Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He graduated with a degree in Business Administration, has over a decade of writing experience, and grew his personal portfolio 153% from 2020 to 2024.
Canada’s Big Six banks will begin reporting their second-quarter fiscal 2026 earnings on Tuesday, May 27, as investors look for signs of credit quality and capital markets strength following a solid first quarter.
The banking sector rallied on Thursday, May 21, 2026, with Royal Bank up 1.3%, TD Bank up 1.8%, and Bank of Montreal up 1.49% as the TSX Composite climbed 0.73% to close near all-time highs at 34,409.49 (data as of May 21, 2026).
What Analysts Are Expecting
According to a preview from RBC Capital Markets, core earnings per share across the Big Six are expected to decrease approximately 6% quarter-over-quarter but increase roughly 21% year-over-year on average — a reflection of tough sequential comparisons but strong annual momentum.
The analyst consensus models higher provisions for credit losses (PCLs) across the group, with one notable exception: TD Bank. The increase in PCLs is expected to be driven primarily by stage 1 and stage 2 provisions — loans that are still performing but showing early signs of elevated risk.
On the positive side, capital markets divisions are forecast to deliver stronger core earnings for all of the large Canadian banks except Bank of Nova Scotia, benefiting largely from higher fee revenues.
Strong Q1 Sets a High Bar
All six of Canada’s largest banks beat analyst estimates in the first quarter of 2026, posting combined profits of approximately $19 billion. That performance set a high bar for Q2, and investors will be watching closely to see whether momentum can continue.
Canadian banks have long been among the most reliable dividend-paying bank stocks in the country, and many investors use commission-free investing apps to build diversified portfolios around these financial pillars.
The Bull Case
Supporters of Canadian bank stocks point to resilient consumer credit quality, strong mortgage portfolios, and diversified revenue streams spanning retail, commercial, and wealth management. Year-over-year earnings growth of roughly 21% would signal that the banks are successfully navigating a complex economic environment while continuing to reward shareholders.
The expected strength in capital markets also suggests that deal activity and fee-based revenue are picking up — a positive sign for non-interest income.
Risks to Watch
Higher provisions for credit losses, even on performing loans, indicate that banks are preparing for potential economic headwinds. Stage 1 and 2 PCLs don’t reflect current defaults, but they do suggest caution about the months ahead.
A sequential earnings decline of around 6% quarter-over-quarter would also raise questions about whether the banks can sustain their recent momentum, particularly if credit conditions deteriorate or capital markets activity slows.
What to Watch on Earnings Day
Investors should pay close attention to:
- PCL guidance: Are banks expecting provisions to peak, or is there more pain ahead?
- Credit quality metrics: Delinquency rates, loan growth, and commentary on consumer and commercial borrowers.
- Capital markets performance: Trading revenue, underwriting fees, and deal pipelines.
- Management commentary: Any updates on capital deployment, dividend policy, or strategic priorities.
We’ll be covering the Big Six earnings reports as they roll out starting Tuesday.
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Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He holds a degree in Business Administration and has over a decade of writing experience. Nick began investing just before the COVID-19 market crash in March 2020, growing his personal portfolio 153% by 2024. In 2022, he founded Best Canadian Stocks to make data-driven investing accessible to all Canadians. His goal is to help all of his readers achieve financial freedom, maximize their spending power, and reach their financial goals. Whether you're maximizing your TFSA, building an RRSP to save for retirement, or looking to buy your first stock, Nick has your back. His work covers Canadian equities, dividend investing, tax-advantaged accounts, and personal finance.
