(Bloomberg) -- While expectations for lower borrowing costs are building, it will take as long as three quarters for interest-rate cuts “to really bear fruit” for bank customers, according to a Bank of Nova Scotia executive. 

“There’s some talk about rate decreases in June and July,” Scotiabank Chief Risk Officer Phil Thomas said Tuesday on the lender’s fiscal second-quarter earnings call, referring to moves by the Bank of Canada. “I’m of the opinion that even with those decreases in June and July, it’ll take a few quarters — maybe one, two, three quarters — for it to start to really support the Canadian consumer.”

Homeowners with variable-rate mortgages have been hit particularly hard by rising borrowing costs over the past two years and will enjoy only moderate monthly savings at first. For clients in Vancouver and Toronto, Thomas said, a 25-basis-point rate cut will lead to an average decrease of C$100 ($73) per month on their mortgage payments. 

In the near term, that should help borrowers catch up on overdue payments on car loans and credit cards, but it will take longer, “depending on the customer, for it to really bear fruit,” he said.

Scotiabank almost doubled its provisions for potential loan losses in its Canadian division in the quarter, setting aside C$428 million. The bank as a whole reserved just over C$1 billion for loan losses, roughly in line with what analysts had forecast. 

Read More: Scotiabank Beats Estimates on Wealth-Management Momentum

“The impact of higher rates is increasingly weighing on consumers and, to a lesser extent, our commercial and small-business clients,” Chief Executive Officer Scott Thomson said on the call. “Although we believe the monetary tightening phase of the rate cycle in Canada is now complete, our prior expectation for multiple rate cuts in the back half of the calendar year feels less certain. The reality of a higher-for-longer rate scenario will naturally result in the continuation of elevated credit provision in our retail portfolios.”

After Canada’s annual rate of inflation slowed for a fourth straight month, markets are pricing in roughly two-thirds odds of a rate cut at the Bank of Canada’s policy announcement next week.

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