While banks in Canada have made it through the economic downturn relatively unscathed, there are likely to be some rough patches in the next year.
Most of the media attention from the recent Bank of Canada statement addressed personal household debt levels, but the bank also cautioned lenders to expect credit losses in 2010 when interest rates finally rise.
With mortgages secured, there is a risk that if home owners default on their mortgages that they will also be unable to make payments on unsecured debt, such as credit cards and lines of credit.
However, even if Canadian banks lose money on unsecured debt, it looks like they will emerge from the recession in much better shape than banks in other countries.
