ONTARIO RING OF FIRE

First Mining road project put on hold

Dryden, ON, Canada / CKDR

Randy Thoms

Feb 27, 2024 | 1:05 PM

Map courtesy First Mining Gold

The construction of a mining access road near Cat Lake First Nation is now on hold.

A court judge has granted, at the request of the community, an interim order pausing the work by First Mining Gold.

The company received permission from the Ministry of Natural Resources and Forestry to build an 18-kilometre road to its Springpole mining project.

The company wants the road to avoid travel over winter roads.

Since establishing a camp in 2015, First Mining has used an ice road to move supplies and access the site.

It travels 40 kilometres, of which 34 is over ice and half over nearby Birch Lake.

First Mining says there have been several incidents of vehicles breaking through.

Cat Lake objects to the work, saying the Ministry ignored the community’s moratorium on mining exploration and related road work within its traditional territory.

First Mining indicates it proactively engaged with the area’s Indigenous communities over the past year regarding the safety concerns of using the ice road in light of the warm conditions experienced.

Chief Executive Officer Dan Wilton says he is disappointed by the band’s decision but is open to further talks.

“First Mining continues to listen to the concerns of Indigenous communities and is always willing to meet with community leaders to discuss these and any other matters regarding our activities in their traditional territories,” says Wilton in a release.

First Mining adds it has committed significant resources toward consultation efforts with the area’s Indigenous communities and is committed to working with them to understand the potential impacts on their rights and the traditional land users around the exploration Camp.

Gold in the Cold: First Mining's Winter Road Project Faces Legal Challenge in Northwestern Ontario

Discover the ongoing battle between economic development and indigenous rights in northwestern Ontario, as the construction of a winter road to the Springpole Gold Project exploration camp sparks legal resistance from the Cat Lake First Nation.

BNN Correspondents
26 Feb 2024


In the heart of northwestern Ontario, a battle unfolds that pits the promise of economic development against the preservation of indigenous rights and environmental integrity. On February 9, 2024, First Mining Gold Corp. received construction permits for a temporary winter road leading to the Springpole Gold Project exploration camp. This development, heralded by some as a step forward in the gold exploration sector, has been met with legal resistance from the Cat Lake First Nation, sparking a conversation that transcends the mere construction of an 18 km pathway through the wilderness.

The Road Not Taken Lightly

The proposed winter road is not just a matter of logistics but a narrative of safety, environmental stewardship, and community engagement. Designed to provide a safer alternative for transporting supplies and personnel, the road aims to mitigate the risks posed by increasingly unreliable ice roads—a consequence of warmer winter conditions. Since 2015, First Mining has operated the remote exploration camp with a commitment to minimizing environmental impact and respecting traditional land use practices. Yet, the road's construction has been paused by an interim stay, following the Cat Lake First Nation's notification of their intent to challenge the permits issued by the Ontario Ministry of Natural Resources and Forestry.

A Legal and Ethical Quagmire

The challenge put forth by the Cat Lake First Nation underscores a complex intersection of legal rights, environmental ethics, and indigenous sovereignty. While First Mining emphasizes its dedication to safety and environmental responsibility, the First Nation's concerns highlight the potential for disruption and the need for thorough consultation and consent processes. This scenario is emblematic of a broader dialogue in Canada and worldwide, where the rights and wishes of indigenous communities are increasingly recognized in the face of industrial expansion.

Looking Forward: Engagement and Resolution

Despite the current legal standoff, First Mining maintains its commitment to ongoing dialogue and engagement with the Cat Lake First Nation and other indigenous communities. The outcome of this situation could set a precedent for how resource exploration companies and indigenous territories can coexist and collaborate. As the legal process unfolds, both parties may find an opportunity to redefine the parameters of mutual respect, environmental stewardship, and economic development in a way that honors the land and its original caretakers.

In this unfolding story of gold, ice, and indigenous rights, the path forward is as much about building bridges of understanding and cooperation as it is about constructing a road through the wilderness. As the case progresses, it will undoubtedly continue to attract attention from those invested in the future of resource exploration, indigenous sovereignty, and environmental preservation in Canada and beyond.

Cat Lake First Nation Files Court Injunction to Stop First Mining Gold

By NNL Digital News Update
-February 23, 2024

Cat Lake First Nation (CLFN) has filed for an injunction in the Divisional Court of Ontario seeking to stop First Mining Gold (FMG) from constructing a new access road using Permits issued by the Ontario Ministry of Natural Resources & Forestry (OMNRF). This is against the wishes of CLFN on whose ]territory the new road is being built. The road construction is underway at a fast pace and Ontario and FMG have refused to stop construction.

The permits allow FMG to construct an 18 km road through Cat Lake’s traditional territory (440 Km NW of Thunder Bay). The successful injunction would halt FMG’s construction until the resolution of Cat Lake’s application for judicial review.

Cat Lake First Nation Chief Russell Wesley stated, “Ontario’s actions here fall far below their constitutional duty to consult and accommodate Cat Lake’s rights.” He went on to say, “Ontario’s decision and actions was made in defiance of a well-documented Moratorium on mining in the Cat Lake Territory and numerous public statements of opposition. Recently, I predicted in media interviews that the OMNRF would issue the permits despite Cat Lake First Nation’s concerns. This has happened, the OMNRF has forced Cat Lake First Nation into the courts.”

Cat Lake First Nation filed documents with the Superior Court of Justice (Divisional Court) in Thunder Bay on Feb 21st, 2024. The injunction would prohibit FMG from taking any steps to construct its proposed road from the end of the Wenasaga Road to its Springpole Gold Project exploration site, pending the resolution of Cat Lake First Nation’s application for judicial review.

Cat Lake has always maintained that it is still considering the development of the Springpole Mine Project in its traditional territory. Before Cat Lake can consent to any development it has consistently sought to better understand the potential impacts of the project on its Aboriginal rights, including the impact on the ability of members to exercise their rights to hunt, fish, and trap in the area, as well as the impact on possible sacred sites, such as pictographs and burial grounds of Cat Lake members and their ancestors. The OMNRF permit approval has significantly destabilized this situation.

Chief Russell Wesley observed, “Once such a road is built—cutting down trees, harming local wildlife habitat used by moose caribou and wolverine, depleting fish stocks, damaging sacred Cat Lake cultural sites, and disturbing Cat Lake burial grounds—such actions, and their harms, cannot be undone. Only the requested orders can prevent such harms until the serious issues in the underlying application are heard on the merits.”

The Chief said, “I am deeply concerned over the obvious prioritization of miner safety and the economic interests of mining companies over the safety and well-being of the Cat Lake community members. The five-year permit granted by MNRF is for the entirely land-based road route in stark contrast to Cat Lake First Nation being accessible by a seasonal winter road with several water crossings, made more dangerous and less predictable by climate change.”

The OMNRF issuance of these permits signals a lack of regard for the community’s voice and raises doubts about the Ontario government’s awareness of free, prior, and informed consent.

Cat Lake never signed any treaty with the Crown relinquishing its Aboriginal title or relinquishing its Aboriginal title or Aboriginal rights. Cat Lake was not a signatory to Treaty 9 in 1905-1906.

“We demand equal treatment and consideration for the well-being of our people as we continue to work towards protecting our rights and land,” Chief Wesley concluded.

Cat Lake First Nation Partners with Finnish Companies for Forest Biomass and Health Diagnostics Initiatives

By Don Huff

Huff Strategy

February 26, 2024

Category: Forestry

Region: Canada, Canada East

THUNDER BAY, Ontario — Cat Lake First Nation signed Memorandums of Understanding (MOUs) with two leading Finnish organizations to collaborate on forest biomass and long-distance healthcare diagnostic initiatives. …The first partnership involves a health diagnostics initiative with 73Health, focusing on deploying advanced remote medical diagnostic solutions for the benefit of remote communities, including Cat Lake First Nation. This initiative is part of 73Health’s expansion plans across North America, with Ontario being a priority location. …The second partnership with Natural Resources Institute Finland (LUKE) aims to advance a Northern Bioeconomy Network, focusing on scientific and academic exchange and the sustainable utilization of forest biomass resources for economic growth. The intent is to complete an ecological and economic master plan within a year. … Minister Graydon Smith said “Funding delivered by the Indigenous Bioeconomy Partnerships stream will ensure Ontario’s growing forest bioeconomy builds prosperity for Indigenous businesses and communities.”

Anglo spinoff breeds fish to restock rivers after massive toxic spill
Bloomberg News | February 27, 2024 | 



In a South African first, a project funded by one of the country’s biggest coal mining companies has begun repopulating a river system with fish after a catastrophic spill from a disused coal mine.


The project is being financed by part of the roughly 1 billion rand ($52 million) provided by Thungela Resources Ltd., a company spun off by Anglo American Plc, for rehabilitation and securing disused mine shafts.

The goal is to reintroduce 17 species of fish, ranging from hardy tilapia to eels and tiny catfish, to the 112 km (70 miles) of the Wilge and Olifants river systems that were wiped out by the Feb. 14, 2022, spill of acidic water after illegal miners broke a seal at an operation that had been shuttered since the 1960s.

The 2022 toxic spill is indicative of the environmental risks posed to South Africa from the more than 400 disused coal mines in the country. Along with idled gold mines, these are being targeted by illegal miners who profit from tapping the remaining reserves. The spill was from an operation near the Khwezela Colliery in South Africa’s eastern province of Mpumalanga.

“The impact environmentally goes far beyond the few tons of coal people will steal,” July Ndlovu, Thungela’s chief executive officer, said at an event at the Loskop Dam Nature Reserve on Feb. 23.

The mining company is funding a fish breeding facility at the reserve that began releasing banded tilapia and southern mouthbrooders, two small cichlid species that will need to establish themselves in the rivers before larger predatory species are put back. Other fish to be reintroduced include longfin eels, shortspine suckermouths, yellowfish, stargazer catfish and bulldogs, a small fish that generates an electric field to hunt and orient itself.

“I’ve been working in nature conservation for 42 years and this is the cherry on the cake,” said Andre Hoffman, an aquatic scientist brought out of retirement to work on the project. He spoke as he slowly coaxed small southern mouthbrooders out of a plastic container into a stream. “It’s not nice for this to have happened but we can learn a lot from it.”

The river system could take five to 10 years to recover even with the intervention, but need take 40 to 50 years without it, he said.

In addition to the breeding facility, Thungela has built water treatment plants at a cost of 398 million rand and is restoring wetlands, setting up a plant nursery and restoring vegetation. Over 500 million rand has been spent securing old mines.

(By Antony Sguazzin)

Sandfire America scores legal win for Montana copper project

Staff Writer | February 27, 2024 |

Site of Black Butte project in Montana. Credit: Sandfire Resources America

Sandfire Resources America (TSXV: SFR) stock soared on Tuesday following a positive ruling by the Montana Supreme Court which reversed a district court decision and reinstated the permit for the company’s flagship Black Butte copper project.


For years, the Black Butte project has divided opinions amongst local communities because of its close proximity to Smith River, one of the state’s most popular recreational rivers. The proposed mine is located on private land some 27 km north of the town of White Sulphur Springs in central Montana.

In June 2020, a lawsuit was brought forward by local conservation groups against Tintina Montana — Sandfire’s subsidiary — as well as the Montana Department of Environmental Quality (MT DEQ) for certain violations against the state’s environmental and mining laws. Specifically, it argued that state officials did not thoroughly study the environmental harm that could result from the mine.

After hearing the plaintiff’s arguments, a district court judge issued a decision in April 2022 to invalidate Black Butte’s copper mining permit, though Tintina was allowed to complete the project’s Phase I construction while it pursues an appeal of the order.

In June 2023, the Supreme Court heard oral arguments on the case, and subsequently granted the company’s request for summary judgement to allow complete construction of its underground copper mine in Montana. Intervenors in support of Tintina and MT DEQ in the suit include Meagher County, Broadwater County and the Montana Department of Justice.

On Tuesday, Tintina won on all counts in the Supreme Court with a 5-2 decision, upholding the 2020 decision of the MT DEQ to allow copper mining at Black Butte, which, according to a 2020 feasibility study, will be underpinned by the large Johnny Lee deposit that is expected to produce 23,000 tonnes of copper a year during an eight-year life.

“The fact is, ours is the most reviewed and examined proposed project in the history of Montana mining. The Court record stands at over 90,000 pages of testimony, information, and analysis,” Sandfire America CEO Lincoln Greenidg said in a press release Tuesday.

“Today’s victory in the Montana Supreme Court is a validation of the thoughtful and deliberate efforts of the Sandfire America team to design a world-class, environmentally safe mining project from the beginning,” he said.

“Over a decade ago, we set out to design a state of the art, environmentally protective underground mining project, and this decision is proof we’ve been successful,” added senior VP Jerry Zieg.

The company now has all the permits necessary to proceed with the Black Butte project. Stipulated agreements regarding water rights granted through the Montana Department of Natural Resources and Conservation (MT DNRC) for the project have been finalized, Sandfire said.

Separately, there is an ongoing challenge to the Montana Constitution’s definition of the “beneficial use of water” related to Black Butte’s water use permit. The company noted that this case does not currently affect its water rights package. The challenge was appealed by objectors after losing a district court decision and will be heard by Montana Supreme Court on March 29, 2024.

Shares of Sandfire America surged 75% to a new 52-week high of C$0.14 by 12:15 p.m. ET on the Supreme Court win for its copper project. The company has a market capitalization of C$143.3 million ($105.8m).

Rio Tinto gets $13 million from Canada to decarbonize iron ore processing

Reuters | February 26, 2024 | 

Credit: Labrador Iron Ore Royalty Corporation

Rio Tinto said on Monday that the Canadian government had awarded it C$18 million ($13 million) to decarbonize iron ore processing in Labrador West.


The funding from the government’s Low-Carbon Economy Fund will enable Rio Tinto’s Iron Ore Company of Canada (IOC) to reduce the amount of heavy fuel oil that is used in the production of iron ore pellets and concentrate.

The government funding represents about 25% of the total cost of the project, with IOC funding the rest of the investment, Rio Tinto said.

Installation of new equipment will begin in the second half of the year and is expected to be completed in the first half of 2025.

One of the world’s largest iron ore producers, Rio expects to reduce about 2.2 million tonnes of greenhouse gas emissions over the lifetime of the project.

($1 = 1.3518 Canadian dollars)

(By Vallari Srivastava; Editing by Maju Samuel)

Group RRSP use rising as retirement savings burden 'largely on employees': experts

Daniel Johnson , BNN Bloomberg

Experts say group registered retirement savings plans (RRSPs) have risen in popularity as employees are increasingly tasked with retirement planning amid a broader decline in pension activity. 

Gren Austin, the head of Wealthsimple Work, said in an interview with BNNBloomberg.ca last week that his organization works with employers across Canada looking to create group retirement savings plans. He said that group RRSPs have become the most popular retirement savings plan among clients.   

“We know broadly that pension involvement is down over the decades. And so the onus becomes on the individual, on the Canadian, on the employee, to pay for their own retirement,” Austin said adding that group RRSPs can make a meaningful difference in retirement savings. 

In November of last year, research from Deloitte Canada found that only 24 per cent of private sector workers participated in an employer-sponsored pension plan. 

According to a statement from Wealthsimple on Tuesday, less than one per cent of Wealthsimple Work clients offer a pension plan. The statement said that consumer preferences are changing and employers “are realizing the cost requirements to run a pension are high and opt to follow the demand for group RRSPs.” 

“There is this decades-long historical arc, in that the big pension groups dominated the landscape for a long time in the 60s and 70s. And then those started to fade and things like GRRSPs took over as the main account that sort of dominated the space,” Gren said. 

Julie Petrera, senior strategist with Edward Jones Canada, said in an interview with BNNBloomberg.ca last week that while there is still some level of government assistance for retirement savings, employees take on the bulk of saving responsibilities.  

“The onus is largely on employees to save for their retirement in the absence of good pension plans,” she said. 

Group RRSP matching 

Austin said that group RRSPs often come with a matching component, where some employers will match employee contributions up to a certain level. 

“There's not a lot of other investment scenarios where you can just get that return right away and that's before even the market does its thing and compound interest does its thing. So, it's a really great vehicle to start saving and building up in your RRSP,” he said.

Colin White, the president and CEO of Verecan Capital Management, said in an interview with BNNBloomberg.ca last week that matching components for group RRSPs often range between two and four per cent. He also highlighted that group RRSPs often go unutilized. 

“There's an amazing number of people that don't take advantage of that and they really should. It's free money. If your employer's going to put money into an RRSP plan, you should take that money,” White said.  

Flexibility, transparency

According to White, the rise of group RRSPs has happened for a few reasons, including the difficulties operating pension plans. 

“Pension plans are difficult and complicated to maintain, and they do come with a financial liability that firms have struggled with. And as people have moved around more often in their careers, moving a pension plan is a very difficult and cumbersome thing to do,” he said. 

White also highlighted that traditional pensions are “restrictive from a legislative perspective” and come with liability. 

“So the group RRSP is a far more transparent solution. You know exactly where you stand at any moment in time and you see yourself making progress,” he said. 

White also noted that group RRSP offerings have risen in popularity amid a “more transient workforce” with employees changing jobs more frequently.

According to Petrera, group RRSPs can help employers with recruiting. 

“Group RRSPs are part of a compensation plan. And they’re something that employees would find attractive. So I think there's been a rise in these as employers seek to attract talent to organizations,” she said. 

Cineplex has made almost $40 million from online booking fees in competition case

Tara Deschamps, The Canadian Press

Cineplex Inc. has made almost $40 million from online booking fees at the heart of deceptive marketing claims the country's competition commissioner has made against the cinema chain.

An agreed statement of facts in the case before the Competition Tribunal shows Canada's largest theatre owner made over $11.6 million in the six months after the fees were implemented in June 2022. It made another $27.3 million on the fees in 2023.

Cineplex charges a $1.50 on every ticket purchased online, but Scene+ members get a discount and CineClub members have the fee waived.

Whether the way Cineplex presents the fees constitutes deceptive marketing and drip pricing — when a company displays a price it later tacks fees onto — has been debated in recent weeks before the Competition Tribunal in Ottawa.

Competition Commissioner Matthew Boswell has claimed the fees are deceptive because moviegoers are not presented with the full price of a movie ticket on the very first page they encounter when buying tickets from Cineplex.

Closing arguments filed by the commissioner on Monday claim Cineplex discloses the existence and amount a customer will pay in online booking fees "below the fold" or off the screen for the vast majority of moviegoers, thus misleading people about the final price they will pay.

He added that Cineplex also uses a countdown timer displayed at each stage of the purchase process, which "increases pressure on consumers to focus on completing their purchase, rather than considering transaction details and thinking things through."

When such tactics are used, "consumers tend to underestimate the total price of purchase" because they "pay less attention to additional fees than to base price information."

"The use of these pricing practices has been shown to increase consumer demand — in this case Cineplex has increased demand for its tickets than the demand that would occur if it initially displayed a truthful price of the ticket for a consumer," the commissioner's filing said.

He wants the tribunal to order Cineplex to stop drip pricing, remove the countdown timer from its website and app and pay a financial penalty equal to the amount Cineplex gained from "misleading conduct."

Cineplex has argued the commissioner's claims are without merit and should be thrown out, with costs awarded to Cineplex, because moviegoers are told about fees they may face from the start of the purchase process.

Cineplex spokeswoman Michelle Saba said in an email to The Canadian Press that the business would not comment on the matter while it is being heard by the tribunal.

The company's closing arguments were posted on the tribunal's website Tuesday evening.

In the documents, Cineplex says the commissioner's assertion that it engages in so-called drip pricing is a mischaracterization. It says there is nothing misleading about how it displays online booking fees and total online prices for customers purchasing on its website. 

However, the commissioner's submission said the fees Cineplex charges are a product of its efforts to grow its online ticket business that stretch back many years.

The submission said the chain started using reserved seating in 2017 and had expanded it to all theatres by June 2020, when the COVID-19 pandemic hastened online purchasing.

By 2021, the commissioner said roughly two-thirds of Cineplex's tickets were sold online or through its website.

The commissioner said the online booking fees applied in June 2022 came about "as part of a direction from Cineplex’s chief operating officer for Cineplex to consider different revenue-generating ideas."

By then, Cineplex had grappled with several health measures meant to quell the spread of COVID-19, including theatre closures and social distancing protocols, which weighed on its finances along with a failed sale to U.K. theatre giant Cineworld.

The fees were implemented the same month Canadian laws were changed to deem drip pricing to be false or misleading.

Prior to the fees, tickets booked online were advertised by Cineplex as carrying "no service fee," the commissioner said.

"As Cineplex readied itself for launching the fee, it ordered the removal of any signs that referred to the fact that Cineplex did not have service fees," the filing said.

"It sought to do so in a manner that would not arouse suspicion amongst staff in theatres that the policy might be changing."

This report by The Canadian Press was first published Feb. 27, 2024.

  

High living costs 'jeopardizing' financial security of renters, mortgage owners: survey

Daniel Johnson , BNN Bloomberg\

A new survey says that Canadians, particularly those with rent or mortgage payments, are delaying retirement savings to deal with higher living costs. 

The new survey from Co-operators, released Tuesday, found that higher living costs had a larger impact on renters saving for retirement. In total, 77 per cent of renters indicated they either have not yet started saving for retirement or have not saved as much as they had planned. More than half of respondents with mortgage payments, 51 per cent, indicated they had saved less than planned for their retirement. 

“Canadians are facing a precarious and challenging situation as they try to prioritize their spending. As a result, many are putting their retirement at risk, especially those who pay a mortgage or rent,” Rob Wesseling, the president and CEO of Co-operators, said in the release. 

“This is a clear signal that today’s economic strain is jeopardizing the long-term financial security of most Canadians.” 

The survey found homeowners without a mortgage found it less difficult to accumulate retirement savings, with 76 per cent indicating they have met their retirement savings goals, the survey found. Additionally, 32 per cent of respondents in that demographic indicated they have exceeded their retirement savings expectations. 

More than half of homeowners without a mortgage, 57 per cent, said they believe their registered retirement savings plan (RRSP) and savings will be sufficient to fund their retirement. However, the survey found that only 28 per cent of mortgage owners and 22 per cent of renters believed their savings and RRSP would be enough to cover their retirement costs. 

“These survey results show that Canadians are facing a tough choice – paying for living expenses today or putting some money away for tomorrow,” Jessica Baker, the executive vice-president of retail wealth at Co-operators, said in the release. 

Amid higher living costs, 43 per cent of renters and 23 per cent of mortgage owners indicated in the survey that they are unsure about how they will fund their retirement. Meanwhile, 13 per cent of mortgage-free homeowners face uncertainty about funding their retirement plans. 

Methodology:

Results were derived from an online survey with 1,500 participants across Canada between Jan. 24 to Jan. 30. 

Most Canadian mortgage owners concerned about payments, survey finds

Mitchell Consky, BNN Bloomberg

Canadian homeowners are struggling with an increase in mortgage costs as interest rates surge. (Photographer: SeongJoon Cho/Bloomberg)

A new survey found the majority of homeowners share concerns about making their mortgage payments due to increased interest rates.

According to the data from Ratehub.ca, 67 per cent are worried about paying their mortgage once their next renewal comes up, while 69 per cent of homeowner respondents reported that their mortgage has been generally more challenging to pay in the last two years. 

The survey also found that homeowners made major shifts in their financial decisions to compensate for the higher interest rate environment. 

Penelope Graham, director of content at Ratehub.ca, says homeowners continue to look for numerous options to mitigate the impact of the challenging rate environment. 

“It’s evident that mortgage holders facing a more challenging rate environment (and) upon renewal are exploring options to mitigate the impact – notably, nearly 29 per cent say they plan to refinance their mortgage loans,” she said in a statement sent to BNNBloomberg.ca. 

The data found that 24 per cent of surveyed homeowners considered downsizing their home, while 29 per cent considered refinancing their mortgage. Other major decisions included tightening other areas of their budget (54 per cent) or considering a switch to an alternative lender to help cover costs (17 per cent).

“This can prove to be an effective way to offset higher rates, either by switching to a lender with more favourable term features, extending their amortization, or pulling out built-up equity in order to help with higher monthly payments,” Graham said in the statement. 

She added that higher mortgage rates are “reducing borrowers’ spending power.” 

The survey found that the majority of respondents (65.1 per cent) have a fixed mortgage rate, while 34.9 per cent have a variable mortgage rate. 

Rateshub.ca also reported that 62.6 per cent of respondent homeowners will get a fixed mortgage rate at renewal, and 37.8 per cent will get a variable mortgage rate. 

“Fixed mortgage rates continue to be the most common choice for borrowers, even as rates have soared since early 2022,” Graham explained. “This reflects borrowers’ desire for stability in a volatile marketplace, even as expectations grow for lower variable rates in the near future.”

Methodology: 

Ratehub.ca’s 2023 Mortgage Survey of 2,651 adults was conducted December 3, 2023 - December 31, 2023 by Ratehub.ca. Adults 18 years of age and older residing in Canada were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices.

Rising loan delinquencies bring pain to BMO, Scotiabank results

Christine Dobby, Bloomberg News

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Earnings at Bank of Montreal and Bank of Nova Scotia were marred by increasingly cash-strapped consumers and businesses amid a challenging economic landscape.  

The two Toronto-based banks — the first of the big Canadian lenders to report fiscal first-quarter results — diverged in their results, with BMO missing estimates on lower capital-markets, insurance and corporate-services revenue and Scotiabank topping expectations. Still, both lenders set aside more money for potentially bad loans as higher interest rates continue to hurt credit quality, with missed payments beginning to mount.

Scotiabank’s provisions for credit losses rose to $962 million (US$713 million), more than the $922 million expected by analysts, while BMO’s provisions totaled $627 million, far more than the $514.2 million forecast.

Scotiabank pointed to higher impaired provisions in its international business as well as for Canadian auto loans and unsecured lines of credit, while BMO detailed an increase in impaired provisions for consumer loans, credit cards and business and government loans. 

“Higher delinquencies across most of our retail portfolios this quarter reflect the challenging macroeconomic environment,” Phil Thomas, Scotiabank’s chief risk officer, said on a conference call with analysts. 

His counterpart at BMO, Piyush Agrawal, said the ongoing impact of tighter monetary policy is to blame for an increase in impaired loan provisions.

“Consumer loan losses, in both Canada and the U.S., reflect higher delinquencies in credit cards and other personal loans, reflecting increases in customer insolvencies, which in Canada are now above pre-pandemic levels,” Agrawal said.

Still, executives at both lenders said they continue to see the credit situation as manageable for their Canadian clients, noting that many households still have savings to draw on and have trimmed their discretionary spending.

Clients whose mortgage payments have already gone up “are selectively choosing to prioritize those payments,” BMO Chief Financial Officer Tayfun Tuzun said in an interview. “That’s the reason why I think, in some segments, you are seeing higher card delinquencies, and spend levels are also declining.”

An eventual lowering of interest rates by both the Federal Reserve and the Bank of Canada as soon as this year should ease pressure on consumers, Tuzun said.

“But, in the meantime, we will probably be in this environment where delinquencies will be a bit higher,” he said.

BMO shares fell 4.6 per cent to $120.99 at 2:10 p.m. in Toronto after earlier slumping as much as 5.8 per cent, their biggest intraday decline since December 2022. Scotiabank shares climbed 3 per cent to $65.81.

On the mortgage front, soaring interest rates led to a wave of ultra-long home loans in Canada, hitting borrowers who have fixed monthly payments but variable interest rates. Many of those clients are no longer paying down any principal, extending the length of time it would take to repay their loans. When homeowners go to renew their mortgages, typically after five years, they are expected to face significantly higher payments.

BMO said Tuesday that clients with so-called negatively amortizing mortgages have dropped to 24.7 per cent of the bank’s book in the first quarter from 32.4 per cent a year earlier.

Scotiabank doesn’t allow for negatively amortizing mortgages, but said Tuesday that its customers with variable-rate home loans have already seen an average increase in monthly payments of more than 50 per cent since the Bank of Canada began its rate-hiking cycle in early 2022.