TORONTO – Canada’s big banks did better than expected in third-quarter results last week, but their CEOs say trade uncertainty is still an overhang that will take some time to shake.
Speaking at the Scotiabank Financials Summit in Toronto, banking leaders said Wednesday that the future of the Canada-U.S.-Mexico free trade deal is the biggest unknown as they look to drum up more business and guide for better returns ahead.
There is, however, already some degree of increased clarity, especially in the U.S., said BMO chief executive Darryl White.
“My uncertainty meter, as I’ve come to call it, is actually improving.”
He pointed to the passage of U.S. President Donald Trump’s landmark Big Beautiful Bill as providing tax certainty for clients that’s helping them to invest more, while the trade picture, though still mixed, has some increased clarity.
“If you’re one of our clients in the United States, you know what your tax rate is, you know what your accelerated depreciation is, and you have a better idea of where trade balls are falling, so you get on with things, and you get on with life.”
Canada is lagging on that rebound though as the trade picture is still a big unknown, but White said there is at least more certainty than at the start of the year, when it wasn’t clear who would lead Canada or what the policy direction would be.
He said there’s good indications on federal supports to attract investment, but no hard numbers on that yet to really help drive growth.
“Lots of good narrative, but we haven’t yet seen the term sheet, right, in order to get the action, so I think what we’re seeing in Canada as a consequence of that is just a little bit of a pause.”
The pause, including among potential homebuyers and companies thinking about investments, is affecting growth, but either way BMO is focused on boosting its return on equity as its top priority, said White.
RBC blew past expectations last quarter as it reported an adjusted ROE of 17.7 per cent despite the macroeconomic challenges, but the bank isn’t rushing to boost its outlook on the measure given the trade uncertainty, said chief executive Dave McKay.
“We want to watch the economy, want to watch CUSMA renegotiation to see where Canada comes out through that, so that’s a source of potential volatility going forward.”
He said the bank is seeing credit stabilize in the economy, which has been incredibly resilient, but has held back on releasing more provisions for potentially bad loans because of the wider uncertainty.
The trade uncertainty hasn’t just held back investments in Canada, with Scotiabank saying it’s still waiting to invest more in its Mexico operations until there’s more clarity.
“Given the uncertainty in Mexico, we haven’t allocated a lot of capital,” said chief executive Scott Thomson.
He said the bank held back at first to see how the new leadership in Mexico would play out, while now the overhang of North American trade also needs to be resolved before it expects to see significant growth there, but in the meantime, it’s put in new leadership to prepare.
“We’ve really enhanced the controls in our Mexican business, and now set the foundation for growth, and I think that will happen once USMCA is signed.”
Closer to home, Thomson said he’s not too worried about the Canadian mortgage business but that Canadian clients are still under stress.
This report by The Canadian Press was first published Sept. 3, 2025.
Companies in this story: (TSX:BMO; TSX:BNS)
