Canadian banks prepare for potential loan losses this year

Major Canadian banks have increased loan loss provisions while reporting multi‑billion‑dollar quarterly profits, and some executives flagged housing softness and higher delinquencies as concerns.

Canada's largest banks have increased provisions for loan losses by hundreds of millions to billions of dollars as they reported quarterly results. The moves are intended to cover potential losses if some customers cannot repay loans, including mortgages. Bank executives cited signs of softness in the housing market and some increases in delinquent payments. Broader economic uncertainty and household cost pressures were mentioned as factors behind the caution. Key points: - Royal Bank of Canada, TD Bank, CIBC, Scotiabank, Bank of Montreal and National Bank all increased provisions for potential bad loans in the most recent quarter. - Reported provision amounts included: RBC added C$1.09 billion; Scotiabank added C$1.176 billion; TD added C$1.04 billion; BMO added C$746 million (down from C$1.011 billion a year earlier); CIBC added C$568 million; National Bank recorded C$244 million (down from C$254 million a year earlier). - Banks also reported multi‑billion‑dollar profits for the quarter while continuing to monitor consumer stress and credit performance. - Bank of Montreal’s chief risk officer noted higher delinquencies and softer housing activity, and a Canada Mortgage and Housing Corporation report described the housing market as likely to remain subdued through most of 2026. Summary: Banks have increased reserves to cover possible loan losses as they report strong quarterly earnings and point to housing market softness and some higher delinquencies. The implications for credit trends and mortgage renewals are being watched by institutions and authorities; no specific actions have been announced.