Bank of Montreal set aside more money for potentially sour loans and severance costs as it absorbs Bank of the West during a difficult period for U.S. regional lenders, Bloomberg News reported. The Canadian bank earned C$2.04 billion ($1.89 billion) on an adjusted basis in the fiscal third quarter, weighed down by weaker results in its US personal and commercial division. The profit of C$2.78 per share was short of the C$3.13 expected by analysts in a Bloomberg survey.

Canada's second-quarter GDP report, due on Friday, is likely to show a sharp slowdown in economic growth, a Reuters poll of economists showed, which could lead the Bank of Canada to pause its interest rate hikes despite recent hotter inflation data, Reuters reported. The GDP report will be the last major piece of domestic data before the Canadian central bank makes its next policy decision on Sept. 6. It is expected to show the economy growing at a 1.1% pace in the second quarter, down from 3.1% in the first three months of the year, and below the BoC's 1.5% estimate.

Mortgage data from Canada’s two biggest banks are painting a picture of homeowners straining under high borrowing costs, Bloomberg News reported. Royal Bank of Canada, the country’s largest lender, disclosed that 43% of its Canadian residential mortgages had an amortization period of longer than 25 years, as of July. That’s up from 40% a year earlier, and just 26% in January 2022. Canadian banks have allowed customers to stretch payments for longer periods to help them bring down their monthly payments after a rapid rise in rates.

The Panama Canal is, in many ways, the Panama economy. It hands over about $1 out of every $4 the government takes in, generating a constant stream of cash that flows through all corners of the small country. So when dozens of container ships began backing up outside the canal recently, the result of a drought so fierce that water levels have plunged to dangerously low levels, it got the attention of traders on Wall Street, Bloomberg News reported. For days, they’ve sold Panamanian government bonds, making them one of the worst performers in Latin America.

Mexico’s annual inflation eased roughly in line with expectations in early August, a positive sign for the central bank as it continues holding its interest rate at a record high to slow price growth, Bloomberg News reported. Consumer prices rose 4.67% in the first half of the month compared to the same period a year earlier, down from 4.78% in late July, the national statistics institute reported Thursday.

The Federal Reserve Bank of New York on Wednesday defended its plan to cut off a Puerto Rican lender's access to the U.S. central banking system following a federal crackdown on banks with links to Venezuela, Reuters reported. In July, Banco San Juan Internacional (BSJI) sued the New York Fed to halt the looming termination of its "master account," which lets banks access the Fed's electronic payment system, because of concerns about its compliance with U.S. sanctions and anti-money laundering rules.

After months of underperforming the broader market, Canada’s Big Six banks are likely to continue struggling as expenses and loan-loss provisions rise and consumer finances deteriorate, Bloomberg News reported. Higher interest rates are expected to hurt lenders’ fiscal third-quarter earnings when they begin to report Thursday. Inflation data on both sides of the border have ratcheted up bets that central banks could raise rates further still, which would further erode spending power and borrowing demand.

Canadian June retail sales grew by 0.1% from the previous month driven mostly by car sales, data showed on Wednesday, a sign of weak consumer spending that could convince the central bank that interest rate hikes are sinking in, Reuters reported. The slight June gain was led by increases at motor vehicle and parts dealers as well as gasoline stations and fuel vendors, Statistics Canada said. Excluding sales of cars and car parts, retail sales declined 0.8% in June. Economists had forecast June sales would be flat and that they would rise 0.3% excluding autos.

Binance is helping Russians move money abroad, potentially adding to its sprawling legal problems in the U.S., the Wall Street Journal reported. The cryptocurrency giant, led by founder Changpeng Zhao, joined many other major international companies early last year in scaling back its business in Russia, one of its largest markets by trading volume at the time. After Russia invaded Ukraine, Binance said it had stopped working there and was implementing Western sanctions requirements. It restricted trading on its platform in Russia.

Canada's big bank results are expected to bring to light a number of challenges as lenders set aside more funds for bad loans in a tough economy that has also led to a slowdown in dealmaking and forced borrowers to rethink about new mortgages, Reuters reported. The big six banks, which control a majority of the market in the country, have had to brace for macroeconomic uncertainties and build reserves while also ensuring they have enough capital to meet new regulatory requirements in case of uncertainties.