{"id":18069,"date":"2025-02-25T00:43:14","date_gmt":"2025-02-25T00:43:14","guid":{"rendered":"https:\/\/torontotribune.ca\/index.php\/2025\/02\/25\/canadas-big-banks-to-build-reserves-amid-tariff-uncertainty-national\/"},"modified":"2025-02-25T00:43:14","modified_gmt":"2025-02-25T00:43:14","slug":"canadas-big-banks-to-build-reserves-amid-tariff-uncertainty-national","status":"publish","type":"post","link":"https:\/\/torontotribune.ca\/index.php\/2025\/02\/25\/canadas-big-banks-to-build-reserves-amid-tariff-uncertainty-national\/","title":{"rendered":"Canada\u2019s big banks to build reserves amid tariff uncertainty – National"},"content":{"rendered":"


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Canada\u2019s big six banks<\/a> are expected to build more credit loss provisions as they brace for uncertainty surrounding the U.S. tariff threat, analysts said, potentially weighing on first-quarter earnings and beyond.<\/p>\n

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The banks have already been putting aside more funds to cover any souring loans due to continued high Canadian unemployment, which has fuelled investor concerns despite some more robust economic data recently. Also called provisions for credit losses, a rise in those funds dents profits for the banks.<\/p>\n

U.S. President Donald Trump\u2019s<\/a> threat to impose a 25 per cent tariff on all non-energy Canadian imports starting in March means banks are likely to set aside yet more rainy-day funds, even as they are expected to benefit from a boom in capital markets activity and strong wealth management earnings in the first quarter.<\/p>\n

\u201c(We) expect large banks to build larger performing provisions for credit losses than we previously believed\u2026 we also believe pessimistic scenario assumptions may become more pessimistic,\u201d RBC Dominion Securities analyst Darko Mihelic said.<\/p>\n

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For the first quarter, loan loss provisions are expected to jump between 6.4 per cent for Royal Bank of Canada to as much as 80 per cent for Bank of Montreal. CIBC is expected to show a fall in provisions of 0.7 per cent, according to LSEG data.<\/p>\n

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Net income forecasts for the six banks range from a 7.5 per cent fall for BMO to 13.8 per cent growth for RBC.<\/p>\n

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Mihelic forecasts provisions to increase about 70 per cent to $5.6 billion in aggregate and expects core earnings to decrease about 10 per cent year-over-year in the first quarter.<\/p>\n

The banks report later this week starting with BMO and Bank of Nova Scotia BNS.TO, also known as Scotiabank, on Tuesday.<\/p>\n