Canada's banks are finally getting some respect.
Derided for years as meek and mild while banks around the world expanded wildly, suddenly the reputation of Canada's big lenders as prudent and sometimes downright boring has become an asset instead of a liability.
U.S. President Barack Obama has heaped praise on the management of this country's financial system. Ireland is considering overhauling its system to look more like Canada's. Financial papers around the world are running headlines such as “Canada banks prove envy of the world.”
Since the credit crunch began in the summer of 2007, the Big Five banks have booked a total of $18.9-billion in profits. In roughly the same period, the five biggest U.S. banks have lost more than $37-billion (U.S.).
The reason comes down to a fundamental conservatism. From lending practices to bets on trading to financial reserves and takeovers, the Big Five banks have long tended to be more careful than their global peers.
There are however, clouds over the horizon.
Profit growth in general is a thing of the past until the economy picks up. Most analysts agree that 1st quarter was the high point for the year, rest of the year profits will go down.
There's also nagging doubts that dividend payments are unsustainable and that something bad is still lurking on balance sheets.
Still, the banks are wary of getting cocky when a careful approach has worked well.
“It's a good thing for us to recognize the things we do very well, but maybe do it in what is appropriately a Canadian way – with modesty,” said Bank of Montreal CEO Bill Downe.
reportonbusiness.com: Canada envy, amid a global meltdown