Executives at two of Canada’s largest banks that reported better-than-expected third-quarter earnings on Tuesday say the country’s economic situation is gradually improving, though still uncertain due to the tariffs.

“Earlier this year, my uncertainty meter was very high,” Bank of Montreal chief executive Darryl White said during a call with analysts. “Today, it’s less high.”

He said there were questions about what the Canadian government would look like early this year, “let alone who the leader might be of the Liberal Party” and the policy that would flow from it, and there wasn’t “much of a handle” on the direction of the United States policy.

“We have got a better one today,” he said. Still, there are geopolitical issues and uncertainty about Canada’s future trade deal with the U.S.

“When I add it all up, it doesn’t mean that all the uncertainty has gone away,” he said. “It’s just that the meter has gone down and, therefore, the confidence in the outlook today is one that is just a little easier to call than it was six months ago.”

Phil Thomas, Bank of Nova Scotia ‘s chief risk officer, said credit card spending data suggests discretionary spending is improving and that there are “some green shoots” coming.

He said there are still signs of stress, particularly amongst younger clients, but retail sales were up in the second quarter.

“From a Canadian consumer health perspective, it’s really mixed right now,” he said during Scotiabank’s call with analysts. “We are cautiously optimistic about the outlook.”

For now, White said the Canadian economy is in the “middle innings,” weaving through a modest growth environment.

“The economy is sort of moving at a pace that you’d expect,” he said. “It’s neither robust, nor does it feel recessionary in Canada, and you’ve got some segments that will naturally slow down when that happens.”

BMO and Scotiabank were the first two of the Big Six banks to report their earnings that cover the three months ending July 31.

Their earnings are often considered a signpost of the country’s economy and both banks reported higher profits and beat analysts’ expectations.

But given the uncertainty surrounding tariffs, analysts are closely monitoring provisions for credit losses (PCLs), the reserves lenders set aside to address potentially problematic loans, which is a key metric for measuring the health of a bank’s loan book as well as the ability of households and businesses to pay their debts.

Both BMO and Scotiabank reported lower PCLs than expected, which helped boost their earnings. BMO’s total PCLs were $797 million, compared to $906 million a year ago, while Scotiabank’s total PCLs were around $1 billion, a decrease of about $11 million compared to the same quarter a year ago and a drop of about $357 million from the second quarter of 2025.

“While we are encouraged by our credit performance this quarter, the operating environment remains challenging,” Thomas said. “In Canada, the lack of a trade deal with the U.S. and recent mixed macroeconomic results continue to add uncertainty to our near-term outlook.”

BMO’s net income for the three months ending July 31 was $2.33 billion, compared to $1.86 billion during the same period a year ago, resulting in net earnings per share of $3.14.

The bank’s adjusted net income — which removes the impact of non-recurring items — was $2.39 billion, compared to $1.98 billion a year ago, resulting in adjusted earnings per share of $3.23, which was above analysts’ expectations of about $2.97 per share.

John Aiken, an analyst at Jefferies Inc., said BMO’s “strong beat” should receive an “initial warm reception” by investors, but the bank appears to have modestly missed expectations for most of its business segments except for U.S. retail.

“The bulk of the better-than-expected results came from lower-than-forecast provisions,” he said in a note on Tuesday. “We view the quality of earnings as being not as high as we had originally anticipated and, along with negative loan growth in the U.S., we anticipate that we could potentially see stronger earnings from BMO’s peers.”

Mike Rizvanovic, an analyst at Scotiabank, said in a note that BMO’s headline beat could move consensus expectations a bit higher for fiscal 2026.

  • Scotiabank posts higher global banking profits, beats analysts’ expectations
  • BMO beats expectations, lowers provisions for credit losses

BMO also announced a quarterly dividend of $1.63 per common share, which is unchanged from the prior quarter.

Scotiabank’s net income was $2.53 billion, compared to $1.9 billion during the same period a year ago, resulting in net earnings per share of $1.84.

Its adjusted net income was $2.52 billion, compared to $2.2 billion a year ago, resulting in adjusted earnings per share of $1.88, which was above analysts’ expectations of about $1.73 per share.

The bank also paid a quarterly dividend of $1.10 per share, up from $1.06 in the previous quarter.

“Scotia saw solid performances across each of its operating segments,” Aiken said in a separate note on Tuesday. “In our opinion, Scotia’s beat was of higher quality than BMO’s.”