BMO bullish on Sask. economy, executive says
The Bank of Montreal is celebrating its 200th anniversary this month, as well as 111 years of doing business in Saskatchewan. The Saskatoon StarPhoenix spoke with John MacAulay, BMO’s senior vice-president for the prairies, about the current status of the province’s economy, as well as what the future looks like for the century bank.
Q: We’ve heard a lot over the last two years about collapsing resource prices. At this point, how would you characterize the Saskatchewan economy?
A: The province, in our eyes, will grow moderately (next year), somewhere around 1.7 or 1.8 per cent, which will underperform the national average. However, if you look over the last two consecutive two years, it’s a bit of a turnaround from negative growth, right?
Q: What is driving that expansion after two years of flatlining growth?
A: The first comment I’d make is the oil sector has been retrenching. Stable production over the near-term. Potash production is rising at a pretty steady clip but prices are depressed. Capital investment in new capacity is declining. But then we look to crop production. Certainly the crop production has been challenged by dry weather (but) I think what’s important to take away is, we look for this one central theme about how agriculture’s doing when really, there’s probably five to eight themes that are emerging at any given time.
Q: You mentioned oil, potash and agriculture, Saskatchewan’s biggest industries. Do you see other sectors gaining a foothold as serious players in the provincial economy?
A: We are seeing an increased interest in what we call KBI, which is knowledgebased industries, in the city. I think there’s really three areas outside the traditional sectors where we’re seeing some growth. The first is KBI, and we’re actually meeting that demand by increasing our knowledge and our presence in this city and in this province. We’re seeing the city expanding and with that comes this very interesting lockstep of service industries. And we’re also seeing movement in the service industries related to oil and gas.
Q: Changing gears, what implications do you expect the Bank of Canada’s recent interest rate hikes and changes to the mortgage rules will have for Saskatchewan?
A: These are obviously things that are very central to our business and our customers. So we’re generally supportive of those actions taken by government to cool the housing market and kind of reduce overall system risk. I think, quite frankly, these are good prudent decisions to make sure people are in the right product, in the right home — the system will ensure that. And in the event of something untoward happening, in the event of interest rates rising, people (will be) secure.
Q: There has been much discussion recently about changing habits resulting in rural bank branches closing. What’s BMO’s position on that?
A: A large number of customers are now choosing to engage us through different channels, primarily mobile and online. And so we are positioning ourselves for success as our clients kind of pivot on their own preferences. (But) we have not changed our footprint in Saskatchewan over the last … four years. It doesn’t mean that we won’t in the future but it’s nothing that I anticipate having a discussion about in the next 12 months, for instance.
This interview has been edited and condensed.
BMO senior vice president John MacAulay