Analysts expect Canada’s six largest banks to deliver strong fourth‑quarter results this week. This quarter, net income is projected to rise between 3.5% and 41.9% across major banks. Many lenders also plan only modest increases to loan‑loss provisions — or even reductions, as in the case of BMO.
Strong demand for advisory services, deals and wealth management helped compensate for slow loan growth. Meanwhile, stabilizing credit quality and controlled provisions give banks room to post solid profits.
What Could Temper Expectations
Despite optimism, valuations already trade at roughly 12.9 times forward earnings — about 23% above the ten‑year average. That elevation increases pressure: any earnings miss could spark sharp stock reactions.
Investors are particularly watching banks’ exposure to private credit and non‑bank financial institutions, as credit stress mounts globally.
What to Watch: When and Who Reports
Earnings season begins Tuesday with Scotiabank, while Toronto‑Dominion Bank (TD), Bank of Montreal (BMO) and Canadian Imperial Bank of Commerce (CIBC) report Thursday. Results from Royal Bank of Canada (RBC) and National Bank of Canada will wrap up the week.
What This Means for the Sector
If numbers meet expectations, Canadian banks could regain momentum after a cautious 2025. Strong earnings might boost investor confidence, especially among foreign investors watching North American banking stability.
Yet risks remain. Weakening global economic conditions or surprise credit events might force banks to increase loan‑loss provisions, erasing much of the expected gain.
