Key Takeaways
- Bay Street consensus expects the Big Six to report Q2 fiscal 2026 EPS growth of 6-8% year-over-year on aggregate.
- Provisions for credit losses (PCL) remain the key swing factor a reversal in consumer credit trends could meaningfully pressure earnings.
- Royal Bank and National Bank are consensus favourites heading into results; TD remains under a cloud from its ongoing AML-related remediation costs.
- Canadian bank dividends remain well-covered, with average payout ratios expected at 47% in Q2.
Canada’s Big Six banks Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, CIBC, and National Bank are scheduled to report their fiscal Q2 2026 earnings in late July. The reporting season will provide a critical read on the health of the Canadian consumer, business lending conditions, and the trajectory of credit quality as the Bank of Canada’s rate-cutting cycle flows through the mortgage market.
The Consensus Picture: Modest but Meaningful EPS Growth
Bay Street analysts, on aggregate, expect the Big Six to deliver earnings per share growth of 6-8% compared to Q2 2025. This is better than the near-flat performance seen in 2024 but falls short of the double-digit growth era of 2021-2022. The key drivers of improvement are higher net interest income (as the deposit mix normalizes), better trading revenues, and disciplined expense management.
Royal Bank of Canada (RY) is consensus favourite for the quarter, with analysts at CIBC Capital Markets and TD Securities both projecting EPS of approximately $3.18, up 9% year-over-year. The integration of HSBC Canada’s Canadian retail banking operations, completed in early 2024, continues to provide incremental earnings uplift as cross-sell ratios improve. RBC’s capital markets franchise one of the strongest in the country is expected to benefit from elevated M&A activity in H1 2026.
TD Bank (TD) remains the most contested name among analysts. The bank’s anti-money laundering (AML) remediation program, triggered by a $3.09 billion US regulatory settlement in 2024, is expected to cost an additional $400-500 million in Q2 2026 in operational remediation and compliance investments. Consensus EPS sits at $1.89, but the range is unusually wide from $1.72 to $2.04 reflecting genuine uncertainty about the pace and cost of the compliance rebuild.
Credit Quality: The Mortgage Renewal Wave
The single most discussed risk heading into Q2 reporting is the ongoing mortgage renewal cycle. Approximately 900,000 Canadian mortgages originated at the sub-2% rates of 2020-2021 are renewing in 2026, predominantly into fixed rates in the 4.5-5.2% range a payment shock of 35-50% for many borrowers. Banks have been stress-tested for this scenario, but analysts are watching 90-day delinquency rates and PCL guidance carefully.
The good news is that labour market conditions have been more resilient than feared. Canada’s unemployment rate held at 5.8% in June, and wage growth running at 5.1% year-over-year means that many borrowers are better positioned to absorb higher payments than the dire 2023-2024 scenarios suggested. Bank management teams are likely to convey a message of “elevated but manageable” credit quality in their Q2 commentary.
Capital Markets and Wealth Management
Beyond retail banking, two revenue streams are expected to contribute positively to Q2 results. Capital markets activity specifically debt underwriting and M&A advisory rebounded strongly in H1 2026 as corporate confidence improved and the BoC’s rate cuts opened a window for issuance. RBC Dominion, TD Securities, and BMO Capital Markets are all expected to report materially higher trading and banking revenues versus the subdued Q2 of 2025.
Wealth management, the long-running growth engine for several banks, continues to benefit from strong asset inflows. Rising equity markets both TSX and S&P 500 have lifted assets under management, which drives fee revenue. RBC’s Wealth Management division and National Bank’s subsidiary NBF are both positioned to report double-digit AUM growth versus Q2 2025.
| Bank | Q2 2026 EPS Est. | YoY Growth | Dividend Yield | Analyst View |
|---|---|---|---|---|
| Royal Bank (RY) | $3.18 | +9.0% | 3.4% | Outperform |
| TD Bank (TD) | $1.89 | +3.5% | 5.1% | Market Perform |
| Bank of Nova Scotia (BNS) | $1.74 | +5.2% | 6.2% | Market Perform |
| BMO Financial (BMO) | $2.94 | +7.0% | 4.6% | Outperform |
| CIBC (CM) | $1.82 | +8.3% | 5.3% | Market Perform |
| National Bank (NA) | $2.71 | +10.2% | 3.1% | Outperform |
The Bottom Line
Canada’s Big Six are entering Q2 earnings season in a constructively positioned but not uniformly positive state. Royal Bank, BMO, and National Bank are the names most likely to deliver upside surprises given their capital markets leverage and stronger credit portfolios. TD carries the most execution risk. For long-term dividend investors, the sector remains attractive: the average Big Six yield of approximately 4.6% remains well above the 10-year Government of Canada bond yield, and dividend coverage at roughly 47% payout ratio is comfortable.