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Canadian Insolvency Data Shows Normalization, Not Crisis: NBF
Household finances are under growing stress from inflation and a weaker job market, but there’s no solvency crisis just yet, says National Bank Financial Inc....
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National Bank Financial Inc. analysts pushed back against the crisis narrative this week, arguing that recent spikes in Canadian insolvency filings are a normalization from pandemic lows, not the start of a credit event. The distinction matters for anyone watching household balance sheets as a trigger for broader market stress.
The Simple Read: Record Insolvency Filings
First-quarter data showed total debt in insolvency hitting its highest mark since the 2008–09 financial crisis. The number of insolvency filings also reached levels not seen since 2009. On the surface, that looks like a household sector under severe strain. A naive read would be that credit risk is accelerating and systemic weakness is building.
The Better Read: Adjust for Population and Seasonality
NBF flagged two adjustments that change the picture. First, seasonality – insolvency volumes are traditionally higher in the first half of the year, so the Q1 jump needs a seasonal baseline. Second, Canada’s population has grown about 25% since 2009, meaning raw filing counts should rise just to keep the per-capita rate constant.