Fitch Ratings affirmed its ratings on the Big Six banks and Desjardins Group on Wednesday, noting that the banks’ performance has held up in the face of weakness in the economy and ongoing trade-related uncertainty.
In a report affirming its ratings on the big banks, the rating agency cited the financial institutions’ resilience in the face of ongoing macroeconomic headwinds.
Fitch is currently forecasting GDP growth of just 0.7% this year — amid the impact of the energy price shock, weak hiring and a downward revision to U.S. GDP growth, along with still-elevated trade policy worries — before picking up to 1.5% in 2027.
Against that backdrop, Fitch said it’s expecting “some weakness in asset quality, particularly for commercial and corporate loans directly affected by tariffs.”
Additionally, consumer credit has been weak, and there has been some weakness in residential mortgages too, but Fitch said these portfolios continue to “perform well given low loan-to-values and the nation-wide housing shortage.”
“Given new tariff threats and weakening consumer and business sentiment, Fitch expects muted loan and revenue growth,” the report said. “This will likely lead to flat or lower profitability for the rest of the year.”
Nevertheless, the banks’ strong fee-based income streams should continue to support revenues, it said — and their credit ratings reflect their “healthy liquidity and capital buffers”
All of the banks had common equity Tier 1 capital ratios above 13%, Fitch reported, “benefiting from solid organic capital contribution, moderate [risk-weighted assets] growth, and reasonable dividend increases.”
The added capital buffers above the regulatory minimum is positive “during this period of economic uncertainty,” it said.