Three of Canada's Big Six clear forecasts as trade risk stays off the balance sheet
Bank of Montreal, Scotiabank, and National Bank each beat analyst profit estimates for the quarter ended July 31, with capital markets and wealth management driving the results at all three lenders.
Executives at the three banks used their calls to argue that US tariffs remain a containable risk, according to their earnings releases and remarks reported by CBC News.
Philip Petursson, chief investment strategist at IG Wealth Management, said the reserve build is now the swing factor for the sector.
Provisions taken over the last few years can move back into the income statement as delinquencies and loan losses run better than expected, he told Reuters, and he expects that through the rest of the year and into 2027.
Bank of Montreal
Adjusted net income reached $2.86bn and adjusted EPS $3.96, up 22 percent from $3.23, BMO said in its release.
Reuters reported the figure beat an estimate of $3.76, according to LSEG data.
Reported net income fell 25 percent to $1.75bn on a goodwill charge tied to the announced sale of the bank's Transportation and Vendor Finance businesses.
Adjusted return on equity hit 14.0 percent, and the provision for credit losses fell to $722m from $797m.
Chief executive Darryl White called the tariff threat manageable on the analyst call. "There may be some opportunities in the challenge that we've got in front of us," he said, in remarks reported by Reuters.
He told CBC News on the same call that any impact "has a very high chance of being mitigated in many ways," and pointed to Canada-US tensions as an opening for governments to remove internal trade barriers.
BMO shares rose 0.8 percent in early Tuesday trading and have gained 34 percent this year, Reuters reported.
The bank announced a new normal course issuer bid for up to 25 million common shares, subject to regulatory approval.
Scotiabank
Adjusted EPS of $2.28 topped an estimate of $2.10, per LSEG data cited by Reuters, with net income of $2.95bn against $2.53bn a year earlier.
Adjusted return on equity reached 14.2 percent.
"Q3 was a record quarter for the Bank, as all business lines reported strong results and we exceeded our medium-term objectives in the period," said Scott Thomson, president and CEO of Scotiabank, in the release.
He credited improvements in margins and fee income for clearing a 14 percent return on equity target the bank had set for 2027.
Global banking and markets income grew 37 percent on record underwriting and advisory fees, Reuters reported, with Thomson citing mandates on Canada's two largest debt capital markets deals and its biggest initial public offering since 2021.
Wealth management net sales reached a record $3bn for the quarter, according to call highlights compiled by MarketBeat.
Thomson pushed back on the trade narrative in comments to CBC News.
"The fundamentals in Canada are pretty good," he said, pointing to job growth, fiscal capacity supported by oil prices, and activity tied to the prime minister's agenda.
Scotiabank told CBC News the newest US levies directly affect less than one percent of its total loan book.
Shares rose 3 percent Tuesday and are up 18.8 percent this year, per Reuters.
National Bank
Adjusted EPS of $3.39 exceeded a forecast of $3.18 and revenue of $4.05bn beat an estimate of $3.86bn, according to Investing.com.
Net income of $1.31bn rose 23 percent, with adjusted return on equity at 16.8 percent.
Wealth management net income climbed 21 percent to $296m and capital markets net income rose 32 percent to $442m, the bank reported Wednesday.
Assets under administration reached $988.96bn, up 13 percent from October 31, 2025.
Investing.com reported the stock fell 5.15 percent to $211.07 in pre-market trading, with investors weighing the beat against a slower timeline for capital benefits tied to the Canadian Western Bank integration.
Laurent Ferreira, president and chief executive officer of National Bank of Canada, said the federal aid package should reach those affected.
He pointed analysts toward federal investment in energy, power infrastructure, and shipbuilding as a source of lending opportunities, in remarks reported by CBC News.
Ferreira described the retooling of the Canadian economy as a chance to deploy the bank's balance sheet.
Valuations
John Zechner, chairman of Toronto-based J Zechner Associates, told CBC News that both Scotiabank and BMO booked lower-than-expected loan loss provisions.
"The economy up to this point has been relatively resilient in Canada," Zechner said, adding that conditions are "going to get tougher."
Jefferies analyst John Aiken, writing ahead of the results, told The Globe and Mail that "the market continues to shrug off concerns and allocate record high multiples," and that earnings will need to grow into current prices.
Royal Bank of Canada, Toronto-Dominion Bank, and CIBC each release third-quarter results on Thursday, August 27, according to media advisories from the three banks.
