BMO Dismisses Canada’s Soaring Insolvencies. Here’s Why They’re Wrong

Canadian insolvency filings have been surging, but it doesn’t really matter. That was the take from BMO Capital Markets, which dismissed the issue due to population growth. In a note to investors, the bank explained the per capita trend remains healthy. There’s just one problem—their take makes no sense. Canada Has Near-Record Insolvencies. Does It Matter? There were 13,254 insolvency filings in June, up 11.5% from last year and more than double 2020’s volume. Only June 2009 came in higher, with nothing else even close on the books. That may sound concerning, but BMO sees population growth as a mitigating factor. “As has been reported in recent days, consumer insolvencies are running near the highest level since the 2009 recession. Adjusting for the size of Canada’s population, however, the level has basically just normalized back to pre-pandemic conditions,” explains BMO senior economist Robert Kavcic. More people equals a smaller ratio of credit losses, after all. “​​The real story is that there is really no story,” he adds. Not exactly. Canadian Insolvencies Per Capita Are Low. That Doesn’t Mean What Many Think It Does Canadian insolvencies per capita, seasonally adjusted. Sourc...