In recent years, supervisors have observed banks lending outside their established footprint--to maintain a customer relationship--into real estate markets with which they have less experience. The challenge is heightened when the borrower is also venturing into a new market. These practices led to significant losses in prior CRE credit downturns.
Sources: Statistics Canada and Bank of Canada calculations  For different reasons, as I mentioned earlier, the energy sector faces particular challenges. The collapse in demand for raw materials had begun even before the virus hit Canada, as the crisis took hold in China—the world’s largest commodity importer. Most commodity prices fell, but the oil market was most severely affected.