TORONTO – Fourth-quarter bank earnings wrapped Thursday with TD, BMO and CIBC all reporting higher-than-expected profits to add to the earning beats of Canada’s other big banks this week.
The profits, totalling $16.45 billion for the quarter, were up from $14.73 billion last year as banks, and the economy, largely shrugged off the effects of trade uncertainty with the United States.
Results did show some signs of stress as the Canadian unemployment rate hovers around seven per cent, with most banks adding to their provisions for potentially bad loans on the personal banking side and reporting tepid mortgage growth.
But the pressures were more than offset as capital markets, where banks help major clients with loans and trading, and wealth management, benefited from record-high — if sometimes volatile — markets this year.
“We benefited from a constructive backdrop, especially in capital markets,” said Kelvin Tran, chief financial officer at TD Bank Group, on an earnings call Thursday.
All banks saw a boost. CIBC’s capital markets profits were up 58 per cent from last year, RBC reported profits in the segment up 62 per cent, and National Bank reported a 41 per cent jump.
Wealth management profits also gained, as banks saw their fee intake rise along with markets.
The trends continued an overall strong performance from banks for the year as a whole, despite the headwinds, to collectively make $69.86 billion for the year, up from $51.27 billion last year.
The banner profits for banks and their big investing clients, as many ordinary Canadians struggle, was raised as a concern by RBC chief executive Dave McKay on Tuesday.
“The impact of the K-shaped economy is increasingly polarizing, with more affluent consumers investing disposable income and growing markets, while less affluent consumers struggle with affordability.”
Banks highlighted that clients especially in the Greater Toronto Area were feeling the twin stresses of rising unemployment and high mortgage costs, leading to an uptick in delinquencies.
“We expect retail losses to remain elevated in 2026 as we work through the lag effect of higher unemployment, consumer insolvencies, and ongoing payment shocks for mortgage renewals in Canada,” said RBC chief risk officer Graeme Hepworth.
The trend is also showing up in more consumers falling behind on credit card payments, especially outside the premium credit card segment.
“The overall conditions are definitely affecting mass consumers and particularly the lower end of the credit spectrum,” said Mathew Mehrotra, group head of Canadian personal and business banking at BMO.
The outlook from banks is for better economic growth later into next year, but it could be longer for everyone to feel the effects, especially with another wave of mortgage renewals coming at higher rates, said RBC’s Hepworth.
“We expect retail losses to remain elevated in 2026 as we work through the lag effect of higher unemployment, consumer insolvencies, and ongoing payment shocks for mortgage renewals in Canada.”
Lower borrowing costs and interest rates, along with initiatives from the federal budget could help, but the stresses will still likely mean modest loan growth ahead, said BMO chief financial officer Tayfun Tuzun.
“As we look ahead towards 2026, in Canada, we expect low-single-digit loan growth as challenges in the macroeconomic environment continues to impact personal and commercial demand.”
While banks are still competing heavily in the general retail space, they are keen to take on richer clients where the margins are higher.
“Our first strategic priority is to grow our mass affluent and private wealth franchise,” said CIBC chief executive Christian Exshaw in his first analyst call since taking on the role at the start of November.
Banks also talked about their efforts on further U.S. expansion, investing in artificial intelligence and other technology, and the growth prospects coming from the new direction of the federal government.
“Canada’s renewed focus on natural resource development will drive higher GDP growth and improve national prosperity over the medium term,” said Scotiabank chief executive Scott Thomson.
BMO chief executive Darryl White said that while trade uncertainty persists, and unemployment is expected to remain above seven per cent through the middle of next year, there are positive signs.
“I’m encouraged that initiatives to invest in Canada and diversify trade relationships to strengthen the Canadian economy over the medium term are beginning to move forward.”
McKay said that government spending on infrastructure and defence should help stimulate job growth, though it remains to be seen how quickly projects can secure approval from all stakeholders.
“While the operating environment remains fluid and complex and there is a lot of hard work yet to be done by governments and the private sector, I am cautiously optimistic on the outlook for Canada.”
This report by The Canadian Press was first published Dec. 4, 2025.
Companies in this story: (TSX:TD; TSX:BMO; TSX:CM; TSX:BNS; TSX:NA; TSX:RY)
