bank is the third major Canadian financial institution to report first-quarter earnings, following Bank of Montreal and Scotiabank. Other major banks, including Royal Bank of Canada, Toronto-Dominion Bank, and Canadian Imperial Bank of Commerce, are set to release their earnings later this week.
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