BMO bullish on Sask. econ­omy, ex­ec­u­tive says

Prince Albert Daily Herald - - LOCAL - ALEX MACPHER­SON

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.

GREG PENDER/THE STARPHOENIX

BMO se­nior vice pres­i­dent John Ma­cAulay

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