Canada's Big Six banks fail to override 'sticky' tariff fears despite decent first quarter

Canada’s biggest banks beat analysts’ earnings expectations quite comfortably this week, which usually helps ease concerns linked to the economy, but that wasn’t the case this time around.

The banks’ quarterly calls with analysts were dominated by questions about how United States President Donald Trump’s proposed tariffs on Canadian products might impact the economy and, subsequently, the Big Six.

So much so that at one point, Royal Bank of Canada chief executive Dave McKay decided to remind listeners that the Canadian economy performed better than expected during the three months leading up to Jan. 31.

He said he understood why “a lot” of analysts’ questions were about the economic uncertainty stemming from Trump’s tariffs and why the focus was on the risk of rising credit losses.

“But I do want to bring the messaging back to the Canadian economy, (which) performed through most of the quarter better than we thought,” he said. “The client activity was strong across all our businesses.”

Looking ahead, McKay said that the bank was “hoping for the best; preparing for the worst.”

The chief executive of Canadian Imperial Bank of Commerce said banking clients on both sides of the border were feeling “a little more tentative” due to the tariffs but also noted they were resilient during recent uncertain situations such as the surge in interest rates and currency volatility.

“Clients are more resilient than one gives them credit for,” Victor Dodig said.

Maria-Gabriella Khoury, a senior director at Fitch Ratings Inc., said the calls this week were “more uncomfortable than previous” discussions, but that the banks were prepared for it.

“They haven’t had an analyst call with so many questions since pre-pandemic,” she said.

The last