Canadian Big Six Q3 earnings preview

Canada's six largest banks are set to report third-quarter earnings this week, with analysts and money managers expecting strong results but wary of high expectations. The banks have navigated tariff shifts, weak economic growth, and a sluggish housing recovery, driving their shares up 20-35% year-to-date. Credit loss provisions have peaked and are declining as a percentage of loans, though provisions on impaired loans may rise sequentially. Analysts highlight strong capital markets activity, with TD, BMO, and CIBC expected to show the most improvement, and Royal Bank's capital markets franchise being most material. Investors will watch for updates on the Moneris sale and TD's anti-money laundering remediation. The Royal Bank of Canada's inflation is at the high end of its target range, and unemployment fell to a two-year low in July. Overall, the sector is expected to deliver record earnings, but valuations may be stretched, requiring earnings growth to catch up to prices.