Standard & Poor’s downgrades six Canadian financial institutions

Sam Javanrouh

TORONTO – Standard & Poor’s has downgraded the ratings of six of Canada’s financial institutions by one notch.

The Wall Street Journal says the credit ratings agency cites a softening economy, low interest rates and pressure from the headwinds facing Canada’s economy.

S&P says the risk for the Canadian banking sector is increasing and expects intensifying competition for loans and deposits will pressure profit growth.

The firm lowered its ratings by one notch on ScotiaBank (TSX:BNS) to A-plus.

National Bank of Canada (TSX:NA), Laurentian Bank of Canada (TSX:LB), Central 1 Credit Union , Caisse centrale Desjardins and Home Capital Group (TSX:HCG) were also lowered one notch.

The outlooks for all six financial institutions are stable.

S&P also affirmed its credit ratings on the Royal Bank (TSX:RY) and TD Bank (TSX:TD) and raised its outlook to stable from negative.

The agency currently rates both banks at double-A-minus.

In its report, says the Journal, S&P noted loan demand is approaching a cyclical peak and is expected to moderate after several quarters of robust growth.