Major banks on both sides of the border seem to be flourishing despite trade tensions
Donald Trump’s tariff war is continuing to dominate national news headlines, and there’s no hint of a US-Canada trade deal emerging anytime soon.
That ongoing turmoil is causing plenty of economic uncertainty and stoking further fears of a downturn – but while it might not quite be business as usual for North America’s biggest banks, none are showing signs of significant strain as the chaos rumbles on.
South of the border, Bank of America and Morgan Stanley saw stocks soar after posting bumper third-quarter financial results this week, while Canada’s banking giants are in good shape despite the choppy economic waters if their own Q3 results are anything to go by.
Shilpa Mishra (pictured top), managing director of MNP Corporate Finance, characterized the mentality of US banks as “Can’t stop, won’t stop,” as they continue growing even amid a challenging economy.
And the better-than-expected results of Canada’s top lenders, which saw provisions for credit losses slide at last in the third quarter after surging throughout the past year, suggest the traditional Big Six are poised to withstand any negative tariff impact.
“That really does show that our Canadian financial system is built for headwinds,” Mishra told Canadian Mortgage Professional. “In 2008, we were barely impacted. Now, we continue to surge forward.”
MNP’s newly released third-quarter debt market report said Canada’s capital markets produced one of the strongest first halves in 2025 seen in a decade, even despite the ongoing tariff dispute.
Mishra highlighted those lower credit loss provisions, strong credit portfolios, and solid revenue and margins as key features of the Big Six’s Q3 performance.
The Royal Bank of Canada (RBC) has projected that the Bank of Canada (BoC) will deliver another 25 basis point rate cut in October, following its September move to restart the easing cycle.https://t.co/fsZrskhlbx
— Canadian Mortgage Professional Magazine (@CMPmagazine) October 14, 2025
Consolidations, M&A expected to continue
The dominance of Canada’s leading banks has been in the spotlight recently, with Peter Routledge of the Office of the Superintendent of Financial Institutions (OSFI) indicating last week he was considering measures to increase competitiveness in the banking sector.
But Mishra said the top lenders look set to go from strength to strength for the foreseeable future – and a wave of consolidations, mergers and acquisitions in the space also seems likely to continue.
“If you look at the quarterly results, there’s a bigger story that’s emerging, which is the unprecedented consolidation across the Canadian banking sector,” she said. “We have seen more M&A in the Canadian banking sector in the last two years than in the previous two decades.”
Those moves include a multibillion-dollar acquisition of HSBC’s Canada operations by Royal Bank of Canada (RBC), National Bank’s move for Canadian Western Bank (CWB), and a $2 billion investment by Scotiabank in KeyCorp.
That’s not to say it’s just the Big Six inking deals, though. Private credit “isn’t far behind” on the M&A front, Mishra said, with Brookfield and Birch Hill launching a takeover of First National Financial Corporation – a huge name in Canada’s mortgage space – for just shy of $3 billion.
All that adds up to a continued state of evolution in Canada’s financial space that shows no sign of stopping, Mishra said. “The financial sector will remain in transformation mode. And banking in Canada is really about transformation,” she said.
“But there continues to be support from other lenders. The US banks are very active in the Canadian banking space – as are private lenders.”
Banks not only stable – but also supporting other areas of economy
Other businesses and industries haven’t fared as well as the banking space. Speculation continues to swirl about job losses in Canada’s automaking sector, particularly after the news that Stellantis plans to move a significant chunk of its Canadian operations to the US.
Still, Mishra views the support offered by banks to tariff-impacted industries as strong. “They continue to stay the course and support those businesses,” she said. “It’s very important to note that not only are our banks stable, but they’re supporting our overall economy.”
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