The CEO of Canada’s largest bank has stated that while uncertainty over the North American Free Trade Agreement talks remains a concern for the bank’s customers on both sides of the border, so far those clients and markets have broadly been working through the uncertainty.
“We are in close dialog with governments and our customers and remain hopeful of a good outcome on both sides,” Royal Bank of Canada chief David McKay said, as quoted by Bloomberg.
The bank is seeing more balanced pricing in the housing market, McKay emphasized. “Policy changes in Ontario and in other provinces have contributed to a welcome shift in market psychology towards more caution, and we remain very comfortable with the characteristics and credit performance of our mortgage portfolio.”
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McKay also highlighted the importance of the U.S. for its operations, which includes Los Angeles-based City National Bank, wealth management, and a sizable capital markets operation based out of New York.
“The U.S. is absolutely fundamental to sustaining our growth,” McKay said, noting that the U.S. accounted for 23% of the Toronto-based bank’s total revenue, versus 18% five years ago.
Crucially, McKay stressed that Canada needs to do more to remain competitive, regardless of the results of the discussions around the three-country trade agreement.
“Whatever the outcomes of the NAFTA negotiations, Canada must do more to ensure its competitive edge,” McKay said.
“This is not just about taxes, but addressing how we get our goods and resources to the market, by road, rail, or pipeline, in a sustainable way,” McKay added. “The Canada of tomorrow will have to be more flexible, more open, and move faster than before.”