OTTAWA: Financial experts predict that profits from capital markets will play a pivotal role in the first-quarter earnings of major Canadian banks. An expected surge in trading revenue is likely to provide a much-needed boost, even as the country’s housing market continues to show signs of stagnation. Reports suggest that loan growth remains sluggish due to the ongoing slowdown in the real estate sector.
Despite elevated interest rates, banks have largely maintained their provisions for credit losses—funds set aside to cover potential defaults. Analysts believe that while economic uncertainty persists, the overall debt-repayment capacity within the banking sector remains resilient. Interestingly, while Canada’s broader economic indicators appear weak, bank stocks continue to trade at high levels.
The banking sector is bracing for a busy week of financial disclosures. Scotiabank is set to release its results on Tuesday, followed by BMO Financial Group and National Bank of Canada on Wednesday. CIBC, TD Bank, and Royal Bank of Canada will announce their performance on Thursday. Experts warn that any unexpected dip in revenue or a rise in loan defaults could quickly impact the valuation of these financial institutions.
