As loan-loss provisions decline, question for banks becomes what to do with excess capital?

Some banks have other plans for those funds, in addition to paying shareholders after a year of not being able to raise dividends, such as potentially making acquisitions

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Five of Canada’s Big Six banks reported expectation-beating quarters this week as they look toward a rebound in the country’s pandemic-ravaged economy.

The earnings beats were fuelled in large part by plummeting provisions for credit losses, which are funds that banks must reserve to cover potential losses from loan defaults. Now analysts are looking at how banks will deploy their extra cash reserves and when sluggish loan growth will rebound.

The lenders set aside billions of dollars last spring as a buffer against potential sour loans amid sweeping business closures and job losses. But with government subsidies for businesses and workers and bank loan deferral programs that helped prevent defaults, loans did not sour to the extent that lenders and analysts had expected.

As the vaccine rollout ramps up across North America and the economy south of the border re-opens, the banks slashed their provisions, or in some cases released funds from the reserves.


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Bank of Montreal’s provisions fell to $60 million in the second quarter, as compared with $1.1 billion in the same period a year earlier and far less than analyst expectations of $219 million. CIBC and National Bank also set aside fewer provisions than expected, recording $32 million and $5 million in provisions respectively.

Toronto-Dominion Bank booked the largest reversal in provisions, releasing $377 million that was previously set aside for loan losses. RBC also recovered some of the funds it had previously aside, releasing $96 million, as compared with the $2.8 billion it reported in the same period a year earlier. Analysts expected TD and RBC to set aside $457.8 million and $275.6 million respectively.

The trend signals that the banks are starting to “put the pandemic behind them,” according to Scotiabank analyst Meny Grauman.

“The economy came through this pandemic on a better footing, so credit losses turned out to be a fraction of what we were worried about last year,” Grauman said in an interview. “Even though the pandemic is not over in Canada —we’re behind the U.S. and we’re still under lockdowns here in Canada — we still have good sightline to be able to take those reserves off.”

The pandemic also brought opportunities to certain divisions. Mortgages surged as homebuyers eager to lock in low rates flooded Canada’s heated housing market. Balances at RBC jumped 12.6 per cent year-over-year and 10 per cent at BMO.


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Capital markets also boosted earnings due to a frenzy of corporate mergers and trading activity as businesses jumped on high stock valuations and excess liquidity. RBC led the pack, posting $1.07 billion in its capital markets division, with $563 million at BMO, $495 million at CIBC and $383 million at TD.

But a sluggish recovery in loan demand weighed on earnings. While mortgages boosted personal loans, commercial loans largely remained flat. And credit card spending, while increasing slightly, has been slow to rebound.

Analysts questioned whether excess deposits as consumers and businesses tucked away extra cash would cause a lag in demand for loans, especially with commercial clients.

RBC’s chief financial officer Rod Bolger said that while people may first spend their extra cash rather than take on debt, that should change as the economy reopens and spending on big items resumes.

Meanwhile, the trend toward savings benefitted some segments, with an uptick in clients investing with its wealth management division and companies looking to meet their merger and acquisition goals in its capital markets division.

“From a commercial standpoint, we don’t believe that that is a long-term impact on loan growth, that it should work its way through over the next couple of quarters,” Bolger said in an interview.

“Clients have more funds to invest in the market, and that has certainly benefited our wealth management businesses both in the U.S. and Canada, and it has also benefitted out capital markets business as we see our M&A pipeline is quite robust right now.


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But the banks are also riding on high capital levels, and are expected to continue to release further loan-loss provisions as the economy re-opens. Analysts are watching for how the lenders will allocate that cash.

At the outset of the pandemic, Canada’s banking regulator temporarily restricted banks from raising dividends and buying back shares. The lenders reported increases in their common equity Tier 1 (CET1) ratios, with TD’s jumping to 14.2 per cent and RBC’s climbing to 12.8 per cent.

Across the board, bank executives said that they plan to send some of those funds to investors once the limitation is lifted. Some banks also have other plans for those funds, in addition to paying shareholders after a year of not being able to raise dividends.

“They’ll all put through some pretty health dividend increases, but there are some differences in preferences or thoughts between capital allocation toward organic growth, M&A and buybacks,” CIBC analyst Paul Holden said in an interview, adding that “TD has been the most vocal” about using its capital to potentially make acquisitions to grow its business.

TD chief executive officer Bharat Masrani said that the bank would certainly consider returning capital to shareholders, but that Canada’s second-largest bank has enough capital to look at acquisitions as well.

“We will not be shy to do a bank deal,” Masrani said in a conference call with analysts. “Should a compelling opportunity present itself, we do have that flexibility to look at it very seriously.”


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Celebrate bees at the Capital Region Farmers Market on Saturday

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Capital district under triple lockdown

Stringent restrictions have come into effect in the capital district with the clamping down of a triple lockdown on account of the COVID-19 situation.

District Collector Navjot Khosa, who is also chairperson of the District Disaster Management Authority (DDMA) has said that the curbs will remain in force until May 23.

A decision on extending the restrictions will be made at a later stage.

Alternate days

During the period, shops selling food, groceries, fruits and vegetables, dairy products, meat and fish, animal fodder, poultry and cattle feed, and bakeries will be open on alternate days starting from Monday onwards. These establishments must wind their activities including home delivery by 2 p.m.

While the government has permitted milk and newspaper distribution until 8 a.m., fair price shops including ration, public distribution system (PDS), Maveli and Supplyco shops and milk booths are permitted to function on all days till 5 p.m. Restaurants and hotels will be allowed to function from 7 a.m. to 7.30 p.m. with home delivery services only. No dine-in and take-away (or parcels) will be permitted.

Medical shops, petrol pumps, ATMs, shops selling life-saving equipments, hospitals and other clinical establishments shall be functioning on all days.

The district authorities have advised the public to get provisions and vegetables from the shops near their houses and to refrain from travelling long distances for the purpose.

Minimal staff

Among commercial establishments, banks, insurance and financial services will function with minimal staff on Monday, Wednesday and Friday from 10 a.m. to 1 p.m. Cooperative Banks can function only on Monday and Thursday from 10 a.m. to 1 p.m.

E-commerce entities and delivery services for essential items will be permitted to operate from 7 a.m. to 2 p.m. on all days.

The police will strictly regulate entry and exit in the district. Strict perimeter control will be ensured in containment zones. While inter-State road transport is permitted for goods and emergency services, registration is mandatory on the COVID-19 Jagratha portal for individuals for entering the State through the inter-State border.

Household helps, home nurses, caregivers, technicians (engaged in electrical and plumbing services) must obtain the online passes (from for travel.

The City police have commenced barricading roads in each police station limits to streamline vehicular flow through designated entry/exit points.

City Police Commissioner and Inspector General Balram Kumar Upadhyay said vehicles will be screened at entry/exit points in each police station limits.


Certain other access points have been completely sealed. Such ‘blocking points’ include Chenkottukonam, Udayagiri, Attinkuzhy, Pallithura, Vilayilkulam junction, Kakkamoola, Pappanamcode, Punnamoodu, Uchakkada, Vellaikadavu, Nettayam, Keraladithyapuram, Kizhakke Mukkola and Mangattukadavu.

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Death toll soars to 50 in school bombing in Afghan capital

KABUL, Afghanistan — The death toll in a horrific bombing at a girls’ school in the Afghan capital has soared to 50, many of them pupils between 11 and 15 years old, the Interior Ministry said Sunday.

The number of wounded in Saturday’s attack has also climbed to more than 100, said Interior Ministry spokesman Tariq Arian.

Three explosions outside the school entrance struck as students were leaving for the day, he said. The blasts occurred in a mostly Shiite neighborhood in the west of the capital. The Taliban denied responsibility, condemning the attack.

The first explosion came from a vehicle packed with explosives, followed by two others, said Arian, adding that the casualty figures could still rise.

In the capital rattled by relentless bombings, Saturday’s attack was among the worst. Criticism has mounted over lack of security and growing fears of even more violence as the U.S. and NATO complete their final military withdrawal from Afghanistan.

The attack targeted Afghanistan’s ethnic Hazaras who dominate the western Dasht-e-Barchi neighborhood, where the bombings occurred. Most Hazaras are Shiite Muslims

The area has been hit by violence against minority Shiites and most often claimed by the Islamic State affiliate operating in the country. No one has yet claimed Saturday’s bombings.

The radical Sunni Muslim group has declared war on Afghanistan’s Shiites. Washington blamed IS for a vicious attack last year in a maternity hospital in the same area that killed pregnant women and newborn babies.

Bloodied backpacks and schools books lay strewn outside the Syed Al-Shahda school. In the morning, boys attend classes in the sprawling school compound and in the afternoon, it’s girls’ turn.

Residents in the area said the explosion was deafening. Naser Rahimi told The Associated Press he heard three separate explosions, and immediately thought that the sheer power of the blasts meant the death toll would almost certainly climb.

One of the students fleeing the school recalled the attack, the girls’ screams of the girls, the blood.

“I was with my classmate, we were leaving the school, when suddenly an explosion happened, “ said 15-year-old Zahra, whose arm had been broken by a piece of shrapnel.

“Ten minutes later there was another explosion and just a couple of minutes later another explosion,” she said. “Everyone was yelling and there was blood everywhere, and I couldn’t see anything clearly.” Her friend died.

Outside the Muhammad Ali Jinnah Hospital, in the Dasht-e-Barchi neighborhood dozens of people lined up to donate blood, while family members checked casualty posted lists on the walls.

Most of the dozens of injured brought to the EMERGENCY Hospital for war wounded in the Afghan capital, “almost all girls and young women between 12 and 20 years old,” said Marco Puntin, the hospital’s programme coordinator in Afghanistan.

In a statement following the attack, the EMERGENCY Hospital said the first three months of this year has seen a 21 per cent increase in war-wounded.

IS has previously claimed attacks against minority Shiites in the same area, last year claiming two brutal attacks on education facilities that killed 50 people, most of them students.

Even as the IS has been degraded in Afghanistan, according to government and US officials, it has stepped-up its attacks particularly against Shiite Muslims and women workers.

Earlier the group took responsibility for the targeted killing of three women media personnel in eastern Afghanistan.

The attack comes days after the remaining 2,500 to 3,500 American troops officially began leaving the country. They will be out by Sept. 11 at the latest. The pullout comes amid a resurgent Taliban, who control or hold sway over half of Afghanistan.

The top U.S. military officer said Sunday that Afghan government forces face an uncertain future and possibly some “bad possible outcomes” against Taliban insurgents as the withdrawal accelerates in the coming weeks.


Associated Press photographer Rahmat Gul and video journalist Ahmad Seir in Kabul, Afghanistan and Kathy Gannon in Islamabad, Pakistan contributed to this report.

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Brisbane motorists facing ‘obscene rip-off’ as the city once more becomes the nation’s most expensive capital city for unleaded fuel

The latest RACQ data reveals Brisbane service stations were pumping fuel at a 15-month record high in April, despite a fall in the international oil price.

In recent weeks, prices at many petrol stations have hovered between $1.60 and $1.70 a litre, giving the big oil companies more than 45 cents profit for every litre pumped into a car.

RACQ spokeswoman Lauren Ritchie said the data showed what many people feared.

“Brisbane is the most expensive capital city in Australia when it comes to unleaded petrol prices,” Ms Ritchie said.

“When we are seeing jumps of around 40 cents a litre from the bottom of the cycle to the top of the cycle that really hurts.

“Retailers are taking a very healthy margin on top of what we should be paying here.”

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Plans to make New Zealand capital a Maori language city by 2040

There’s an ill wind and it’s blowing us clear across Wellington’s Whairepo Lagoon. “Tokihi!” roars our crew master, his voice echoing across the water like an ancient war cry. “Haa!” we scream in response, thrusting our white-tipped paddles into the water as one.

“Haa!” We tilt forward, shoulders on fire as we propel the wooden canoe through driving rain.

The lagoon is a tempest; heaving and rolling like a living thing, yet our Maori waka (canoe) holds steady, our chants keeping us in time, like seafarers of old.

We’d started outside the Te Wharewaka o Poneke (waka house) a vast building in the shape of a traditional cloak. “Our vision is to return a strong Maori presence to the waterfront,” says Taupuruariki Brightwell, one of our guides for the two-hour waka tour.

Maori culture is experiencing a revival, but nowhere is it more obvious than in the nation’s capital. The new Te Tauihu te reo Maori policy – named after the ornately carved figurehead of a waka – aims to make Wellington a Maori language city by 2040, the 200th anniversary of the Treaty of Waitangi.

“Tokihi!” comes the command, as we turn into the wind for the gruelling paddle back to the waka house, as a small group of bystanders cheers us on.

And that’s the strength of a tour like this; it elevates Maori art and culture, putting it centre stage, while helping to rekindle Indigenous pride across the entire city.

The following day I head to Te Papa Tongarewa, New Zealand’s bold and innovative national museum, where I learn more about Polynesian navigation than a girl needs to know.

“Testicular navigation,” says my guide Pene Kiwi Kiwi, as we pause in front of a voyaging waka. “The early navigators used their testicles to feel the direction of the swell when it was too dark to see the stars.”

I don’t doubt she’s telling the truth; there’s even a signboard to prove it. Whether the technique relied on sensing vibration through the waka’s wooden seats, or if the navigators adopted a commando-style “stand and swing” position, is still open to debate.

Dinner that night at restaurant Hiakai, a fine-dining experience dedicated to the exploration of Maori cooking, is a sure sign that Wellington is leading the Indigenous food movement. Set inside a restored brick kiln on the city-fringe, chef Monique Fiso serves up six, eight and 10-course set-menus, including boundary-pushing dishes such as green-lipped mussel-flavoured ice cream on a base of heirloom potatoes, and ika (fish) paired with parsnip, kowhitiwhiti (a native watercress with a mustard flavour), kawakawa (a native healing herb said to aid digestion) and bone broth.

Over three hours, my eight-course degustation transports me from the heights of New Zealand’s pine forests to the depths of its oceans, from the simple pleasures of beach barbecues to flavours I never knew existed. It’s a dream, a challenge, a celebration of art, nature and culture. No wonder Hiakai made Lonely Planet’s “Best in Travel 2021” list.

One afternoon I visit the Dowse Art Museum where I meet Neke Moa, a contemporary jeweller well known for pounamu (nephrite jade) carvings. “Working with pounamu allows me to channel the knowledge and spirit of my ancestors,” she says. “It provides a direct connection with the people of this land and the land itself.”

Opened in 1971 the museum is currently celebrating “50 years of uplifting ideas”, with a special program of exhibitions, talks and events to be rolled out across 2021. Topics include everything from “Not today…Can you decolonise an art gallery?” to the “Connotation of craft for contemporary Maori artists”.

On my final morning I stroll along the waterfront, now called Ara Moana – “Ocean Pathway”. Overhead the sky is a streaked paua shell, while in the distance a waka pushes through the water, its curved Te Tauihu a symbol of determination and courage. Shielding my eyes against the sun I see a bright, golden city, poised, not just for a new day, but a new era.




Hiakai is open for dinner Thursday to Saturday. See


Qantas operates flights between Sydney, Melbourne and Wellington. See

Kerry van der Jagt was a guest of WellingtonNZ. See

Travel to New Zealand from Australian states aside from Western Australia is permitted. A high degree of caution is recommended due to the COVID pandemic. See

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Lack of capital holding SMEs back from realising their full post-pandemic potential

New research shows that while Australian SMEs feel confident about the future and are eager to make the most of the growing consumer demand online, their financial recovery remains at risk due to lack of cashflow and difficulty accessing business finance.

According to the 2021 PayPal Working Capital research, 54 per cent of Australian SMEs experienced loss over the past year, with the greatest impacts felt due to COVID-19 (77 per cent), lack of foot traffic (32 per cent) and lack of online presence (26 per cent).

Despite these challenges, the report noted that 21 per cent managed to break even, 20 per cent experienced some growth, and five per cent experienced significant growth. The 25 per cent of SMEs who managed to grow through the pandemic’s peak in Australia cited higher demand (35 per cent), growth in customer base (36 per cent) and consumer preference for local goods and services (26 per cent) as major growth drivers.

“Australian small businesses have faced a tough year, with many unexpected challenges thrown at them due to COVID-19, Eli Nana, Manager at PayPal Working Capital Australia, said. “Despite the difficult environment, it’s encouraging to see our local businesses head down the road to recovery, particularly with growth driven by Aussies wanting to support local.”

Many Australian SMEs say that cashflow (48 per cent) is one of the greatest challenges facing their business. In addition, 49 per cent stated that their experience in getting business loans ranged from difficult to extremely difficult and only 38 per cent managed to receive positive feedback on their application. Meanwhile, only 10 per cent found it easy or very easy to access financing.

“After the rollercoaster year that Australian small=business owners have just experienced, it’s no surprise that they’re prioritising flexible repayments for business financing,” Nana said.

“While we all hope the next 12 months will be far more stable and predictable than the past 12, it’s clear that businesses will continue to value finance solutions that can adjust to changing business realities in real time, and that can be accessed quickly and easily when they’re needed to help seize sudden opportunities or overcome unexpected challenges.”

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Review launched into Greensill Capital following David Cameron lobbying controversy

Boris Johnson has ordered an independent review into Greensill Capital following the David Cameron lobbying controversy.

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Darwin the only Australian capital to experience population decline

GREATER Darwin was the only capital city to experience a population decline in the last financial year, according to the latest Australian Bureau of Statistics data.

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