According to the Zhitong Finance APP, the six major Canadian banks will announce their fourth quarter performance this week. LSEG's data shows that Royal Bank of Canada (RY.US), Canadian Imperial Bank of Commerce (CM.US), Bank of Nova Scotia (BNS.US), and Canadian National Bank will achieve net income growth in the fourth quarter, with growth ranging from 2% to 32%, while Toronto-Dominion Bank (TD.US) and Bank of Montreal (BMO.US) are expected to see a decline in net income of 3% to 18% in the fourth quarter.

In the past year, these six Canadian banks have faced some challenges, prompting them to allocate more funds to address bad loans - customers struggling to repay mortgages in an environment of high interest rates and rising living costs. However, in recent quarters, lower interest rates, cost control, cautious lending, and the prosperity of investment banking business have helped these banks focus on profitability.

Analyst Ebrahim Poonawala of Bank of America stated, "The fourth quarter financial reports of the six major Canadian banks will show accelerated growth in earnings per share, but given the unknown macroeconomic factors, it is expected that the management teams of these banks will proceed cautiously." At the same time, amidst rate cuts and a series of mortgage extensions, the Canadian financial markets are shifting focus to the banks' expectations for the new year.

These banks themselves also face various challenges, from Toronto-Dominion Bank's money laundering issues to Bank of Montreal's non-performing loan projects in the USA. Analysts are optimistic about the efforts of Bank of Nova Scotia to turn losses into profits and consider Canadian National Bank's acquisition of Western Bank of Canada to be essentially bullish news.

So far this year, Canadian Imperial Bank of Commerce has seen the largest increase in stock price, reaching 47%, while the stock prices of Royal Bank of Canada, Canadian National Bank, and Bank of Nova Scotia have increased between 6.8% and 40%. Toronto-Dominion Bank is an exception, as its stock price has fallen by nearly 3% this year after paying a massive $3 billion fine to the US government and is working to improve its anti-money laundering protocols.

Analyst Meny Grauman of Bank of Nova Scotia pointed out that the current uptrend is unrelated to the banks' fourth quarter reports, but more related to the banks' prospects for next year, apart from loan growth, capital markets revenue, and loan loss provisions.

Although the rate cut by the Bank of Canada has reduced concerns about the impact of mortgage payments, as most mortgage holders will have to renew next year, analysts point out that competition may intensify. Canadian consumers who signed mortgage agreements at lower rates may face the risk of rate hikes upon renewal, potentially impacting the loan growth of financial institutions and increasing mortgage delinquency rates. Most banks have taken proactive steps to reduce customer payment impacts by offering various options (including lump sum payments).

Royal Bank of Canada securities analyst Darko Mihelic expects that by 2025, $315 billion CAD (equivalent to $224.86 billion USD) in mortgage renewals will be held by charter banks, many of which are floating rate mortgages currently in negative amortization. He further adds that in the 2026 fiscal year, the proportion of variable rate mortgages in renewal loans will be the highest, 'although payment impacts are decreasing, a significant portion of mortgagees will still face higher mortgage repayments, prompting them to shop around for the lowest mortgage rates.'