Key Takeaways
- Canada’s Big Six banks have returned an average of 12.3% year-to-date, topping the TSX’s 9.8% gain.
- Loan loss provisions have stabilized, with most banks revising guidance lower for H2 2026.
- RBC leads the group with a 16.2% YTD return following its City National integration.
- P/E multiples remain below the 10-year average, suggesting room for re-rating.
Canada’s Big Six banks have had a quietly impressive 2026. Despite persistent macro uncertainty trade war noise, a wobbling housing market, and three rate holds the group has returned an average of 12.3% year-to-date, comfortably outpacing the TSX Composite’s 9.8% gain over the same period.
Who’s Leading
| Bank | Ticker | YTD Return | P/E (fwd) | Dividend Yield |
|---|---|---|---|---|
| Royal Bank | RY.TO | +16.2% | 12.8x | 3.4% |
| TD Bank | TD.TO | +9.4% | 11.2x | 4.8% |
| Bank of Montreal | BMO.TO | +11.8% | 11.6x | 4.5% |
| Scotiabank | BNS.TO | +10.1% | 10.4x | 5.9% |
| CIBC | CM.TO | +14.2% | 12.1x | 4.2% |
| National Bank | NA.TO | +13.1% | 13.4x | 3.1% |
The Bull Case
The bear thesis on Canadian banks that a housing correction would trigger a surge in mortgage defaults has largely failed to materialise. Arrears remain near historical lows, and the banks’ conservative underwriting through 2024–2025 is now paying dividends. Average loan-to-value ratios on insured mortgages sit at 68%, providing substantial equity buffer even in a stress scenario.
Meanwhile, rate stability is a net positive. While cuts would compress net interest margins on new lending, the absence of cuts keeps existing variable-rate mortgage revenue intact. Most bank CFOs have guided for NIM expansion through 2026 as GIC repricing tailwinds fade.
The Bear Case
The key risk is trade exposure. TD’s significant U.S. retail banking presence (TD Bank N.A.) creates sensitivity to U.S. consumer credit conditions, and Scotiabank’s Latin American footprint is a wildcard. With forward P/E multiples still below the 10-year average of 13.2x, any earnings disappointment could be painful.