2025 Canadian Banks Mid-Year Credit Outlook (video)

Canadian banks face mounting risks from a substantial rise in uninsured mortgages-now accounting for 82% of their residential portfolios-as well as from a major wave of mortgage renewals set to peak through 2026. This scenario increases their exposure to potential credit losses, especially if economic conditions deteriorate or employment falters due to trade tensions. However, banks have prepared prudently, maintaining significant loan-loss reserves, stringent borrower stress tests, and a robust C$58 billion surplus in capital above regulatory minimums. These defenses position Canadian bank bonds well to endure severe downturns and limit credit risks to investors. Star Reply