Name: 2025 Credit Outlook Toronto: Canadian Banks - Credit, Regulatory, and Regional Challenges Persist
Start: 2024-11-11T18:33:00Z
End: 2024-11-11T18:33:55.000Z
Location: BrightTALK

Morningstar DBRS is a leading provider of independent rating services and opinions for corporate and sovereign entities, financial institutions, and project and structured finance instruments globally. Rating more than 4,000 issuers and 60,000 securities, we are one of the top four credit rating agencies in the world and a market leader in Canada, the U.S. and Europe in multiple asset classes.



The current regulatory landscape in banking is evolving, with notable variations in capital requirements across different jurisdictions. In this environment, comparing banking capital levels between countries is becoming more challenging. With Basel III reform implementation delayed in jurisdictions such as the U.S. and UK, Canada’s Office of the Superintendent of Financial Institutions (OFSI) is actively weighing macroeconomic developments and competitive balance considerations into its regulatory decision-making process, particularly regarding capital requirements for the country’s ‘Big Six’  banks, which have significant operations outside of Canada. Additionally, the U.S. is pursuing a deregulatory agenda, which is expected to reduce capital requirements on banks despite possible risks.

Join Morningstar DBRS for a Frontline Perspectives webinar on differing bank capital regulations in Canada and the U.S., including potential implications for Canada’s regulatory approach moving forward.

The webinar will be presented by Carl De Souza (Senior Vice President, Sector Lead, North American Financial Institution Ratings), and Eric Chan (Vice President, North American Financial Institution Ratings). Audience members are invited to join the conversation by participating in a Q&A session following the presentation.

Competitive Balance Considerations in Focus as Bank Capital Rules Vary Across Regulatory Jurisdictions

Residential mortgage delinquencies have been increasing at our rated Canadian medium-size banks (MSBs), but performances have varied. Still-elevated interest rates and rising unemployment have contributed to credit deterioration, and tariff-related macroeconomic uncertainty has amplified concerns. 

Join us for a webinar on the mortgage credit quality of our rated Canadian MSBs. While credit pressures are increasing, loan losses have remained low. We anticipate credit deterioration to continue heading into 2026 as mortgage rates are still high and tariff uncertainty persists, affecting overall market sentiment.

Frontline Perspectives: Canadian Medium-Size Banks Face Credit Pressure from Mortgage Portfolios

Morningstar DBRS is pleased to invite you to a live discussion on Wednesday 29 October at 11:00 CET, focusing on recent credit rating actions for  Italian banks, including the implications of the recent upgrade of Italy’s sovereign rating. 

As Italy’s banking system continues to demonstrate resilience amid moderating growth and increasing uncertainty from geopolitical risks and trade protectionism, our recent actions reflect an updated view of the sector’s credit strength, capital buffers and risk environment.  

Discussion points: 

- Credit rating evolution of Italian banks: key drivers and rationale  
- Developments in profitability, asset quality and capital  
- Implications of the windfall tax  
- Banking sector consolidation

Frontline Perspectives: Credit Rating Actions on Italian Banks

In Q3 2025, total Credit Estimate (CE) volumes increased compared with volumes in Q1, Q2, and the same period last year, in line with the historical trend of rising activity in the second half of the year. This quarter, we assigned a total of 397 CEs, which include new CEs, refreshed CEs, and amendments, as well as a small portion of internal assessments. Currently, there are about 1,534 active/outstanding CEs across 1,224 leveraged corporate borrowers and more than 40 managers, including managers of collateralized loan obligations and private credit funds.

Join Morningstar DBRS on October 28th at 10:00 a.m. ET, for a Frontline Perspectives webinar on CEs presented by Jerry van Koolbergen, Managing Director, US Structured Credit Ratings, and Orest Gavrylak, Senior Vice President, Sector Lead, Corporate Ratings, Private Credit and Credit Estimates. 

The discussion will highlight overall credit quality, financial metrics year-to-date, revenue growth, and anticipated CE volume in Q4 2025. Following the presentation, the audience is invited to participate in a Q&A.

Frontline Perspectives: Credit Estimate Quarterly Snapshot Q3 2025

Canada's postsecondary education sector continues to operate in an uncertain environment fraught with revenue concerns that stem from constrained provincial funding, a notable decline in international enrolments, and other ongoing cost pressures. 

The reputation of Canadian universities is at a crossroads, with students facing uncertain employment prospects upon graduation and schools shutting programs down, closing campuses, and reducing staff headcount. While universities with academically stronger profiles and large expendable resources have more flexibility to weather the challenging operating environment, absent flexibility on domestic tuition, fundamental changes to the funding model, or a loosening of federal international student caps beyond 2026, the sector's financial sustainability will continue to come under increased stress.

Join us for a discussion on Canadian universities as we review enrolment trends, federal policies, new budget initiatives, and the sector’s medium-term outlook. Audience members are invited to participate in a Q&A session following the presentation.

Frontline Perspectives: Canadian Universities Struggle to Balance the Books

Join us for a webinar to discuss proposed changes to our global methodology for rating project finance. The proposed updates focus on providing greater transparency on Morningstar DBRS' credit rating process and are designed to refine our analytic frameworks. During the webinar, we will provide a detailed review of notable updates across the construction and operating phases and discuss expected credit rating impacts.  

This webinar will be presented by Biao Gong, (Senior Vice President, Sector Lead, Corporate Ratings, Asset Finance) and Victor Leung, (Senior Vice President, Sector Lead, Corporate Ratings, Asset Finance).  

The audience is invited to participate in a Q&A session after the presentation, and to provide comments on the methodology on or before September 30, 2025.

Comment Request: Methodology for Rating Project Finance

Middle market borrowers are under increasing financial pressure, with nearly 10% now operating under covenant relief and another 18% at risk of compliance trouble in 2026. No borrowers from last year’s covenant relief group have shown real financial improvement, and most are now relying heavily on external capital support—such as equity injections, junior debt, and PIK interest—to offset ongoing cash flow weakness. 

Join Morningstar DBRS on September 16 at 10:00 a.m. CDT for a Frontline Perspectives webinar on Middle Market reliance on Capital Support presented by Michael Dimler, Senior Vice President - Private Corporate Credit, Krutang Desai, Senior Analyst - Private Corporate Credit and Juan Vidal de la Pena, Analyst - Private Corporate Credit. 

Audience members are invited to join the conversation by participating in a Q&A session following the presentation.

Frontline Perspectives: Navigating Private Credit - Current Fundamentals and Market Trends

Join Morningstar DBRS on September 10 at 2:00 p.m. ET for a Frontline Perspectives webinar on Consumer ABS presented by Stephanie Chin (Senior Vice President, Structured Finance Research), Ines Beato (Associate Managing Director, U.S. ABS Ratings), and Jonathan Riber (Senior Vice President, Senior Sector Lead, U.S. ABS Ratings, Consumer Assets).

The presentation will include an update on the state of the U.S. consumer, along with the latest performance trends across auto loan, consumer loan, credit card receivable, and student loan ABS. Audience members are invited to join the conversation by participating in a Q&A session following the presentation.

U.S. Consumer ABS Update

New issue and refreshed Credit Estimates (CEs) volume in Q2 2025 remains consistent from the previous quarter and maintains pace with 2024. This quarter, Morningstar DBRS assigned a total of 306 CEs to new borrowers and existing CEs refreshed for periodic review and amendments, as well as a small portion of internal assessments. Excluding internal assessments, Morningstar DBRS reviewed 296 unique borrowers' last 12-month and audited financial data. Currently, there are about 1,522 active or outstanding CEs across 1,213 leveraged corporate borrowers and 46 collateral managers, including managers of collateralized loan obligations (CLOs) and private credit funds.

Join Morningstar DBRS on August 4th at 10:00 a.m. ET, for a Frontline Perspectives webinar on Credit Estimates presented by Jerry van Koolbergen, Managing Director, US Structured Credit Ratings, and Orest Gavrylak, Senior Vice President, Sector Lead, Corporate Ratings, Private Credit and Credit Estimates. 

The discussion will highlight overall credit quality, financial metrics year-to-date, revenue growth, and anticipated CE volume in the third quarter of 2025. Following the presentation, the audience is invited to participate in a Q&A.

Frontline Perspectives: Credit Estimate Quarterly Snapshot Q2 2025

In May, Morningstar DBRS released its updated “Global Methodology for Rating Companies in the Oil & Gas, Oilfield Services, and Pipeline and Midstream Energy Industries”. In addition to expanding our industry coverage, the Methodology generally focuses on providing greater transparency on our credit rating process and is designed to refine analytical frameworks and methodologies across Morningstar DBRS. Join us for a methodology review webinar as we explore Morningstar DBRS’ updated approach to rating issuers in our oil and gas, oilfield services, and pipeline and midstream energy coverage universe. The webinar will be presented by Ravikanth Rai, Associate Managing Director, Corporate Ratings. The audience is invited to participate in a Q&A session after the presentation.

Methodology Update: Oil & Gas, Oilfield Services, and Pipeline and Midstream Energy Industries

Spain’s residential construction sector faces a paradox: despite strong demand and rising housing prices, the fragmented industry and the insufficient available land for development, coupled with the lack of labour and increasing raw material costs prevent new property developments from keeping pace with demand . This insightful webinar will delve into the root causes of this disconnect, examining both the obstacles facing builders and the opportunities for innovation and reform.

Join Laura Gutierrez, Senior Vice President, European Corporate Ratings, Diversified Industries & Energy, Jorge Espinosa, Assistant Vice President, Global Sovereign Ratings and Jason Graffam, Senior Vice President, Global Sovereign & Financial Institution Ratings as they explore the structural challenges, market forces, and policy responses shaping the future of Spanish housing.

Frontline Perspectives: Spanish Construction

In May, Morningstar DBRS released its updated “Global Methodology for Rating Companies in the Mining and Forest Products Industries”. This methodology update includes various changes to the methodologies’ structure and analytical approach throughout the credit rating process to provide greater transparency. Join us for a methodology review webinar as we explore Morningstar DBRS’ updated approach to rating issuers in our Mining and Forest Products coverage universe. The webinar will be presented by Brian Szeto, Vice President, Corporate Ratings. The audience is invited to participate in a Q&A session after the presentation.

Methodology Update: Mining and Forest Products Industries

Morningstar DBRS expects the private credit market has plenty of room for further growth for a variety of reasons, including that assets under managements (AUM) in private credit remain multiples lower compared with those in private equity. Additionally, institutional investors continue to be attracted to private credit (particularly direct lending, which comprises the majority of private credit AUM), given that it adds portfolio diversification, has low correlation to public markets, and generates comparatively high risk-adjusted returns.

Join Tim O'Brien, Managing Director, North American Financial Institution Ratings, and Michael McTamney, Senior Vice President, North American Financial Institution Ratings in this webinar as they explore the recent rapid growth in private credit, as well as the market structure and linkages across participants and the implications going forward.

Frontline Perspectives: The Web of Private Credit Lenders

Join Morningstar DBRS on June 26 at 2 p.m. ET for a webinar on insurance-related ABS presented by Stephanie Chin, Senior Vice President, Structured Finance Research, Sergey Moiseenko, Managing Director, US ABS Ratings, Commercial Assets, Josh Gatmaitan, Senior Vice President, US ABS Ratings, and Mark Hirshorn, Sector Lead, US ABS Ratings, Esoteric Assets.

The discussion will provide our credit rating approach for and related commentary on structured settlement ABS, insurance commission ABS, and more. A Q&A session will follow the presentation for the audience to participate in the conversation.

Frontline Perspectives: Insurance-Related ABS

Heading into the second half of 2025, the trade war and tariff uncertainty continues to pose a challenging environment for the large Canadian banks. The Big Six's Q2 2025 adjusted earnings decreased 7.8% sequentially, driven by notably higher PCL on performing loans and lower noninterest revenue. Aggregate total PCL increased QOQ along with aggregate total PCL as a percentage of average net loans and acceptances. Moreover, aggregate PCL on performing loans more than tripled QOQ to $1.8 billion for the Big Six Canadian banks as global trade and tariff policy uncertainty remains elevated, weakening the outlook in North America. Aggregate loan growth stalled and was relatively flat QOQ. Although the operating and macroeconomic environment has become more challenging with weakening consumer spending and business investment, the Big Six remain well positioned with ample liquidity, stable funding, and solid capital levels.

Join us for an in-depth discussion on the Large Canadian Banks Q2 2025 Earnings Round-Up with Carl De Souza, Senior Vice President, Sector Lead, North American Financial Institution Ratings and Shokhrukh Temurov, Vice President, North America Financial Institution Ratings. We will review capital levels, funding and liquidity, and credit trends amidst an uncertain environment.

Frontline Perspectives: Large Canadian Banks Q2 2025 Earnings Round-Up

Following the conclusion of the 29th annual Global ABS conference, Morningstar DBRS is pleased to invite you to a Frontline Perspectives webinar on the key takeaways from Barcelona last week. Join Mudasar Chaudhry, Head of European Structured Finance Research in conversation with senior DBRS Morningstar analysts as they recap the highlights and key themes at the conference.

Join Morningstar DBRS on 19 June 2025 at 3:00 p.m. BST to catch up on topical trends and panel discussions at the Global ABS event. The presentation will last approximately 45 minutes and will be followed by a Q&A session for the audience to participate in the conversation.

Frontline Perspectives: Global ABS 2025 Conference - Key Takeaways

Join Morningstar DBRS' analysts from its Financial Institution Ratings group for an in-depth discussion on the latest trends affecting European banks following Q1 2025 earnings. The panel will also examine how global trade tensions and shifting economic conditions are shaping Morningstar DBRS’ outlook for the European banking sector for 2025 and beyond.


Discussion topics will include the following:

-- Earnings performance in the context of lower interest rates and heightened market volatility

-- Trends in asset quality across European banks

-- The potential impact of tariffs on the banking sector

-- Developments and prospects for banking consolidation

Frontline Perspectives: European Banking Update: Q1 Highlights and Outlook amid Global Trade Tensions

The U.S. and Canadian economies held up reasonably well during the first quarter of 2025 amid rising trade tensions. Growth concerns took a turn for the worse in early April with the announcement of Liberation Day tariffs and trade tensions intensifying between the U.S. and China. Subsequent de-escalatory measures have, at least temporarily, diminished the severity of the tariffs' initial shock. However, we expect U.S. policy uncertainty to remain elevated going forward and act as a drag on growth in the second half of 2025.

Frontline Perspectives: North America Macroeconomic Update

Join us for a discussion on the Canadian Structured Finance Market, where panelists will focus on the state of the Canadian consumer in the current macroeconomic environment. You can also expect a general performance update of asset classes and a deep dive into the EV market as the sector grows.

2025 Credit Outlook Toronto: Canadian Structured Finance Performance Update

Kunal Kapoor, CEO, Morningstar sat down with Suzanne Akers, CRO, AIMCo to discuss how their organizations are navigating sustainability in long-term investments, incorporating ESG risks and changing market dynamics.

2025 Credit Outlook Toronto: Morningstar and AIMCo Fireside Chat

While the march towards energy transition continues, the road is filled with unique challenges. Join us for an in-depth conversation with Matthew A. Akman, Executive Vice President, Corporate Strategy and President, Power at Enbridge, as he provides his insights on Enbridge’s approach to investing in renewable energy. The discussion will include an overview of Enbridge’s investment preferences and a discussion on the challenges associated with the regulatory environment, tariffs, access to key raw materials and grid infrastructure.

2025 Credit Outlook Toronto: How Enbridge is Navigating the Energy Transition Roadway

Numerous countries and corporations globally have now established definitive energy transition objectives. Progress is underway, but many challenges lie ahead in meeting the various objectives. In a panel discussion moderated by Aran Thavaraja, Director, Corporate Debt Strategy, BMO Capital Markets, our Corporate analytical team will discuss how rated entities in project finance, auto manufacturing, engineering and construction, airlines, and fuel production are managing the energy transition pathway. We will provide our thoughts and opinions on planned strategies, progress, challenges, geopolitical considerations, and credit implications for entities in these specific sectors.

2025 Credit Outlook Toronto: Assessing Energy Transition Strategies and Credit Implications

Hear from our sovereign team on recent and historical rating actions and trends, as well as our global economic outlook for 2025 as we consider geopolitical risks and tensions.

2025 Credit Outlook Toronto: Global Sovereign Outlook

2025 Credit Outlook Toronto

Although the Bank of Canada has started its monetary policy easing cycle, credit, regulatory, and regional challenges still persist for the Canadian banks. Housing costs continue to weigh down Canadian households, commercial real estate, particularly the office sector, remains a concern, the U.S. regional bank sector is posing headwinds, regulatory developments continue to drive capital management strategies, and operational risk management issues are causing heightened concerns.

2025 Credit Outlook Toronto: Canadian Banks - Credit, Regulatory, and Regional Challenges Persist

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2025 Credit Outlook Toronto: Canadian Banks - Credit, Regulatory, and Regional Challenges Persist

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