'Uncertainty meter has gone down': Bank execs hope for economic 'green shoots' after earnings top expectations

Executives at two of Canada’s largest banks are feeling cautiously optimistic as the country’s economic situation gradually improves, despite lingering uncertainty surrounding tariffs. Bank of Montreal chief executive Darryl White noted during a call with analysts that earlier this year, his “uncertainty meter was very high,” but today, it’s “less high.”

White highlighted the uncertainties surrounding the Canadian government earlier in the year, including questions about the leadership of the Liberal Party and the direction of U.S. policy. While there are still geopolitical issues and uncertainties surrounding Canada’s trade deal with the U.S., White expressed a more positive outlook, suggesting that the level of uncertainty has decreased.

Phil Thomas, the chief risk officer at Bank of Nova Scotia, also noted positive signs of improvement in discretionary spending based on credit card data, indicating some “green shoots” in the economy. However, he acknowledged that there are still signs of stress among younger clients, despite an increase in retail sales during the second quarter.

Both banks reported higher profits and beat analysts’ expectations for the third quarter, with lower provisions for credit losses contributing to their earnings. BMO reported total PCLs of $797 million, down from $906 million a year ago, while Scotiabank reported total PCLs of around $1 billion, a decrease from the previous year and the second quarter of 2025.

While BMO’s net income for the quarter was $2.33 billion, with adjusted earnings per share of $3.23, Scotiabank reported a net income of $2.53 billion and adjusted earnings per share of $1.88. Both banks also announced quarterly dividends, with BMO maintaining its dividend at $1.63 per share and Scotiabank increasing its dividend to $1.10 per share.

Analysts have reacted positively to the earnings reports, with some noting that BMO’s results were driven by lower provisions for credit losses, while Scotiabank’s performance across its operating segments was solid. Overall, the outlook for both banks appears to be cautiously optimistic, with a sense of improvement in the Canadian economy despite ongoing uncertainties.