TORONTO (Reuters) - Canada’s federal housing agency said on Tuesday it is well capitalized and able to weather severe but unlikely scenarios including a global trade war and repeated cyberattacks on Canadian financial institutions.
The Canada Mortgage and Housing Corporation (CMHC), responsible for insuring the bulk of Canadian mortgages issued by banks and other big lenders, uses annual stress tests to gauge its resilience to extreme scenarios. It began publishing the results in 2015.
The 2018 stress test confirmed CMHC’s mortgage loan insurance and securitization business had enough capital to withstand the impact of scenarios which also included a household debt crisis and the eruption of a volcano.
“In all cases, this year’s stress testing shows we are well capitalized to handle these very severe situations,” CMHC’s Chief Risk Officer Steven Mennill said in a statement.
Mennill told reporters on a conference call that the tests showed CMHC was in a better position to withstand extreme scenarios that it was a year ago.
Reporting by Matt Scuffham; Editing by Nick Zieminski