Big Six Q1 profits strong; Q2 preview excitement
Key Questions
How did the Big Six banks perform in Q1 2026?
The Big Six reported combined Q1'26 profits of $19B, beating expectations, with BMO posting adjusted EPS of C$3.48 (+15%) and CIBC delivering Q2 EPS of $1.98 (+15%) plus a 3% dividend hike. Earnings are described as a potential 'banger' amid strong capital markets offsetting credit pressures.
What is the preview for Q2 bank earnings?
Analysts expect solid Q2 growth despite macro headwinds, with BNS reporting on May 27 and RY/TD highlighted as top picks. Average EPS growth of 13.1% is forecast through 2028, though valuations at all-time highs raise the bar for results.
What credit stress concerns face the Canadian banks?
Worsening credit conditions and rising insolvencies (at 2009 levels) are shifting PCL peaks to FY2027, with stress tests expected in Q2. Capital markets strength has helped offset some impacts so far.
Which banks are analysts' top picks for 2026?
RY and TD are frequently cited as top picks by firms including BofA, which sees growth potential despite uncertain economic conditions. Valuations remain elevated, requiring strong earnings to justify current levels.
What is the expected EPS growth for Canadian banks?
Analysts project 19% EPS growth overall, with BofA forecasting 13.1% average annual growth from fiscal 2026-2028. This comes amid macro uncertainties but supported by revenue gains.
How are bank valuations affecting earnings season expectations?
Big Six valuations at all-time highs have raised the performance bar for the upcoming earnings season. Analysts note this could pressure stocks if results fall short of elevated expectations.
What role do capital markets play in bank earnings?
Strong capital markets activity has helped offset credit stress and provisions in Q1 results. This contribution is expected to remain a positive factor in Q2 previews.
Are Canadian banks poised for growth despite economic risks?
Yes, analysts anticipate solid Q2 growth with earnings momentum continuing, though credit deterioration and macro headwinds like tariffs remain watchpoints. BofA and others maintain constructive views on the sector.
Q1'26 $19B beat; BMO adj EPS C$3.48 (+15%), CM Q2 EPS $1.98 +15%/div+3%; BNS May27 preview; RY/TD top picks. Earnings called a potential 'banger'. Credit stress tests Q2 with PCL peak shifted to FY2027 (insolvencies 2009 levels) but capital markets offset; 19% EPS growth expected amid macro headwinds.