Canada’s top five banks announced their third-quarter financial results this week. They reserved less money for potential loan losses due to reduced Canada-U.S. trade tensions. Bank of Nova Scotia and Bank of Montreal led the earnings week, followed by Royal Bank of Canada, National Bank, Toronto Dominion Bank, and Canadian Imperial Bank of Commerce.
Derek Holt, Scotiabank’s Vice President of Capital Markets Economics, noted that five out of six banks exceeded expectations, with only National Bank falling slightly short. The banks had increased reserves during the previous quarter amid trade uncertainties, especially during U.S. President Trump’s tariff threats.
While a trade deal between Canada and the U.S. remains pending, the business outlook has improved since April. Executives like TD Bank’s Kevin Tran and RBC’s CEO Dave McKay warned that ongoing trade uncertainties could hamper economic growth and lead to higher inflation.
CIBC’s CEO Victor Dodig predicted that global trade tensions might slow growth and raise inflation. Nonetheless, declining interest rates could help bolster economic expansion. Analyst Michael Dehal from Dehal Investment Partners praised Scotiabank and BMO’s results as “encouraging,” expressing optimism for an upcoming trade agreement.
