Bank CEOs See Positive Credit Despite Trade War; TD Reserves $500M

For markets, the key question is whether escalating tariffs will dent Canadian bank loan books. RBC's Dave McKay and Scotiabank's Scott Thomson offered a cautiously bullish credit view, while TD's $500 million reserve signals that prudence is already being priced into balance sheets. This matters for bank earnings, valuations, and capital deployment over the next several quarters.

Canadian bank chief executives used the Scotiabank Financials Summit in Toronto on Wednesday, September 9, 2026, to push back against fears that the rapidly escalating Canada-U.S. trade war will undermine credit quality. RBC President and CEO Dave McKay tempered his optimism with caution, saying he is "a little cautious because of the escalation of the trade war right now," but that consumer, commercial, and U.S. commercial credit outside tariff-impacted sectors "is getting better." Scotiabank President and CEO Scott Thomson took a measured view, arguing that only "a relatively small amount of trade is tariffed" and therefore tariffs are unlikely to have a large effect on credit performance. TD CEO Raymond Chun said he sees resiliency in both Canada and the U.S., while revealing that TD has set aside $500 million in reserves for tariff-related uncertainties.

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RBC's Dave McKay and Scotiabank's Scott Thomson offered a cautiously bullish credit view, while TD's $500 million reserve signals that prudence is already being priced into balance sheets.

The comments come just days after the trade dispute entered a new, more aggressive phase. The United States imposed an initial round of tariffs on Canadian goods in August 2026. Shortly afterward, Canada's major banks reported largely positive third-quarter earnings, with lenders pointing to a resilient economy and describing the trade tensions as manageable. On Tuesday, September 8, 2026, the Canadian government introduced retaliatory tariff measures in response to the U.S. duties. In turn, U.S. President Donald Trump signed new executive orders to completely bar imports of certain Canadian goods, sharply increasing the economic stakes for Canadian exporters and the banks that finance them.

The central tension in the executives' message is the gap between headline macro risk and actual credit performance. McKay acknowledged that tariff-impacted sectors face a significant degree of uncertainty, and RBC is maintaining a robust capital buffer to absorb potential losses. Yet he also emphasized that broader credit trends are improving. Thomson was even more sanguine on direct exposure, noting that commercial, small business, and automotive segments have shown no significant issues so far. Chun's disclosure of a $500 million reserve is the most concrete sign that banks are preparing for potential deterioration, even as current indicators remain healthy.

For investors, the commentary carries several important implications. First, it suggests that Canadian banks do not currently see a broad-based credit cycle turning, despite the sharp escalation in trade friction. This should support the view that near-term earnings and loan-loss provisions are likely to remain stable. Second, the divergent tones among executives highlight the importance of portfolio mix: banks with heavier exposure to tariff-sensitive industries such as automotive, manufacturing, and commodities may face greater pressure if the dispute drags on. Third, the $500 million reserve at TD provides a benchmark that analysts may use when evaluating whether peers have set aside enough capital for trade-related losses.