Big Six banks see reasons for optimism while navigating ‘period of volatility’

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'Big Six' banks beat earnings, can it last?

TD Bank beats Q2 expectation, hikes dividend

Canada’s major banks say they’re cautiously optimistic as their latest earnings beat expectations, with executives confident they’re well-equipped to handle potential risks in the Canadian economy.

The Big Six grew their profits in the second quarter compared with the same three-month period a year ago, while also posting results above analysts’ forecasts. Five of those — TD Bank Group, Royal Bank of Canada, Bank of Nova Scotia, BMO Financial Group and National Bank of Canada — each hiked their quarterly dividend.

And while executives expressed confidence in their ability to withstand economic challenges ahead, they also acknowledged macroeconomic concerns that could shift their outlooks.

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Those include the U.S.-Iran war that continues to drag on, pushing international oil prices and inflation higher. High unemployment in Canada and ongoing uncertainty over trade with the U.S. — with a renegotiation of the Canada-United States-Mexico Agreement looming — also cloud the outlook, they said.

“Uncertainty remains elevated,” said RBC chief executive Dave McKay on a conference call with analysts Thursday morning.

“The outcome of these factors will have implications for client demand, supply chain stability and the direction of monetary policy.”

Like its peers, McKay said RBC is navigating a “period of volatility” in the economy. But he also touted the country’s economic resilience, saying RBC expects GDP growth of 1.5 to 1.6 per cent over the next four quarters, even as real estate activity continues to lag.

“The consumer’s still spending and the consumer’s saving as well,” he said.

“So I see so many positive trends in the Canadian economy that’s allowed us to be resilient to what we have.”

He added there’s “enormous opportunity” for Canada as it recalibrates its trade position with its southern neighbour.

“We believe the resolution of CUSMA uncertainty, new trading relationships and the advancement of major nation-building projects can meaningfully expand the Canadian economic ecosystem, creating a multiplier effect over the near-to-medium term,” said McKay.

“We encourage policymakers and all levels of government to continue to work together to secure Canada’s future prosperity.”

RBC cut funds set aside for bad loans in its latest quarter, during which its profit rose 25 per cent compared with a year earlier. It earned $5.51 billion or $3.85 per diluted share for the quarter ended April 30, up from a profit of $4.39 billion or $3.02 per diluted share a year earlier.

Canada’s largest bank also declared a quarterly dividend of $1.76 per share, an increase from $1.64 per share. Its revenue totalled $17.45 billion for the quarter, up from $15.67 billion in the same quarter last year.

The bank’s provision for credit losses amounted to $912 million, down from $1.42 billion a year ago.

It was a “very good quarter overall” for the bank, said Scotiabank analyst Mike Rizvanovic. He said RBC’s credit performance was “much better than we, or the street had expected.”

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Its peers, except CIBC, also allocated less funds for bad loans compared with last year. Scotiabank’s provision for credit losses was $1.22 billion in the quarter, down from $1.40 billion a year ago, while TD set aside $1.00 billion compared with $1.34 billion a year ago.

BMO’s reserve for potentially bad loans was $739 million for its latest quarter, down from $1.05 billion a year ago, and National Bank’s provision amounted to $233 million, down from $545 million a year ago.

CIBC’s provision for credit losses was $605 million, the same as a year earlier.

TD chief risk officer Ajai Bambawale said he expects macroeconomic issues to maintain pressure on the bank’s provision for credit losses moving forward. He said TD will take “suitable actions if warranted” as risks persist.

“If you think about trade and tariffs, TD Bank is already well-provisioned. We have close to $500 million there and most of that reserve is unused,” he said Thursday.

“With respect to the Middle East war, I’d call it a watch item. Having said that, what we did this quarter is we put more weight on our downside case, and we have already built some incremental reserves. So we are going to continue to reassess our reserves each quarter.”

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But Scotiabank CEO Scott Thomson struck an optimistic tone on Wednesday, saying he felt the Canadian economy was primed to turn a corner from its current “stresses.” He said Canada is in an enviable position as an “oil-exporting nation” while the commodity is trading around US$90 per barrel.

“When you have oil at these type of prices, that is very beneficial for the overall Canadian economy and that allows fiscal stimulus — significant fiscal stimulus — by the Canadian government to support some of the provinces that will be impacted either by CUSMA or affordability issues,” he said.

Thomson said he’s also encouraged by a recent “significant change in tone” from international investors toward Canada.

“Over the last 15 years ... you’ve seen a lot of foreign money leave Canada,” he said.

“And now you have a lot of foreign money looking at Canada from a foreign direct investment.”

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Sammy Hudes, The Canadian Press

This report by The Canadian Press was first published May 28, 2026.

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