Recent insights from Scotiabank strategist Hugo Ste-Marie suggest that Canadian bank stocks are poised for continued outperformance into 2026. According to Ste-Marie, Canadian banks have shown remarkable resilience, surging 31.7% year-to-date, marking a strong year thus far.
Upcoming Financial Reports
The fiscal Q4 results for Canadian banks are expected soon, with Scotiabank reporting on December 2. Analyst Mike Rizvanovic anticipates a robust quarter, driven by high capital markets, stable margins, moderated expense growth, and significant share buybacks. This financial performance could enhance future expectations for the banking sector.
Profitability Outlook
Ste-Marie believes if banks meet or exceed their return on equity (ROE) targets, their strong performance will likely persist in the coming year. He emphasized that even with recent gains, the banks’ year-over-year outperformance is not historically overextended.
Stock Ratings
- Canadian Imperial Bank of Commerce (CM-T): Outperform rating
- National Bank of Canada (NA-T): Outperform rating
- Royal Bank of Canada (RY-T): Outperform rating
Market Developments in Commodities
In related market news, analyst Sam Crittenden from RBC Capital Markets reported that copper prices reached new all-time highs. This surge is attributed to tightening supply, favorable forecasts, and unexpected trading disruptions on the CME’s Comex Exchange.
Precious Metals Performance
Silver also achieved a record price, rising to $55.66 per ounce. This spike is influenced by reduced liquidity in the market and ongoing supply challenges following recent disruptions in London.
Government Responses to Economic Challenges
In a bid to bolster Canada’s steel industry, Prime Minister Mark Carney introduced measures addressing the high tariffs impacting exports to the U.S. Initiatives include reducing tariff-free quotas on foreign steel and imposing a 25% tariff on certain steel derivative products.
Economic Growth Insights
BMO economist Robert Kavcic discussed Canada’s economic growth, noting a 1.4% increase in real GDP over the past year. Despite some fluctuations, the economy is displaying below-potential growth, with final domestic demand stabilizing with a 1.7% increase.
Challenges in Business Investment
Despite positive consumer support for domestic demand, a significant slowdown is evident in nonresidential business investment. This sector has not contributed to growth in the past year while similar categories thrive in the U.S. market, particularly spurred by advancements in artificial intelligence.
As we look toward 2026, Canadian banks appear well-positioned to maintain their strong market performance, reflecting broader economic trends and strategic responses to challenges.
