Canada’s major banks may not be directly affected by tariffs, but their extensive loan portfolios valued at trillions of dollars are at risk due to the economic repercussions of the ongoing trade dispute with the United States. Despite this, senior executives remain optimistic.

The country’s largest financial institutions have begun releasing their third-quarter financial results. Against a backdrop of escalating trade tensions and the implementation of countermeasures to soften the impact of American tariffs, Bank of Montreal and Scotiabank were the first to report this week. National Bank followed suit on Wednesday, with Royal Bank of Canada, Toronto-Dominion Bank, and CIBC announcing their results on Thursday.

During a conference call with analysts following the earnings announcement, Scotiabank’s CEO, Scott Thomson, described the recent trade uncertainty as “manageable” and highlighted positive aspects of Canada’s economy. He emphasized factors such as job growth, fiscal strength driven by oil prices, and economic activities supported by government initiatives.

Although U.S. President Donald Trump imposed significant tariffs on Canadian goods over the weekend, Scotiabank indicated that the direct impact on the bank’s loan portfolio is minimal. However, the banks remain vulnerable to broader economic weaknesses, particularly in consumer lending areas like mortgages, auto loans, and credit cards.

Both Thomson and Bank of Montreal CEO Darryl White viewed the current trade tensions as an opportunity for Canada to address internal trade barriers. White noted BMO’s significant U.S. presence, with a substantial portion of the bank’s assets allocated to the American market.

Despite the challenges posed by the trade war, shares of Canada’s leading banks are trading near record levels on the Toronto Stock Exchange. Analysts, such as John Zechner from J Zechner Associates, observed lower-than-expected loan loss provisions in the banks’ recent financial reports but cautioned that the economic environment could become more challenging for the financial sector moving forward.