Fitch Ratings revised HSBC Bank Canada's ratings outlook to negative from stable, following the recent outlook change on the company's ultimate parent, HSBC Holdings PLC.
The rating agency noted that HSBC Bank Canada's long- and short-term issuer default ratings are linked to those of HSBC.
Additionally, Fitch affirmed HSBC Bank Canada's viability rating at "a+" and revised the outlooks for operating environment, asset quality and earnings and profitability to negative from stable. The agency cited the disruption caused by the coronavirus outbreak both in Canada and globally in changing the outlook. This follows the recent outlook revision on seven Canadian banks on coronavirus-related risks.
Fitch believes that higher unemployment, alongside a softer housing market, lower business volumes and weaker capital markets revenues could pressure earnings of Canadian banks, including HSBC Bank Canada, and increase credit losses.