More than half of Canadians say current economic conditions have impacted retirement plans: Survey

Daniel Johnson, BNN Bloomberg

More than half of Canadians said their plans for retirement have been impacted by the current economic backdrop, according to the Scotia Global Asset Management Investor Sentiment survey.

The survey from Scotiabank, released on Thursday, found 55 per cent of respondents said their retirement plans were “impacted by current economic conditions.” 

“These results indicate that investors have current concerns about meeting their retirement goals; however, regular meetings with financial advisors and having a written financial plan diminish those concerns,” Neal Kerr, the head of Scotia Global Asset Management, said in a press release. 

The survey also said 59 per cent of respondents had negative feelings regarding their investments, which marked a 33 per cent increase from a previous survey conducted in the fall of 2021.

The findings aligned with a recent Scotiabank poll, which found that Canadians are worrying more about their personal finances when compared to the previous year.

The Investor Sentiment survey also found that 86 per cent of respondents who met with a financial adviser in the past six months had higher levels of confidence in funding their retirement. 

Indications of confidence increased to 95 per cent among respondents who combined meeting a financial advisor with having a financial plan. 

But, only 26 per cent of Canadians who responded to the survey said they had a written plan. 

METHODOLOGY:

The Scotia Global Asset Management Investor Sentiment survey was conducted by Environics Research from January 4-10, 2023. The online survey included 1,022 Canadians, 25 years of age or older with household investable assets of $25,000 or more and who participate in investments decisions for their household. The data was weighted by age, gender and region and household investable assets to reflect the population.

Canadians seeking more credit amid financial 

pressures: Report

Holly McKenzie-Sutter, BNN Bloomberg

Canadians are taking on more credit in response to financial pressures and uncertain economic conditions, a new report has found, with recent signs that people are increasingly struggling to make timely payments.

TransUnion’s Q4 2022 Credit Industry Insights Report found the health of Canada’s credit market has remained at pre-pandemic levels—though “delinquency,” or late payments “increased steadily over the last three quarters.”

“We are observing increased credit usage, as some consumers look to credit as a means to help stave off financial pressures,” Matt Fabian, director of financial services research and consulting at TransUnion in Canada, said in a new release.

“Lenders are beginning to increase their provision for credit losses, but they’re not stopping their growth trajectory since delinquency levels are still below what they were prior to 2020. Canada is still in a good environment from a performance perspective, but lenders would do well to monitor trends closely.”

CREDIT PARTICIPATION RISES NATIONWIDE

The report assessed depersonalized and aggregated credit data from more than 29 million Canadian credit consumers. TransUnion’s report maps credit market health with its Credit Industry Indicator (CII), based on demand, supply, consumer behaviour and performance. The report said Canada’s CII rose four points year-over-year in December 2022 to 105, staying in the pre-pandemic range.

Much of the increase was driven by high credit participation and larger consumer balances, the report said.

Credit participation rose in all provinces and Ontario saw the highest increase of credit-active consumers at 3.2 per cent, as borrowers looked for “a range of credit products” to cope with financial pressures.

HIGHER INTEREST RATES AND “PAYMENT SHOCKS”

The increase in the report indicator was offset by declines in retail spending and increases in delinquency. After years of healthy credit performance during the pandemic, the report said people are now facing “payment shocks” amid the high inflation, high interest rate economic environment that has driven up monthly payment amounts.

Consumer-level “serious delinquency,” defined in the report as payments 90 days or more past due, increased 11 per cent year-over-year in the last quarter of 2022, rising to 1.51 per cent. Delinquency was increasing over the last three quarters, with most of the increase seen in recent months with unsecured credit products.

The report noted “overall delinquency levels” were below pre-pandemic levels, and suggested credit lenders should look for early warning signals and work with consumers to “prepare less costly recovery strategies.”

Total outstanding balances reached a record high in the last quarter with a year-over-year increase of 6.8 per cent to $2.3 trillion. The report said that increase was driven by high average credit card and mortgage balances per consumer.

YOUNG PEOPLE SEEK CREDIT

Younger consumers drove originations, or new credit products, the report found. Gen Z originations growing 20 per cent year-over-year and millennial originations growing 10 per cent.

Gen Z consumers born in 1995 or later were the fastest-growing cohort adopting credit, with nearly 19 per cent starting to borrow--though the report attributed most of the increase in that cohort to more people reaching credit-eligible age. Millennials also saw a four per cent increase in the number of credit-active people.

MORTGAGE TRENDS

Mortgage originations declined 18 per cent year-over-year, the report said. Demand for mortgage refinancing has dropped with recent interest rate changes, as “most consumers who were eligible for refinancing have already taken the opportunity to do so.”

Real estate prices are declining, the report said, but interest rate hikes have driven up minimum payments and “put Canadian homeowners under even more pressure,” with mortgage payments increasing an average 17 per cent from a year earlier.

Indigo won’t pay ransom requested in February cyberattack

Holly McKenzie-Sutter, BNN Bloomberg

Canadian bookstore chain Indigo Books & Music Inc. will not pay ransom requested by hackers behind a Feb. 8 cyberattack that compromised employee data and continues to hamper online operations, the company said Thursday.

The retailer said it still does not know the identity of the attackers, but the investigation so far has revealed the software they used – and that stolen employee data could be posted to the dark web on Thursday.

“We have been informed that the criminals responsible for this attack may make some or all of the data they have stolen available using the dark web as early as today,” the company said in a Thursday statement to BNN Bloomberg.

“Given we cannot be assured that any ransom payment would not end up in the hands of terrorists or others on sanctions lists, Indigo has determined it would be inappropriate to pay the ransom.”

The unidentified hackers used software associated with infamous global ransomware group LockBit, the company said.

Indigo said it is working with Canadian police services and the U.S. Federal Bureau of Investigation (FBI) in response to the attack that saw the company halt its website and mobile app operations.

The company said it decided not to pay the requested ransom on the advice of privacy commissioners and law enforcement, as paying the ransom “rewards criminal activity” and does not guarantee the stolen data would be protected.

Ransomware uses software to encrypt the victims’ digital files and then demands payment to unlock them. The FBI has described LockBit as one of the world’s most active and destructive ransomware groups.

In an unusual move for the organization, LockBit apologized earlier this year for an attack by one of its “partners” that disrupted operations at Toronto’s Hospital for Sick Children, and offered to unlock the hospital’s data.

Other global LockBit victims include the U.K.’s postal service, software firm ION Trading UK and its clients and police departments and government agencies in the U.S.

Customer data was not compromised in the Indigo attack, the company has said, but some data from current and former employees was. It’s offering affected employees two years of free credit monitoring and identity theft protection from agency TransUnion of Canada.

Now three weeks after the attack, Indigo’s web operations still aren’t fully back online.

Only “select” book titles are available to order online, customers cannot use gift cards for online orders or access their online “wish lists,” and the store’s mobile app is not currently available.

The company said it can’t provide delivery status updates for orders placed online before Feb. 8 or allow people to cancel online orders, among other limitations.

With files from Bloomberg News and The Canadian Press.

Crescent Point continues to grow production in Kaybob Duvernay

Amanda Stephenson, The Canadian Press

Crescent Point Energy Corp. says its $900-million acquisition of Shell Canada's Kaybob Duvernay assets in 2021 has performed so well that the assets will have paid for themselves by the end of the first quarter of 2023.

"We've been very pleased with this asset since entering the play in 2021," Crescent Point chief operating officer Ryan Gritzfeldt told a conference call to discuss the company's fourth-quarter results. 

"We are currently on track to generate approximately $900 million of excess free cash flow . . . by end of first quarter 2023. This equates to a very quick two-year payback on our original acquisition."

Crescent Point, which has drilling operations in Alberta, Saskatchewan and North Dakota, has been fortifying its position in the Kaybob region of northern Alberta since making that first blockbuster purchase of assets two years ago.

During the third quarter of 2022, the company acquired additional assets in the Kaybob Duvernay for about $87 million, and in December 2022, it announced a $375-million deal with Paramount Resources Ltd. to acquire yet more Kaybob assets.

"After nearly two years of operating within the basin, we made the strategic decision in late 2022 to increase our land position, and in so doing, have increased our drilling inventory in the play to over 20 years," Gritzfeldt said.

He added Crescent Point now plans to grow its Kaybob Duvernay production from 40,000 barrels of oil equivalent per day to over 60,000 boe/d within the next five years.

Crescent Point Energy announced a special dividend Thursday as it reported a loss in its latest quarter, weighed down by a one-time impairment charge.

The company said it will pay a special cash dividend, based on its fourth-quarter results, of 3.2 cents per share on March 17, to shareholders of record as of March 10. The payment is in addition to the company's regular quarterly dividend of 10 cents.

Crescent Point reported a fourth-quarter loss of $498.1 million or 90 cents per share for the quarter ended Dec. 31 compared with a profit of $121.6 million or 21 cents per share in the last three months of 2021.

The company said its adjusted profit from operations amounted to $209.8 million or 38 cents per share for its fourth quarter, up from $160.0 million or 27 cents per share a year earlier.

Average daily production for the quarter amounted to 134,124 barrels of oil equivalent per day, up from 130,407 in the fourth quarter of 2021.

Crescent Point is forecasting crude oil prices for 2023 to hover around the US$75 per barrel for the benchmark West Texas Intermediate.

The company's heavy weighting in oil means that any $5 increase over that $75 WTI price will generate approximately $200 million in additional cash flow.

https://www.shaleexperts.com/plays/duvernay-shale/Overview?menu

Duvernay Shale Overview - Maps - Geology - Counties 

The Duvernay Shales have been credited as the source rock for many of the large Devonian oil and gas pools in Alberta. The most famous is The Leduc Field ...

The Duvernay Shale in Alberta has significant potential for oil and ... 

Jun 30, 2022 ... However, the Duvernay's oil resource is much smaller than the remaining bitumen reserves in Alberta's oil sands (165 billion barrels).

https://en.wikipedia.org/wiki/Duvernay_Formation

Duvernay Formation - Wikipedia 

The Duvernay Formation is a stratigraphical unit of Frasnian age in the Western Canadian ... Calgary-based, Athabasca Oil Corporation (formerly Athabasca Oil Sands ...

JUST WHAT THE TORIES WANT

Canadians fear China swayed elections that put Trudeau in power: Poll

Brian Platt, Bloomberg News

Two thirds of Canadians suspect China attempted to interfere in recent elections that returned Prime Minister Justin Trudeau and his Liberals to power, according to a new poll.

More than half think the alleged meddling represents a serious threat to Canada’s democracy. A similar proportion says Trudeau’s response to the simmering scandal hasn’t been tough enough.

A series of recent media reports that cited secret intelligence documents alleging China attempted to interfere in the 2019 and 2021 votes has brought the issue into the spotlight. Trudeau has so far resisted pressure to call a public inquiry into the matter.

While the strongest belief in Chinese interference comes from supporters of the main opposition Conservatives, the survey published Wednesday by the Angus Reid Institute found majority support for the notion among backers of all parties.

“The political aspect of this is undeniable,” Angus Reid President Shachi Kurl said by email, flagging the belief among Conservatives that China denied them an election win in 2021. “This is significant because it runs the risk of further undermining trust in the election process.”

Overall, 32 per cent of respondents said China definitely tried to interfere in recent Canadian elections and 33 per cent said it probably did. Only 6 per cent answered a definitive no to the question.

‘STOLEN’ VOTE?

On Tuesday, a non-partisan group of government officials released a study on the integrity of the last national vote, in which Trudeau secured a third term but fell short of a parliamentary majority that would have allowed him free reign to pursue the Liberal government’s agenda. 

“National security agencies saw attempts at foreign interference, but not enough to have met the threshold of impacting electoral integrity,” the panel said.

Angus Reid, however, found that 42 per cent of Conservative voters said they thought the 2021 election was “stolen” due to Chinese interference, compared to tiny support among those backing left-leaning parties.

While Trudeau and Chinese President Xi Jinping have clashed in public, the Liberals are seen as more open to doing business with the Asian superpower than the Conservatives, who take a hard line on human rights issues and national security concerns.

China maintains it doesn’t interfere with Canada’s internal affairs and has warned that the northern nation should stop “smearing” Beijing’s government with what it calls unfounded allegations.

It’s too soon to tell if the issue will do lasting damage to Trudeau, according to Kurl. “These data offer an early directional arrow in terms of expecting the PM and his government to be seen to be taking this issue more seriously,” she said. 

The poll found that 53 per cent of respondents think Trudeau’s response to the allegations hasn’t been strong enough, and want to see Canada take further action. About 64 per cent said they believe Canada doesn’t put enough focus on national security and defense.

Asked if Trudeau’s government is “afraid to stand up to China,” 69 per cent said they agree.

Reporting by broadcaster Global News and the Globe and Mail newspaper has alleged Trudeau received secret intelligence briefings saying China attempted to get certain candidates elected to parliament, and preferred to see his Liberals govern the country over the Conservatives.

The prime minister has called the stories inaccurate, but declined to go into detail about what exactly he disputes. The reports included claims that China spread misinformation to hurt certain candidates, and funneled money and volunteers toward people it wanted to see elected. 

A parliamentary committee is studying the matter, and will hear testimony later Wednesday from government witnesses including Trudeau’s national security adviser, Jody Thomas.

The Angus Reid survey was conducted online between Feb. 23 and 25 among a representative randomized sample of 1,622 Canadian adults. The firm said that for comparison purposes, a probability sample of this size would carry a margin of error of 2 percentage points, 19 times out of 20.

Nordstrom closing all of its Canadian stores, cutting 2,500 jobs

Tara Deschamps, The Canadian Press

Nordstrom (JWN:UN)

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Nordstrom Inc. is closing all of its Canadian stores and cutting 2,500 jobs as it winds down operations in the country.

The Seattle-based retailer has six Nordstrom and seven Nordstrom Rack stores in Canada, which it announced Thursday will be shuttered by late June. Its e-commerce business, nordstrom.ca, was due to cease operations by the end of the day.

Chief executive Erik Nordstrom said the closures were the result of regular reviews the company conducts that challenged its longtime plans "to build and sustain a long-term business" in Canada.

"Despite our best efforts, we do not see a realistic path to profitability for the Canadian business," he said in a statement.

"This decision will simplify our structure, intensify focus on our growth and profitability goals and position us to create greater value for our shareholders."

CTV NEWS: These are the locations where Nordstrom will close its stores in Canada

Nordstrom, an upscale department store chain that sold a mix of designer goods, first announced plans to expand to Canada in 2012 and opened its first store in Calgary at CF Chinook Centre in September 2014.

It quickly expanded its presence with stores at CF Rideau Centre in Ottawa, CF Pacific Centre in Vancouver and CF Eaton Centre, Yorkdale Shopping Centre and CF Sherway Gardens in Toronto.

Nordstrom Rack, which promised luxury brands at bargain prices, followed with several locations. When it opened its first Rack store in Canada in 2018 at Vaughan Mills, a mall north of Toronto, it said as many as 15 more could follow.

The company said its Rack stores would deliver savings of up to 70 per cent on apparel, accessories, home, beauty and travel items from 38 of the top 50 brands already sold in its Canadian department stores.

The Canadian closures were "probably the right choice" and show the company has a lack of confidence in how it could continue to support Canadian losses, said Neil Saunders, the managing director of GlobalData, a retail research agency.

"Although the division is relatively small, and the Canadian market has somewhat limited potential because of its size, it is nevertheless a significant admission of failure that Nordstrom cannot make its proposition work financially," he wrote in a note to investors.

"It also underlines the rather tenuous position of the company which wants to focus is finances and firepower on reinvigorating the U.S. operation."

Nordstrom's wind down is being completed through an order obtained by the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act.

It intends to seek court approval later this month for a liquidation sale, which would begin shortly after.

Nordstrom Canada gift cards will continue to be honoured to the end of the liquidation period, though none would be made available for purchase after Thursday.

Returns and exchanges will be permitted until March 17 at which point all sales and returns will be considered final.

The Canadian wind-down came as Nordstrom released its fourth quarter results, which included net earnings of US$119 million in the period ended Jan. 28. That compared with net earnings of US$200 million during the same period the year before.

As a result of the Canadian closures, Nordstrom expected to record US$300 to US$350 million in pre-tax charges in the first quarter of fiscal 2023.

The wind-down is expected to result in a roughly US$400 million decline in net sales.

Suncor Energy selling North Sea offshore assets in deal valued at $1.2B

Amanda Stephenson, The Canadian Press

Suncor Energy Inc. has taken another step toward streamlining its business, signing a deal to sell its offshore assets in the North Sea to Equinor UK Ltd. in an agreement valued at about $1.2 billion.

The deal announced late Thursday comes after Suncor put the assets up for sale last year.

"The decision to sell our UK Exploration & Production business is a clear example of our commitment to optimize our asset portfolio," interim CEO Kris Smith said in a news release.

The deal includes Suncor's non-operated 29.9 per cent stake in the producing Buzzard field as well as its 40 per cent stake in the Rosebank development, which is operated by Norwegian multinational Equinor and located about 130 kilometres northwest of the Shetland Islands.

The transaction is expected to close in the middle of this year.

Suncor has been selling non-core assets to focus on its main oilsands and downstream businesses.

Last year, it announced it would sell its wind and solar assets to Canadian Utilities Ltd. for $730 million and in another deal agreed to sell its exploration and production assets in Norway for $410 million.

The company also considered the possible sale of its Petro-Canada retail chain, but announced in November it would keep the business as it was unlikely to receive the price it believes the chain is worth.

Suncor's efforts to streamline its operations are part of an overall plan to boost performance at the Calgary-based energy giant. Last year, the company reached a deal with activist investor Elliott Investment Management LP, which had expressed frustration with the company's lagging share price, safety record, and streak of operational challenges.

Suncor will also soon have new leadership, as Rich Kruger -- who led Imperial Oil Ltd. as president and CEO from 2013 until 2019 -- will become CEO on April 3.

Kruger was named to the post after a months-long search, and will replace Smith who has been doing the job on an interim basis since Mark Little resigned in July 2022 amid investor pressure.

KOREA

[Editorial] Embarrassing subsidy standards

Just two years ago, big Korean companies’ aggressive investments in the United States were flagged as the symbol of the Korea-U.S. alliance. U.S. President Joe Biden mentioned Korea’s household corporate names for their generous investment every time he met with Korean presidents. During his summit with president Moon Jae-in in May 2021, Joe Biden saluted the representatives of Samsung, Hyundai Motor and SK.

While stopping in Korea for his summit with President Yoon Suk Yeol in May last year, Biden went straight to the chip factory of Samsung Electronics in Pyeongtaek, Gyeonggi, to highlight the “tech alliance” of the two countries. The chip alliance was dubbed a “win-win strategy,” as the U.S. can strengthen its chip ecosystem on home while Korea can penetrate deeper into the U.S. market.

But the provisions of the U.S. CHIPS and Science Act confound us. Under the terms, foreign companies receiving U.S. subsidies must share their excess profit with the federal government and report their finances, including cash flow, in detail. They also cannot expand their chip production facilities in China for 10 years. The U.S. government claims the conditions are necessary in return for the $39 billion tax fund to foreign chipmakers ultimately desgined for the interests of the U.S. economy and security.

But the demands can seriously infringe on corporate sovereignty. Chipmakers are sensitive in disclosing their chip processing technologies. Korean companies could be victimized by the “Make America Great Again” slogan by Biden. He has been as demanding as his predecessor Donald Trump, albeit in less blunt rhetoric.

The Korean government must stand up for its companies. The economy and security must move as one. The Ministry of Foreign Affairs and the Ministry of Trade and Industry last year fought over who should have the jurisdiction over trade diplomacy. They must prove their worthiness if they mean well.

Korea must not make any concessions with its chip competitiveness to maintain the edge over China and the U.S. The most advanced processing technology and R&D facilities must not leave the country. The legislature must hasten with the chip support legislation to help secure the competitiveness of its semiconductor industry.

Multibillion-dollar investments in the U.S. mean less jobs for Korea and less exports for the country. Still, Korean companies went on with massive-scale investments in America on expectations of mutual benefits. The U.S. solely seeking its own benefit while stressing the tech alliance for the realignment in supply chains is not acceptable. The two governments must strike a good balance if they really do not want to damage their bilateral relationship for the future.

Sunday
March 5, 2023