Canadian banks will be in the earnings spotlight this week, with five institutions reporting third quarter results.

Bank of Montreal reports on Tuesday, followed by CIBC on Wednesday, TD Bank and National Bank on Thursday, and Royal Bank on Friday. “We expect to see continued pressure on [net interest margins] and further indications of the need for higher credit provisioning,” notes UBS Securities Canada Inc. in an earnings preview.

“Capital markets activity likely improved from a slow start, but we still expect it to be down from the elevated levels enjoyed by a number of banks in [the second quarter],” it notes. “Overall, the quarter should lend support to our view of a looming deceleration in operating momentum in the sector.”

UBS notes that it is “least comfortable” with Royal Bank. “We are not convinced that a true recovery is afoot in RY’s U.S. bank platform and we fear that failure to deliver signs of consistent progress will disappoint investors that have run the stock back up to a premium valuation relative to the group,” it says.

Instead, UBS will continue to focus on the banks that it believes boast winning platforms: Bank of Nova Scotia and TD. “We continue to prefer what we view as the strongest medium-term operating outlooks in the group based on capital strength, investment opportunity, and management skill, namely BNS (our top-pick) and TD.”