Canada

Canada's banking system is dominated by six domestic systemically important banks — RBC, TD, Scotiabank, BMO, CIBC and National Bank — which accounted for about 95% of the C$10.0tn (US$7.1tn) of consolidated assets reported to OSFI by federally regulated banks in July 2026. RBC and TD are also global systemically important banks. The federal sector comprises 34 domestic banks, 15 foreign bank subsidiaries and 27 foreign bank branches, while Desjardins Group, a provincially regulated cooperative, is the largest institution outside the federal banking framework. Consolidated bank assets are around three times GDP, reflecting the banks' extensive foreign operations.

The large banks run universal models spanning retail and commercial banking, wealth management and capital markets, with substantial US franchises at TD, BMO and RBC. Residential mortgages are the core domestic asset, and high loan-to-value lending requires mortgage insurance, while funding rests on a broad retail deposit base supplemented by wholesale markets. TD's US retail operations remain subject to the asset limitation and remediation obligations imposed under its October 2024 US anti-money-laundering resolutions, constraining growth in its largest foreign market.

Capital is strong. The six largest banks reported an average CET1 ratio of 13.5% at 30 April 2026, against a supervisory expectation of 11.0% after OSFI cut the Domestic Stability Buffer to 3.0% in June 2026; OSFI puts the surplus at roughly C$74bn. Mortgage underwriting is constrained by the minimum qualifying rate — the higher of 5.25% or the contract rate plus 2% — and by loan-to-income limits on the share of new uninsured mortgages above 4.5 times income, measures aimed at high household indebtedness.

The macroeconomic backdrop is dominated by trade. New US tariffs and Canadian counter-measures followed a breakdown in bilateral trade talks, and the Bank of Canada held its policy rate at 2.25% on 2 September 2026 while warning that tariffs pose risks to the recovery; unemployment was 6.4% in July. Key risks for banks are credit deterioration in trade-exposed sectors, household indebtedness, exposure to US regulation and how the large banks deploy capital released by the lower buffer requirement.