Three major Canadian banks expressed cautiously optimistic views on the economy on Thursday, in stark contrast to the anxiety and frustration felt by many small businesses dealing with the repercussions of an escalating trade war with the United States.
Royal Bank of Canada, Toronto-Dominion Bank, and CIBC unveiled their financial results before the Toronto Stock Exchange opened on Thursday. Combined, these banking giants hold assets worth up to $6 trillion on their balance sheets. With extensive portfolios of loans and a wide network of clients across Canada and the U.S., these influential institutions have a unique perspective to monitor the impact of tariffs.
RBC CEO Dave McKay stated during the bank’s quarterly conference call that despite ongoing trade tensions with the U.S., the Canadian economy has shown resilience. He highlighted improvements in employment and GDP in the second quarter, maintaining a cautiously optimistic outlook for continued economic expansion. McKay noted that the average effective tariff rate remains low at around six percent, with over 80 percent of exports still duty-free.
TD Bank CEO Raymond Chun referred to an emerging “super cycle” for investment in Canada, driven by government spending in sectors such as infrastructure and national defense. According to TD Economics, there are over $1 trillion in approved or proposed projects by Ottawa and the provinces through 2035 and beyond, signaling promising investment opportunities despite trade tensions.
CIBC CEO Harry Culham expressed “measured confidence” for the latter part of 2026, emphasizing that the evolving trade environment remains under close scrutiny. CIBC’s chief risk officer, Frank Guse, highlighted the bank’s monitoring of Canada’s labor market for any signs of weakness, echoing concerns raised by a recent study estimating potential job losses if the Canada-U.S.-Mexico Agreement (CUSMA) were to be eliminated.
BMO Capital Markets forecasts that the latest round of U.S. tariffs could shave approximately half a percentage point off Canadian growth, primarily due to decreased business confidence and investment. Despite these challenges, shares of Canada’s major banks continue to trade near all-time highs on the Toronto Stock Exchange, with the BMO Equal Weight Banks Index ETF, a collection of Canadian bank stocks, surging nearly 50 percent over the past year.
