Canada’s largest banks’ profits soared in the first quarter of 2026, even as Canadian consumers continued to struggle with debt amid elevated unemployment.
This week, Scotiabank, BMO, CIBC, RBC and TD reported earnings that surprised analysts, driven by success in the capital markets and wealth management divisions.
The results show that pockets of the Canadian population, such as younger people and homeowners in the Greater Toronto Area, are struggling financially — but not enough to impact banks’ bottom lines.
“We are seeing strong profitability and improving productivity for many of our corporate clients, while commercial clients in tariff-impacted sectors and geographies are facing headwinds,” said RBC’s CEO Dave McKay in a conference call with stock analysts Thursday.
“The impact of the K-shaped economy continues to bifurcate Canadians,” he added, speaking of unequal consumption patterns that have emerged between age groups, provinces and workers in different industries.
Here are the biggest consumer trends from last quarter:
Credit card delinquencies on the rise
Overall, credit card delinquencies where payments were at least 90 days late increased last quarter.
The banks attributed this trend to a tough labour market in Canada as well as economic uncertainty due to U.S. tariffs and ongoing discussions surrounding the Canada-United States-Mexico Agreement (CUSMA).
At Scotiabank, younger clients with unsecured debt products — including credit cards — are showing signs of stress, said the bank’s chief risk officer, Shannon McGinnis, during a call with analysts on Tuesday.
To manage the risk of defaults, BMO said it has been focusing on growing its premium credit card business, targeting clients who are more well-off.
Premium account growth is up 13 per cent year-over-year, according to BMO’s Mat Mehrotra, head of Canadian personal and business banking.
The banks also highlighted struggles in their residential mortgage portfolios.
Many people who took out COVID-era mortgages, when house prices were high and interest rates were low, are grappling with renewals at higher rates and higher payments this year.
The loss of liquidity in the GTA’s condo market has also been pressuring households and impacting loan delinquencies.
Still, last December, Canada’s banking regulator said he wasn’t too concerned about the impact of the condo crisis on the banks’ earnings.
Economic outlook improves
Provisions for credit losses — money banks set aside to cover potential loan losses and a measure of consumer health — appear to be improving, driven by a more positive economic outlook in Canada.
“From my conversations with CEOs and industry leaders over the past few months, clients are generally managing near-term uncertainty well and remain optimistic about the longer term,” said CIBC’s CEO Harry Culham in a call with analysts Thursday.
CIBC’s provisions for potential loan losses fell $5 million from the same quarter last year.
At Scotiabank, provisions rose but only slightly.
“The unemployment rate has improved in recent months and is expected to continue to trend down in coming quarters,” said McGinnis.
BMO’s provisions fell to $746 million from $1.01 billion in the prior year.
“The behavior we’ve seen from (mortgage) renewals in the last few quarters has actually been very good,” said BMO’s chief risk officer, Piyush Agrawal.
“Delinquency levels of renewing customers, a third of them at lower rates, some at a higher rate, are actually comparable to the rest of the portfolio,” he added. “I’m hopeful for the spring to come around and actually reinvigorate the market.”
Soaring bank profits
Scotiabank’s net income rose to $2.3 billion from $993 million year-over-year, with the bank’s Canadian division seeing solid earnings growth.
BMO’s reported net income rose 16 per cent compared to the first quarter of 2025, to $2.49 billion from $2.14 billion. The positive results were primarily led by strength in the U.S. banking and capital markets divisions.
CIBC’s net income grew 43 per cent since last year to $3.1 billion. In a note to clients, analysts at Jefferies called it “one of the best starts to the year” for the bank.
RBC announced “record net income” of $5.8 billion for the quarter ended Jan. 31.
At TD, net income climbed 45 per cent to $4.04 billion compared with $2.8 billion a year ago.
