TORONTO — Canada’s Big Six banks are starting the year with steady profits but less appetite for acquisitions, leaning on capital markets and AI as geopolitical uncertainty dampens business confidence, the country’s top bank executives said at RBC’s CEO conference on Tuesday.

Tuesday’s conference was followed by an Economic Club of Canada event on Wednesday, where the Big Six’s chief economists offered mixed views about Canada’s economic resilience, warning that weaknesses remain despite the country dodging a recession last year.

Capital market buffer: Canada’s big banks expect capital markets—especially in the U.S.—to remain strong in 2026, buoyed by private equity asset sales and a favourable regulatory environment. They also signalled they would keep M&A ambitions in check. 

RBC chief executive David McKay said Tuesday that the bank’s capital markets activity remains “very constructive” without the need for additional acquisitions. CIBC’s newly appointed CEO Harry Culham echoed this sentiment, noting the lender’s capital markets business is delivering higher returns with less earnings volatility than in previous cycles, driven in part by deeper client relationships. Momentum remains strong in BMO’s investment banking divisions, CEO Darryl White added. However, he stressed that any acquisition would need to improve returns and not delay the bank’s target of reaching a 15 per cent return on equity by the end of 2027.

National Bank’s chief executive Laurent Ferreira took a more cautious view, warning that 2025 benefited from unusual market conditions that may not persist. Ferreira said it would avoid deploying capital into “frothy” private credit or overpaying for assets, while remaining open to selective deals in areas such as wealth, capital markets or technology. The Montreal-based bank closed last year with two major deals: its acquisition of Laurentian Bank’s retail and small-and-medium enterprise banking portfolios, and the completion of its Canadian Western Bank acquisition.

‘Economic war’: Ferreira warned that trade uncertainty and global tensions are already weighing on investment, amid a fragile labour market and consumer sentiment. “If we want to be part of the new world order, we need to speed this up,” he said at the event. He welcomed Ottawa’s renewed focus on infrastructure and defence while urging for faster execution on projects. Ferreira alluded to the U.S. capture of Venezuelan president Nicolás Maduro, saying “the events this weekend” should factor into Canada’s decision-making.

Meanwhile, Scotiabank’s CEO Scott Thomson welcomed the U.S.’s renewed influence in Latin America and said that a political shift toward right- or centre-right governments in Chile, Colombia and Peru—alongside Mexico’s business-friendly administration—marks an inflection point after a “lost decade” for the region. Despite exiting Venezuela in 2014, Scotiabank has the highest international exposure among Canada’s Big Six. “Longer term, this is a good thing for the Western Hemisphere. It’s a good thing for the U.S. It’s a good thing for the Bank of Nova Scotia,” he said at the event.

Despite those risks, bank CEOs said the economy has proven more resilient than expected, but BMO’s White warned trade tensions are unlikely to ease ahead of the USMCA’s review mid-year. “To think that we’re going to all of a sudden wake up to a new deal in June or July, I think, is a bad assumption,” he said.

AI as a margin of defence: As lending growth stalls, banks are increasingly looking inward. Culham said the bank is investing close to 20 per cent of its expense base in technology, including AI, to lift efficiency and return on equity. “Rather than hiring—call it three or four or five per cent incremental [full-time employees] per year—perhaps we don’t need to do that anymore,” he said. 

Toronto-Dominon Bank CEO Raymond Chun said the bank is emphasizing cost management, which might historically involve measures like hiring freezes, but that AI will help with cost management and the bank is not planning a hiring freeze. Chun said that the bank is on track to generate $1 billion in value from its in-house AI, having already delivered $170 million from 75 use cases in 2025, with a further $200 million expected in 2026.

He also pointed to mortgage adjudication, funding and discharge costs already down more than 20 per cent over two years. “In the next two quarters, you’re going to see agentic AI layered into each one of those buckets,” he said, adding that the $19 discharge costs alone could be cut in half again.

For RBC, the opportunity is still early. “I’m really excited, AI is just another wave of opportunity to create shareholder value, and client value,” McKay said.

Editor’s note: This story has been amended to clarify remarks made by Toronto-Dominion Bank CEO Raymond Chun.