Toronto – Arab Canada News

The RBC Bank, one of the largest banks in Canada, revealed in its financial report for the second quarter of 2025, increasing indicators of stress faced by borrowers, amid continued high interest rates. The bank recorded a notable rise in default cases, particularly in the Greater Toronto Area, reflecting the mounting challenges in the mortgage market.

Increase in Late Payments

The bank's financial data showed that the percentage of residential loans overdue for more than 90 days rose to 0.30% in the second quarter, compared to 0.28% in the first quarter, and only 0.19% during the same period last year. The proportion of troubled loans reached 0.29%, up from 0.19% a year ago.

Toronto Leading

Graeme Hebruth, the bank's head of risk, explained that the pressures are concentrated in more economically sensitive areas, primarily the Greater Toronto Area, which records the highest late payment rate at 0.39%, compared to 0.23% in Vancouver and 0.30% nationally.

The Overall Quality of the Portfolio Remains Strong

Despite this increase, the bank confirmed that the quality of the loan portfolio remains strong, with about 60% of borrowers having borrowing rates below 65% of the property's value, while the proportion of high-risk loans (LTV above 80%) does not exceed 7%.

Additional Monitoring of Commercial Real Estate and Apartment Sector

Hebruth noted that the bank is closely monitoring the commercial real estate sector and high-rise residential complexes, especially amid slowing sales of residential units and declining demand. Despite the challenges, loans to developers represent only 1% of the total portfolio, often linked to the best developers and stringent financing standards.

The CEO: No Recession Expected.. Deposits are Growing Strongly

During the investor conference call, CEO Dave McKay reviewed the bank's performance and highlighted key developments:

• Economy: "While no recession is expected in Canada or the United States, the state of uncertainty affects customer confidence and activity, especially in the housing sector."

• Deposits: "We recorded a 13% growth in average deposits year-over-year, supporting our ability to fund loans more efficiently."

• Mortgages: "The growth in residential loans is supported by an increase in renewals and interbank transfers, but we expect a slowdown in activity in the short term."

• HSBC Integration: "We have completed the transfer of HSBC's largest and most complex clients, and we are confident in achieving the targeted savings in the next quarter."