Trade policy uncertainty and geopolitical risks, including tariff-related uncertainty and global tensions, are creating an unfavorable operating environment for Canadian banks in 2026.

The interest rate environment and monetary policy, with the Bank of Canada on an extended hold and potential policy tightening later in 2026, impact bank profitability and consumer debt burden.

Pressures from credit costs and slower net interest income growth are expected, with credit deterioration for Canadian banks likely to continue in fiscal 2026 and provisions for credit losses potentially peaking in the latter half of the year.