Inside what RBC, Scotiabank and TD leaders told the Scotiabank Financials Summit about tariffs, reserves and the capital rules now reshaping Canadian lending.
The bank CEOs credit outlook across Canada’s largest lenders remains broadly positive even as the Canada-U.S. trade war escalates, executives said Wednesday at the Scotiabank Financials Summit in Toronto. Leaders from RBC, Scotiabank and TD told the annual gathering that consumer and commercial borrowers are holding up, while acknowledging they are building precautionary cushions against tariff-exposed sectors.
The timing was pointed. The comments came one day after Ottawa introduced retaliatory tariff measures against U.S. duties imposed in August, and after U.S. President Donald Trump responded with executive orders barring imports of certain Canadian goods outright. Bank chiefs were, in effect, being asked to price the risk of a trade conflict that was widening while they spoke.
Dave McKay’s “A Little Cautious” Assessment at the Summit
RBC president and chief executive Dave McKay struck the most balanced tone of the day. He said he is “a little cautious” because of the escalation of the trade war, but that outside of that pressure point, the picture in consumer, commercial and U.S. commercial lending is improving.
McKay also drew a clear line around where the risk actually sits. Sectors directly hit by tariffs, he said, face a significant degree of uncertainty, and RBC is holding a robust capital buffer to absorb potential losses should conditions deteriorate. That is a familiar posture for Canada’s largest bank by assets: keep lending, but keep the shock absorber inflated.
Scotiabank’s Scott Thomson on How Little Trade Is Actually Tariffed
Scotiabank president and CEO Scott Thomson offered the most explicitly relaxed view on credit performance. He said a relatively small amount of trade is actually subject to tariffs, and that he does not expect the measures to have a large effect on the lender’s credit results.
Thomson did not treat that as a permanent verdict. He said the bank will have to “stay tuned” for what unfolds over the next year from a macroeconomic standpoint, and that the relationship with the United States will matter. For now, he said, Scotiabank’s commercial, small business and automotive segments do not appear to be showing significant issues.
Why TD Set Aside $500 Million for Tariff Uncertainty
TD chief executive Raymond Chun said he is seeing resiliency on the credit front in both Canada and the United States. Even so, TD has set aside $500 million in reserves tied specifically to tariff-related uncertainty.
That combination — an upbeat read on borrowers paired with a large provision — is the defining feature of this moment in Canadian banking. Reserves of that kind are forward-looking judgments about what could go wrong, not confirmation that loans are already souring. Banks build them when the range of possible outcomes widens, which is exactly what a fast-moving tariff fight does.
The Week the Trade War Entered a New Chapter
The summit landed in the middle of a sharp escalation. Canada introduced retaliatory tariff measures on Tuesday in response to U.S. duties brought in during August, a step covered in detail in our report on how Canada’s retaliatory tariffs took effect as Prime Minister Mark Carney warned of tough times ahead.
Washington’s answer was to escalate again. Trump signed new executive orders to completely bar imports of certain Canadian goods — an approach that follows the pattern seen in the U.S. import ban targeting Canadian alcohol and bicycles. Ottawa, meanwhile, has been widening its options abroad, including the diplomatic push described in our coverage of how Ottawa courted the European Union as tariffs bit.
Notably, the third-quarter earnings reported by Canada’s major banks shortly after the initial round of U.S. duties were largely positive. Lenders pointed to a resilient domestic economy and described trade tensions as manageable — the same framing the CEOs repeated on stage this week.
OSFI Cuts the Domestic Stability Buffer to Three Per Cent
Running underneath the tariff talk is a capital rule change that directly affects how much lending firepower the big banks have. In June, the Office of the Superintendent of Financial Institutions lowered the domestic stability buffer to three per cent from 3.5 per cent, saying the move would give the six largest banks more flexibility to deploy capital.
The buffer is part of the cushion Canada’s largest lenders must hold against an economic shock. Reducing it frees up capital that can be used for loan growth, share buybacks or other commercial purposes — a meaningful lever at a time when banks are simultaneously topping up tariff-related reserves.
Speaking at the summit, OSFI superintendent Peter Routledge said the risk environment in Canada has “fundamentally changed.” He framed the buffer decision as a signal rather than a retreat: “The benefit is we’re sending a clear and unambiguous message to the banking system that you have capital planning certainty and more capital flexibility yourself to make commercial decisions.”
Where the Big Six Stood at the Summit
| Institution / body | Speaker | Position stated |
|---|---|---|
| RBC | Dave McKay, president and CEO | Cautious on trade escalation; consumer, commercial and U.S. commercial credit improving; robust capital buffer maintained |
| Scotiabank | Scott Thomson, president and CEO | Limited tariff impact expected on credit performance; no significant issues in commercial, small business or automotive |
| TD | Raymond Chun, chief executive | Resiliency in Canada and the U.S.; $500 million set aside for tariff-related uncertainty |
| OSFI | Peter Routledge, superintendent | Risk environment “fundamentally changed”; domestic stability buffer lowered to 3% from 3.5% |
| BMO InvestorLine | Not specified | Commission-free trading on all stocks and ETFs announced Wednesday |
Digital Challengers and BMO InvestorLine’s Zero-Commission Play
Tariffs were not the only pressure discussed. The summit also came as the big banks face rising competition from smaller digital platforms, and McKay did not dismiss the threat.
He called competition in the sector “great” and acknowledged that some customers are being won over by the improved customer experience smaller platforms offer. “We need to improve our overall customer experience. I think that is the most important, and we’ve underinvested in a couple of our platforms,” he said, promising a relaunch and rebranding of RBC’s approach. He added that he is optimistic RBC can win back customers who have moved to alternative lenders.
The competitive squeeze produced a concrete move the same day: BMO InvestorLine announced commission-free trading on all stocks and exchange-traded funds as it pushes to grow its digital self-directed investing platform. BMO says it is the first direct investing brokerage owned by one of Canada’s five big banks to scrap commissions on stock and ETF trades.
What the Bank CEOs’ Credit Outlook Means for Borrowers
For households and business owners, the practical read from the summit is that credit conditions have not tightened broadly — but the exposure is uneven.
- Tariff-exposed sectors carry the risk: McKay singled out sectors hit directly by duties as facing significant uncertainty, which is where lender scrutiny is most likely to concentrate.
- Reserves are precautionary, not proof of losses: TD’s $500 million provision reflects a wider range of possible outcomes rather than reported deterioration in loan books.
- More bank capital is available to deploy: The lower domestic stability buffer gives the Big Six additional flexibility, though how each bank uses it is a commercial decision.
- Competition is working in customers’ favour: Zero-commission trading and platform investment are direct responses to digital rivals winning accounts.
Thomson’s own caveat is the one worth holding onto: the macro picture over the next year, and the state of the relationship with Washington, will determine whether these outlooks hold. This report describes what executives and the regulator said publicly and is not financial advice; individual lending conditions will vary by borrower and sector.
Frequently Asked Questions
What is the domestic stability buffer?
It is part of the capital Canada’s six largest banks must hold in reserve in case of an economic shock. OSFI lowered it to three per cent from 3.5 per cent in June 2026.
Does TD’s $500-million reserve mean loans are going bad?
No. TD’s chief executive said he is seeing resiliency in both Canada and the U.S.; the reserve is set aside against tariff-related uncertainty rather than confirmed losses.
Why does Scotiabank expect limited credit impact from tariffs?
Scott Thomson said a relatively small share of trade is actually tariffed, and that Scotiabank’s commercial, small business and automotive segments show no significant issues so far.
What triggered this week’s escalation?
Canada introduced retaliatory tariff measures on Tuesday in response to U.S. duties imposed in August, and Trump then signed executive orders barring imports of certain Canadian goods.
