Tariff Tension Forces Canadian Banks to Fortify as Loan Risks Rise

Amid escalating uncertainty stemming from U.S. tariff threats, Canada’s Big Six banks are bracing for a potential economic slowdown. Analysts project that provisions for credit losses, funds reserved to cover potential bad loans, could rise between 6.5% and 80% across some institutions in Q1. 

While RBC may still report earnings growth, BMO is forecasted to see a 7.5% decline. Heightened credit risk and concerns about loan quality are now front and center for both investors and analysts. Experts warn that continued tariff pressures could undermine Canadian household creditworthiness and corporate lending, two critical pillars of the national economy. 

For Calgary’s commercial real estate sector, these developments highlight the need for sharper tenant risk assessments, especially in industrial and retail spaces tied to cross-border trade. Additionally, banks may adopt a more cautious stance toward financing construction, acquisitions, and redevelopment projects in the near term. 

Reference: Global News, “Canada’s big banks to build reserves amid tariff uncertainty,” May 2025.

Connect with ClearView: Want to understand how credit tightening or tariff shocks could impact your asset strategy? Contact us at info@cvpartners.ca we’ll help you reposition proactively. 

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