'Modest earnings growth' forecast at Canadian banks through 2025: Fitch

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Fitch News

Earnings Growth,Royal Bank Of Canada,Canadian Banks

'Risk profiles are largely conservative and supported by well-managed exposures and underwriting practices that have led to low loan impairments and credit...

Canada's six largest banks and the Desjardins Group federation of credit unions consistently score in the upper echelons of Fitch's rating hierarchy across all categories. Canada’s biggest banks should see “modest earnings growth” through a soft economy in 2024 and 2025, with Royal Bank of Canada topping its peers, Fitch Ratings says.

Fitch’s outlook comes within an economic context it refers to as “stagnant.” The report notes the Bank of Canada’s easing cycle has started but says “any boost to economic activity is some ways off” and that “household spending will likely remain feeble, at least through 2025.”, to hover just above six per cent into 2026. The report also says the headline Consumer Price Index should drop to two per cent by the end of 2025, and the Bank of Canada’s overnight rate should hit 2.

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