By the Numbers: Canada’s 2024 Finance in Review — $58.8B in Bank Profits, 3.25% BoC Rate, Rising Delinquencies, and Major Deals Redefining Lenders

Canada’s financial landscape in 2024 closed with a notable paradox: banks posted robust profits and displayed resilience despite high borrowing costs, while households faced renewed pressure from elevated mortgage rates and a cautious, regulated lending environment. The year was shaped by a string of headline-grabbing deals, regulatory shifts, and evolving climate-finance dynamics, all of which left a lasting imprint on the country’s banking system, capital markets, and consumer credit. This article takes a comprehensive, data-driven look back at 2024 for Canadian finance, translating complex numbers into a nuanced narrative about profitability, risk, policy, and strategic repositioning across Canada’s Big Six banks and their broader ecosystem. The following sections unpack the most consequential metrics, the drivers behind them, and the implications for 2025 and beyond, while preserving the original realities and insights embedded in the data.

The Year in Review: Profitability, Delinquencies, and Mortgage Dynamics in 2024

The year 2024 was defined by a shift from acute fears of systemic mortgage stress to a more tempered, still-cautious optimism about a soft landing for the Canadian economy. A central pillar of this narrative was the profitability of Canada’s six largest banks, collectively navigating high rates, evolving consumer behavior, and an imperfect macro outlook. The adjusted profits clocked in at an impressive $58.771 billion for the Big Six banks in the 2024 fiscal year. This figure marked an increase of roughly $1 billion over the previous year, signaling not just resilience but a degree of upside potential even as the sector contended with elevated funding costs, higher impairment expectations, and a cautious lending stance. The year’s earnings trajectory underscores a complex balance: while loan growth remained subdued due to tight financial conditions, interest margins benefited from the higher-cost environment and the banks’ ability to manage funding costs and risk exposure effectively. At the same time, this profitability did not erase the underlying tension created by mortgage renewals at materially higher rates. The macro backdrop—a soft landing for the economy combined with sticky inflation in the earlier part of the year—allowed banks to maintain strong earnings momentum, but it also kept profit margins under pressure from competition and risk controls, especially on the consumer lending side.

In parallel, the Bank of Canada’s policy stance remained a critical determinant of both bank performance and the broader credit environment. By year-end, the BoC rate stood at 3.25%, a substantial decline from the 5% level observed at the start of June. This trajectory reflects an aggressive, data-driven easing cycle designed to anchor a gradual cooling of inflation and to stimulate economic activity after a period of restrictive policy. Banks followed the central bank’s lead, translating the easing into reduced prime rates, with the prime rate adjusted downward to 5.45%. The shift in rates had a cascading effect on consumer and business credit, influencing everything from mortgage renewals to new lending approvals and the cost of funds for banks. The year’s rate dynamics set the stage for continued, albeit uneven, monetary stimulus anticipated in 2025, with industry participants looking to the pace and magnitude of BoC rate cuts as key determinants of the economy’s pace.

Into 2025, market observers and bank executives anticipated a more deliberate, slower pace of rate reductions. A prevailing expectation, supported by central-bank communications and economic indicators, was that the BoC would continue to loosen policy but at a measured pace, allowing the transmission mechanism—lower borrowing costs, improved consumer sentiment, and accelerated housing market activity—to take root gradually. Analysts forecast that the central bank’s key rate might approach the vicinity of 2% by July 2025, a level that would reflect confidence in a muted but still present risk of inflation and a still-sensitive labour market. The contrast with the U.S. Federal Reserve was notable as well: while the BoC signaled a continued easing path, the U.S. policy outlook suggested a more modest pace of cuts, with the Fed hinting at a gradual reduction that could involve only two rate cuts next year. This divergence underscored the unique domestic dynamics facing Canadian banks, including domestic growth slowdowns, commodity-price volatility, and a comparatively more leveraged household sector in certain segments.

The mortgage backdrop, a perennial lens through which to gauge consumer stability, showed a mixed but ultimately manageable picture. The mortgage delinquency rate stood at 0.20% at the end of the third quarter, according to Equifax Canada. This rate, while higher than the pandemic-era low—roughly 0.14% two years prior—was still well below the pre-pandemic averages that hovered around 0.30% or higher in years before the global disruption. The implication was twofold: banks remained vigilant about credit quality, but the resilience in employment, household incomes, and housing demand—bolstered by a stable, if costly, mortgage renewal cycle—supported a controlled level of delinquencies. Banks signaled that delinquencies could creep higher in the coming year as job losses become more pronounced in certain sectors and as refinancing cycles align with higher-rate environments. Yet, the overall confidence in bank portfolios remained intact, aided by diversified loan books, disciplined underwriting standards, and prudent risk management strategies that prioritized higher-quality assets and a cautious stance on new credit originations.

The year also bore out the responsiveness of banks to operational and governance challenges, with a notable case involving a prominent Canadian lender. In the broader context of risk management and regulatory compliance, one bank faced a high-profile legal exposure connected to anti-money laundering controls in the United States. The bank was compelled to acknowledge regulatory lapses and to assume financial responsibility in the form of a significant settlement. The magnitude of this settlement illustrated the heightened regulatory scrutiny that large banks endure across cross-border operations, as well as the reputational and strategic consequences that can accompany compliance failures. At the same time, leadership changes within the sector—such as a chief executive officer transition at one major bank—highlighted the ongoing process of governance renewal and succession planning that banks undertake to sustain long-term strategic risk management and stakeholder confidence.

The acquisition landscape defined a substantial portion of 2024’s corporate activity, with the relationship between mergers and acquisitions and market dynamics playing a central role in shaping profitability and competitiveness. The year’s biggest structural move in the Canadian banking space involved the acquisition of HSBC Canada by Royal Bank of Canada (RBC). The completion of this deal meant more than a change in brand or a larger balance sheet; it represented a reconfiguration of market share, customer bases, and strategic capabilities across Canada’s mortgage and consumer lending markets. The integration process across the combined platforms brought hundreds of thousands of clients into the RBC ecosystem, enhanced cross-selling opportunities, and expanded RBC’s scale in the Canadian financial services landscape. In quantitative terms, about 780,000 customers were transitioned to RBC following the HSBC Canada acquisition, accompanied by roughly 4,500 new employees and $108.5 billion in assets. The magnitude of human and financial resources redirected through this merger underscored the industry’s ongoing consolidation trend and its implications for competition, pricing dynamics, and consumer access to credit in a market already characterized by intense competition and regulatory scrutiny.

Market capitalization and valuation trends further framed the year’s narrative. RBC’s market capitalization closed the year at approximately $246 billion, reflecting a roughly 30% climb over the course of 2024. This ascent placed RBC as the country’s most valuable company by market capitalization, surpassing the next-largest players such as Shopify (about $199 billion) and TD Bank Group (around $133 billion). The valuation dynamics highlighted the sector’s risk-reward calculus, where robust profitability and scale competed with concerns about housing-market exposure, regulatory risk, and cyclical sensitivity to global interest-rate movements. The year’s performance also fed into a broader discussion about which banks were best positioned to navigate a potentially tougher macro environment in 2025, as pricing power, funding strategies, and access to capital would be critical in sustaining earnings growth and shareholder value.

Against this backdrop, governance and leadership developments added another layer to the year’s narrative. In a notable governance dispute, RBC’s former chief financial officer, Nadine Ahn, faced a $49 million lawsuit alleging wrongful dismissal. The lawsuit arose from allegations concerning a personal relationship with a colleague and claims of preferential treatment implicated in the workplace. The case, while specific to one bank, underscored the ongoing focus on executive conduct, internal controls, and the governance practices that investors scrutinize when assessing bank risk and leadership stability. Separately, RBC announced changes in its executive team, including leadership shifts anticipated with the retirement of the chief executive officer who would be replaced in the new year by a designated successor. While legal matters and leadership transitions can create short-term volatility and distraction, they also signal a disciplined approach to governance, with a focus on continuity, strategic clarity, and long-term value creation for shareholders and clients alike.

The climate-finance dimension of 2024 featured a mix of continued fossil-fuel financing alongside a strategic pivot toward renewable energy and lower-carbon investments. According to a March report by climate advocates, the five largest Canadian banks provided a combined $104 billion in fossil-fuel funding in 2023, a sum that represents a lower level of financing than in earlier years but still a substantial exposure given the global energy landscape. Among these banks, Royal Bank of Canada led the cohort with approximately $28.2 billion in fossil-fuel funding. In response to climate commitments and shifting investor sentiment, RBC announced a plan to triple its renewable-energy funding to $15 billion by 2030, signaling a deliberate acceleration of decarbonization-related lending and investment. A separate development in the ESG space involved a Scotiabank subsidiary’s holdings in the defense contractor Elbit Systems Ltd. The subsidiary held 557,400 shares valued near US$144 million by the end of the year, a reduction from 2,236,500 shares valued at roughly US$443 million at the end of 2023. The sale was undertaken by 1832 Asset Management and occurred amid sustained protests over Elbit’s role in supplying weapons for the Gaza conflict. While the protests were a public relations challenge, bank leadership insisted that the decision to reduce holdings was not a response to protests but a portfolio strategy aligned with risk management and client mandate considerations.

Finally, the regulatory environment around consumer finance and lending practices continued to evolve in ways that could reshape the cost and availability of credit for households. A notable regulatory milestone in 2024 involved a reform to the maximum legal interest rate. The prior cap stood at 60% on a base calculation that converts to roughly 48% on an annual percentage rate (APR) basis. The federal government moved forward with regulations designed to cap the rate at 35% APR, starting January 1. In tandem with this cap, new restrictions around payday lending were introduced, reflecting a broader policy push to rein in predatory lending practices while preserving access to credit for consumers who may rely on short-term financing. The interplay between these rules and the banking system’s risk management practices, pricing strategies, and product offerings will be a critical area to watch as 2025 unfolds, particularly in relation to subprime borrowers and the evolution of alternative lending channels.

Throughout 2024, the convergence of strong bank profitability, ongoing rate normalization, strategic M&A activity, evolving ESG priorities, and tightening consumer-lending regulation painted a comprehensive picture of a sector balancing performance with discipline. The year’s outcomes set the stage for a 2025 in which banks must navigate an environment shaped by more nuanced monetary policy, a restructured competitive landscape following M&A, and a climate-conscious mandate driving capital allocation toward lower-carbon investments, all while managing credit risk in a rising-rate world. The following sections break down these themes in greater detail, exploring the implications for consumers, businesses, regulators, and investors in the months ahead.

BoC Policy Trajectory, Mortgage Markets, and the Lending Outlook

The Bank of Canada’s policy evolution in 2024 was the dominant macro driver shaping bank profitability, consumer credit dynamics, and the risk posture of lenders. The year began with a restrictive policy stance designed to curb enduring inflation, but as the inflation narrative evolved, the BoC transitioned into a gradual easing cycle that culminated in a year-end policy rate of 3.25%. This decline from the mid-year peak of 5% represents a meaningful easing in borrowing costs and a signal of confidence that domestic demand could withstand lower policy rates as inflation moderated and supply-chain pressures eased. The trajectory offered relief to households facing renewed mortgage renewals at higher rates and provided a more favorable backdrop for business borrowing. However, the pace and magnitude of cuts also raised concerns about the durability of the growth impulse, the risk of inflation resurgence, and the potential for renewed financial stress should rate cuts outpace consumption and investment recovery.

The BoC’s policy stance, combined with the banking sector’s adjustments to lending and funding costs, had a pronounced effect on consumer credit dynamics and mortgage behavior. Banks lowered their prime lending rates to align with the central bank’s shift in policy, lowering consumer borrowing costs and encouraging refinancings and new loan originations in a rate environment that was still relatively restrictive by historical standards. The end-of-year rate of 3.25% meant that households facing renewal risk could benefit from improved affordability conditions compared with earlier in the rate cycle, but the absolute level of rates remained elevated relative to pre-2022 norms. The implication for banks was a continued challenge to balance growth with risk control. On the one hand, lower rates helped stimulate loan demand and relieve some of the pressure on borrowers who had faced sharp rate increases during the tightening phase. On the other hand, the high starting point of mortgage rates meant that even with further reductions, debt-service costs could remain above historical norms for an extended period, potentially weighing on discretionary spending and collateral values in some market segments.

Looking forward to 2025, analysts expected the BoC to maintain a cautious but constructive stance toward rate normalization. The consensus among most economists suggested the policy rate would approach the 2% level by mid-2025, contingent on evidence of sustained disinflation and a continued moderation in domestic demand. The expectations for 2025 included a sequence of rate cuts that would gradually improve household cash flow and affordability, particularly for renewals in the second half of the year. However, the trajectory of inflation remained a crucial variable. If inflation proved stickier than anticipated, the BoC might adopt a more gradual approach to easing, or pause briefly to assess the impact of earlier rate reductions on consumer spending, business investment, and housing market activity. Conversely, if inflation decelerated more quickly or if supply constraints remained limited, a faster pace of rate reductions could be possible, with downstream effects on lending margins and consumer demand.

In this environment, the lending landscape shifted in meaningful ways. Banks continued to navigate a prudence-first approach to risk, with tighter underwriting standards and a keener emphasis on quality over quantity when expanding credit. Mortgage renewals, a perennial focal point for consumer credit risk, remained sensitive to the mix of rates, terms, and amortization profiles offered by lenders. The higher cost of funds, combined with the BoC’s base rate trajectory, helped stabilize the risk profile in some areas while still posing challenges in others, particularly for households with high leverage, strained incomes, or exposure to variable-rate loans. Banks actively managed this balance through targeted product design, pricing strategies, and risk-adjusted portfolio management to maintain credit availability without compromising asset quality.

The regulatory environment continued to evolve around the same time, incorporating changes designed to protect consumers while preserving market efficiency. In addition to the APR cap and payday lending regulations, policymakers signaled a continued willingness to adjust macroprudential levers to maintain financial stability, especially in a landscape defined by rapid evolutions in technology, data analytics, and consumer finance products. The interplay between monetary policy, macroprudential regulations, and bank-level risk controls will shape the 2025 lending landscape, influencing ultimate consumer outcomes, bank earnings, and the resilience of the Canadian financial system.

Overall, the BoC’s 2024 trajectory provided a framework within which banks could operate with a cautious optimism. The combination of easing policy, moderated inflation, and a disciplined risk-management posture allowed banks to sustain profitability while navigating a complex environment characterized by mortgage renewal risk, evolving regulatory constraints, and shifting consumer behavior. The 2025 outlook hinges on the coordination of monetary policy with fiscal measures, global macro conditions, and domestic economic momentum, with a particular focus on the housing market, household debt trajectories, and the ongoing transition toward greener finance and climate-related risk management.

Mergers, Market Position, and the Bank Street Arena: The RBC-HSBC Canada Tie-In, Asset Flows, and Valuation Signals

The strategic consolidation in Canadian banking reached a critical inflection point in 2024 with the completion of RBC’s acquisition of HSBC Canada. This deal did more than reshape a balance sheet; it altered the competitive dynamics of Canada’s mortgage and customer-relationship markets by expanding RBC’s footprint and portfolio diversity. The integration of HSBC Canada added a substantial platform with hundreds of thousands of customers and billions in assets under management, creating a more expansive network for cross-selling, product innovation, and scale-driven efficiency gains. The aftermath of the acquisition included tangible actions: about 780,000 customers were moved to RBC’s umbrella, RBC absorbed roughly 4,500 new employees, and the combined entity now managed approximately $108.5 billion in assets sourced from the HSBC Canada transaction. These numbers underscored not only the scale of the deal but also the magnitude of the integration work required to realize anticipated synergies in the years ahead. The sale and absorption process also highlighted the importance of cultural alignment, systems integration, and regulatory coordination in large cross-border or cross-brand integrations within Canada’s tightly regulated financial services environment.

From a market-valuation perspective, RBC’s repositioning reinforced its standing as Canada’s most valuable company by market capitalization, with a year-end figure near $246 billion. The market’s confidence in RBC’s extended scale, enhanced product suite, and stronger capital position was reflected in investor expectations around profitability trajectories and earnings stability. In parallel, other market leaders continued to hold substantial value: Shopify, a tech-oriented e-commerce stalwart, carried around $199 billion in market value, while Toronto-Dominion Bank (TD) stood at roughly $133 billion. These relative valuations illustrated how investors weighed the durability of banks’ earnings against the broader sector’s appetite for growth beyond traditional lending, and how tech-enabled consumer growth assets compete for premium multiples in the Canadian market.

The acquisition also impacted competitive dynamics, particularly in mortgage markets where the HSBC Canada platform previously contributed a diverse mix of lending capabilities. RBC’s expansion created greater scale in the mortgage channel, potentially influencing price competition and underwriting standards. While the entry of a larger bank may intensify competition for prime borrowers, it could also prompt smaller lenders and regional banks to sharpen their strategies—whether by focusing on niche segments, improving service levels, or differentiating through technology-enabled experiences. The broader implication is a more globally connected and comparatively concentrated market structure, wherein scale economies and cross-sell opportunities become more pronounced, pushing banks to differentiate through customer-centric strategies, digital transformation, and risk-adjusted pricing.

Strategically, the RBC-HSBC Canada tie-in also placed emphasis on risk-management capabilities and compliance coherence across the M&A process. Integration risk—ranging from systems consolidation, data governance, regulatory alignment, to customer experience consistency—remained a central concern for investors and management alike. The successful execution of the integration would require rigorous governance, clear milestones, and disciplined cost management to translate the deal’s potential into sustainable earnings. In terms of shareholder value, the market’s reaction suggested confidence that RBC’s expanded scale would deliver long-term gains, particularly if the integration would unlock cross-selling opportunities, improve efficiency, and bolster capital markets franchise strength.

Beyond the RBC-HSBC Canada narrative, the Canadian banking sector continued to experience acquisitions and corporate reorganizations more broadly. The consolidation trend, driven by the dual pressures of regulatory capital requirements and the need to optimize cost structures in a high-rate environment, underscored a broader industry cadence: scale remains a core determinant of profitability, while the ability to manage risk across more varied asset classes becomes a decisive competitive edge. As banks adapt to the shifting climate-finance landscape—balancing fossil-fuel exposure with renewable energy investments and ESG integration—their strategic moves around acquisition, asset allocation, and customer-centric product development will likely define market leaders in 2025 and beyond.

From an investor’s perspective, the RBC-HSBC Canada consolidation reinforced a central thesis about the Canadian banking sector: leadership in a concentrated market with strong capital adequacy and prudent risk governance can translate into durable returns, even when interest-rate volatility and regulatory changes create short-term headwinds. For customers and employees, the integration promised new opportunities—broadened product access, enhanced service networks, and opportunities arising from scale-driven investments in technology and process improvements. The long-run implication is a banking sector characterized by greater efficiency, stronger risk controls, and a capacity to absorb future shocks through a diversified, digitally enabled platform that can serve both individual consumers and commercial clients in a rapidly changing financial services environment.

Climate Finance, Fossil Fuels, and the ESG Transformation in Canada’s Banking Sector

Climate finance and environmental, social, and governance (ESG) considerations have surged to the forefront of strategic planning for Canada’s largest banks. The sector’s climate-finance footprint, energy-transition commitments, and related governance choices have direct implications for their risk profiles, asset allocations, and stakeholder expectations. A pivotal data point in this domain is the 2023 fossil-fuel funding figure aggregated by the five largest Canadian banks, which stood at $104 billion. This measure, reported in a climate coalition assessment, marks a period of significant, albeit easing, fossil-fuel financing relative to earlier years in the Paris Agreement era. The distribution of this funding across banks varied, with RBC leading the group at roughly $28.2 billion in fossil-fuel funding. The year’s numbers reflect the ongoing tension between traditional energy financing interests and the imperative to align with climate-resilience objectives and energy-transition strategies.

In response to these dynamics, RBC announced an explicit strategic pivot aimed at intensifying renewable-energy funding. The bank set a bold target to triple its renewable-energy funding to $15 billion by 2030. This commitment signals a long-term strategic recalibration—one that preserves the revenue potential and risk diversification afforded by traditional energy finance while accelerating exposure to sustainable infrastructure projects, grid modernization, and green technology platforms. Such a shift is not merely reputational but also financial: renewable-energy projects typically involve longer tenors and steady cash flows, which can bolster risk-adjusted returns when paired with robust governance and strong project financing capabilities. The broader ESG narrative in 2024 saw increased scrutiny of banks’ portfolios, with investors and regulators demanding clear, credible pathways to net-zero targets and credible transition plans. In this context, the shift toward renewable energy funding aligns with a broader investor appetite for climate-resilient assets and forward-looking strategies.

In tandem with climate finance, a separate governance concern surfaced regarding holdings in defense-related equities. A Scotiabank subsidiary reduced its stake in Israeli defense contractor Elbit Systems Ltd. from 2,236,500 shares valued at approximately US$443 million at the end of 2023 to 557,400 shares valued aroundUS$144 million by year-end. The transaction, executed through 1832 Asset Management, occurred amid public protests over Elbit’s role in supplying weapons. Bank executives stated that the decision was not a reaction to protests but part of a routine portfolio rebalancing aligned with risk management and client mandates. Nonetheless, the event underscored the heightened scrutiny that banks face regarding the geopolitical implications and ethical dimensions of their investment allocations. It also highlighted the increased role of asset-management subsidiaries in shaping risk exposure and portfolio composition in a way that aligns with evolving investor values and policy expectations.

Another ESG and climate dimension involved the broader energy-services landscape, particularly the balance between fossil-fuel financing and the pivot toward decarbonization. The fossil-fuel funding narrative is not monolithic; it reflects a spectrum of financing activities, including project finance, working-capital support, and structured lending for exploration, production, and midstream infrastructure. Banks have faced pressure from climate advocates, policymakers, and some investors to lower exposure to high-carbon assets while ensuring essential financing remains available for transition-related projects. The 2023 fossil-fuel funding data—reported in early 2024 communications—provides a benchmark for assessing progress and evaluating the pace of the transition. The willingness of major Canadian banks to commit to renewable-energy finance and to articulate explicit short- and medium-term targets for decarbonization represents a critical step in aligning corporate strategy with climate imperatives and investor expectations.

Beyond the macro-level climate-finance numbers, the sector’s practical ESG execution remains a function of governance quality, risk management, and transparent reporting. Banks are increasingly measured on both their direct lending activities and their supply chains, including the environmental and social impact of financed projects. In this context, proposals to strengthen governance around climate-risk disclosures, scenario analysis, and portfolio-level decarbonization metrics are likely to gain traction in the near term. The sector’s ongoing evolution will demand robust data analytics capabilities, continuous refinement of risk evaluation models, and a proactive approach to engaging stakeholders—from customers to regulators to climate-conscious investors—about the alignment of financial strategies with sustainable development goals. In sum, 2024 reinforced the centrality of climate-finance decisions to the strategic agenda of Canada’s largest banks, with a clear path toward a more sustainable and resilient financial system that balances profitability with responsible stewardship of natural resources and climate risk.

Governance, Leadership Transitions, and Legal Uncertainties

The governance dimension of 2024 featured high-profile leadership movements, regulatory shifts, and governance-related litigation that together shaped investor sentiment and internal risk-management practices. One prominent case involved Nadine Ahn, the former chief financial officer of RBC, who pursued a wrongful-dismissal claim against the bank. The suit, which sought approximately $49 million, revolved around a dispute over allegations of an undisclosed close personal relationship with a colleague that allegedly affected internal decisions. The case touched on sensitive issues of workplace relations, transparency, and the boundaries of professional conduct in the upper echelons of large financial institutions. It also underscored the importance of robust internal processes for governance and HR, particularly in organizations with complex leadership structures and large teams. While the outcome of the case could have reputational and financial implications, RBC and the broader sector faced the continuing imperative to maintain strong governance practices to sustain trust among investors, clients, and employees.

Leadership continuity remained a central theme as well. RBC announced leadership changes that signaled a transition in the top ranks, with the outgoing chief executive preparing for retirement and a successor anticipated to take the helm. Such transitions carry implications for strategy execution, cultural continuity, and stakeholder confidence. In a sector where long-term strategic planning and risk governance are paramount, leadership turnover can act as both a risk and an opportunity: a risk if the transition disrupts execution, an opportunity if it injects fresh perspectives and renewed focus on growth, efficiency, and risk management. The interplay between governance reforms, executive succession planning, and strategic investments in technology, data, and client experience remains a critical determinant of an institution’s ability to navigate a rapidly evolving regulatory and competitive environment.

From a regulatory and compliance perspective, 2024 heightened the focus on controls, transparency, and accountability, as macroprudential oversight intensified in response to evolving risk factors. Banks were required to demonstrate not only strong capital positions and liquidity but also robust risk-management frameworks that could withstand a range of scenarios, including sharper credit losses, potential housing-market shocks, and cross-border regulatory dynamics. The governance dimension also intersected with ESG reporting requirements and public accountability for how banks allocate capital toward sustainable investments and climate-facing strategies. The confluence of leadership changes, legal disputes, and regulatory expectations highlighted the need for precise governance frameworks, clear decision rights, and transparent disclosure practices that support long-term stability and stakeholder confidence.

In terms of investor sentiment, governance, leadership stability, and risk-management discipline emerge as core determinants of franchise value in Canada’s largest banks. The market’s reaction to leadership changes and legal matters was nuanced, reflecting a broader recognition that while such events can create near-term volatility, they do not necessarily derail longer-term strategic trajectories when the institution demonstrates robust risk controls, disciplined capital management, and clear strategic alignment with a evolving regulatory and market environment. The governance narrative of 2024 thus serves as a reminder that bank management’s ability to implement strategy, manage risk, and communicate effectively with stakeholders is central to sustaining trust, attracting capital, and delivering durable shareholder value in a changing financial ecosystem.

The Regulatory and Market Signals: Interest-Rate Expectations, Lending Constraints, and Consumer Impacts

The final quarter of 2024 illuminated a regulatory and market landscape characterized by a mix of favorable monetary conditions, enhanced consumer protections, and ongoing caution around credit risk. The Bank of Canada’s path toward lower policy rates and the anticipated pace of cuts created a framework that supported improved affordability for borrowers, especially for those facing renewals in the near term. Yet the elevated level of debt, household leverage, and the persistence of some inflationary pressures during parts of the year kept risk managers vigilant. The regulatory changes around lending rates—in particular, the cap on annual percentage rates at 35%—introduced a critical constraint that shaped the cost of credit for higher-risk borrowers and payday-lending arrangements. This policy shift was designed to reduce predatory lending practices while ensuring access to credit remains available through responsible channels. The net effect for banks is a more regulated lending environment in which pricing signals must reflect both risk and consumer protection considerations, potentially constraining the profitability of high-risk lending products but reducing the exposure of banks to unsecured credit losses in vulnerable segments.

From a macro vantage point, 2024 reinforced the importance of a balanced approach to monetary policy as an instrument to support growth while safeguarding financial stability. The BoC’s easing path, coupled with an economy that demonstrated resilience but with caution due to the high-cost credit environment, suggested that 2025 would require careful calibration of policy moves. The U.S. economic context added complexity to the global backdrop; while the U.S. Federal Reserve indicated potential for limited rate cuts next year, Canada’s policy stance remained more accommodative, given domestic inflation dynamics and labor-market conditions. The relative pace of rate cuts and the degree of economic slack would influence cross-border capital flows, currency movements, and financial-market volatility, all crucial factors for Canadian banks’ funding costs and profitability.

Within Canadian capital markets, equity valuations for the major banks remained supported by a combination of earnings strength, scale advantages, and the ongoing appeal of defensive financials in a potentially uncertain macro environment. The RBC-HSBC Canada deal served as a reminder that M&A activity can act as a lever for strategic repositioning, enabling institutions to capture greater market share and diversify risk while improving cost structures through economies of scale. However, this same activity also heightened the importance of integration success, cyber-risk management, and system compatibility—factors that can determine whether the move translates into durable earnings outperformance or merely a temporary uplift.

For consumers, the regulatory and market signals translated into a more cautious but improved credit landscape. The 3.25% policy rate by year-end and the expectation of continued rate reductions in 2025 suggested a future environment where refinancing and new credit could become more affordable. Yet for households facing high debt loads and mortgages maturing in the near term, the journey to improved affordability would be gradual, requiring careful financial planning and prudent utilization of available debt-management tools. The climate-finance push and ESG considerations added another layer to consumer decision-making, as households increasingly weigh the sustainability credentials of the banks with which they do business and the alignment of bank financing with environmental goals.

In sum, 2024 produced a comprehensive set of regulatory and market signals that will shape the Canadian banking landscape in 2025. Policy-makers’ willingness to recalibrate lending rules, assess predatory lending risk, and encourage responsible consumer finance will intersect with banks’ strategic actions—particularly around rate sensitivity, mortgage renewal dynamics, and the integration of large-scale acquisitions. The sector’s ability to translate these signals into durable profitability hinges on disciplined risk management, continuous investment in technology and data analytics, and a continued commitment to governance and stakeholder communications that reinforce trust in Canada’s financial institutions.

The Quantitative Tapestry: Sector Highlights, Funding, and Shareholder Value

A careful review of the year’s quantitative fabric reveals a sector that, despite the high-rate era and ongoing macro uncertainties, managed to deliver a compelling narrative of resilience, strategic repositioning, and disciplined capital deployment. The Big Six banks reported a combined adjusted profit of roughly $58.771 billion for 2024, marking a year-over-year increase of about $1 billion. This outcome, while robust, did not erase the sense of caution that pervaded the market as banks navigated a period of moderate loan growth against a backdrop of high consumer indebtedness and renewed mortgage-rate exposure. The profitability story, therefore, is best understood as an outcome of effective risk management, cost discipline, and the ability to leverage scale to support earnings even as loan growth slowed.

The BoC’s rate saga—ending the year at 3.25% after a mid-year peak of 5%—played a central role in shaping both bank profitability and consumer affordability. The associated corporate lending environment saw banks reduce their prime rates in step with the central bank’s policy stance, with prime rates down to 5.45%. Analysts projected additional rate reductions in 2025, albeit with the pace and extent subject to inflation dynamics and domestic demand conditions. The macro picture suggested that the rate-relief effects would have a delayed but meaningful impact on the economy, as past rate hikes continue to weigh on borrowers with heavily indebted households and indebted sectors requiring refinancing.

In terms of credit quality, the end-to-third-quarter mortgage-delinquency rate stood at 0.20%, rising from the pandemic-era baseline of roughly 0.14% two years prior but still well below the pre-pandemic average, which hovered near or above 0.30%. Banks anticipated a modest rise in delinquencies next year as job losses were expected to accelerate in some segments of the economy; however, they remained comfortable with overall mortgage portfolios, thanks to diversified exposures, strong credit discipline, and prudent provisioning strategies. The combination of a manageable delinquency rate and a favorable stop-gap in mortgage renewals signaled that the housing finance system could weather a challenging year ahead if economic conditions remained stable enough to prevent a relapse in unemployment or a spike in defaults.

On the corporate-front, several landmark data points helped illustrate the sector’s evolution. The TD Bank Group faced regulatory and legal developments tied to AML oversight failures in the United States, culminating in a $4.45 billion settlement. The matter underscored the heightened emphasis on compliance, cross-border risk management, and accountability in the shared regulatory framework that governs large financial institutions. At the same time, RBC announced leadership changes, with the retirement of its CEO and the imminent transition to a new leader—an event that will be watched closely by investors as a potential catalyst for strategic shifts in capital allocation, technology investment, and risk governance.

From a corporate finance perspective, the RBC-HSBC Canada acquisition demonstrated the powerful role of scale in the modern banking landscape. The consolidation produced 780,000 customers and roughly $108.5 billion in assets on the RBC side of the ledger, along with about 4,500 new employees. Beyond the immediate numbers, the deal signaled a broader strategic theme in which leading banks leverage acquisitions to accelerate growth, expand customer bases, and deepen product offerings in a way that can yield superior pricing power and more robust risk management capabilities over time. The market’s assessment of RBC’s expanded scale was reflected in a market capitalization approaching $246 billion by year’s end, underscoring the market’s confidence in RBC’s ability to translate the deal’s synergies into sustained shareholder value.

Investor confidence in the broader banking sector remained anchored by a combination of profitability performance, strategic growth, and resilient balance sheets. RBC’s market cap position, combined with a leadership role in a diversified financial-services portfolio, positioned the bank to deliver long-term value even as the sector navigated a phase of elevated interest rates and tighter credit conditions. The valuations of peer institutions—Shopify at approximately $199 billion and TD at about $133 billion—illustrate a market that continues to reward scale, strategic repositioning, and disciplined capital management in the Canadian financial ecosystem. The overarching narrative here is that a balanced approach to growth—one that emphasizes risk management, capital adequacy, and strategic M&A—can sustain attractive shareholder returns in the face of macro headwinds.

In terms of governance and executive risk, the 2024 data reveal a sector that remains vigilant about leadership, accountability, and governance structures. The Nadine Ahn case exposed tensions between workplace relationship dynamics and corporate governance expectations, highlighting the need for transparent HR practices and governance oversight. Moreover, leadership succession plans and the management of a high-profile retirement were central to ensuring strategic continuity. Investors typically view such transitions through a risk-adjusted lens: while they introduce near-term uncertainty, they can also foster a long-run strategy refresh that aligns with evolving market dynamics and stakeholder expectations. Consequently, governance quality emerged as a differentiating factor among Canada’s leading banks, reinforcing the idea that strong governance is not merely a compliance exercise but a strategic differentiator that contributes to sustained performance and investor confidence.

The climate- and ESG-related elements of the sector’s performance also feed into the broader narrative about shareholder value in 2024. By embracing renewable energy funding and addressing fossil-fuel exposure, banks sought to balance risk with opportunity in a transitioning energy system. The combination of a robust renewables agenda and a measured approach to fossil-fuel exposure was well received by investors who increasingly seek a credible climate strategy and measurable decarbonization outcomes. The Elbit Systems position and related protests added complexity to the ESG calculus, underscoring the necessity for banks to articulate clear governance policies for portfolio composition, risk appetite, and proactive stakeholder engagement—particularly when portfolios intersect with geopolitical sensitivities and human-rights concerns.

Importantly, the year’s data also reflect a broader strategic imperative: to build resilience and competitiveness through technology, data, and customer-centric capabilities. Banks have accelerated investments in digital platforms, analytics, and risk-management infrastructure to respond to changing consumer behavior, regulatory expectations, and market competition. In 2025 and beyond, the ability to leverage data-driven insights to optimize pricing, underwriting, and risk controls will be pivotal to sustaining profitability and growth while managing credit risk and compliance considerations. The 2024 results show that, even in a high-rate environment, profitability and strategic repositioning are achievable when banks align capital allocation with deep risk management, disciplined execution, and a clear plan to address evolving climate and governance imperatives.

Conclusion

The year 2024 in Canadian finance presents a composite picture of resilience, strategic recalibration, and a forward-looking orientation toward sustainability and governance excellence. Profits remained robust across the Big Six banks, with adjusted profits totaling $58.771 billion, reflecting disciplined cost management and effective risk controls that allowed lenders to navigate high rates, subdued loan growth, and renewal cycles with confidence. The BoC’s rate path, ending at 3.25%, provided a framework for lower borrowing costs and a gradually improving affordability landscape, even as borrowers faced the ongoing realities of elevated debt and rate-sensitive spending. The year’s M&A activity—culminating in RBC’s HSBC Canada acquisition and its subsequent implications for market share, cross-selling potential, and efficiency—demonstrated the strategic importance of scale in the Canadian banking arena. Market valuations reinforced investor confidence in the sector’s long-term earnings power, with RBC leading in market capitalization and a clear signal that well-executed consolidation can yield durable value.

Climate-finance dynamics underscored the sector’s dual mandate: support for energy transition through expanded renewable funding while prudently managing exposure to fossil-fuel financing. RBC’s pledge to triple renewable-energy funding to $15 billion by 2030 illustrates a deliberate, long-term commitment to sustainable finance that aligns with evolving investor expectations and regulatory directions. Governance and executive transitions highlighted the ongoing emphasis on leadership, accountability, and risk culture as essential to sustaining client trust and stakeholder confidence. Finally, the regulatory shifts— notably the move to cap the maximum APR at 35% and to strengthen protections around payday lending—signal a more protective framework for consumers while challenging banks to innovate responsibly within a more constrained pricing environment.

Looking ahead, the Canadian financial sector appears positioned to leverage continued rate normalization, technology-driven efficiency gains, and disciplined risk management to sustain profitability and growth despite the evolving macro conditions. The convergence of M&A-driven scale, ESG-aligned financing strategies, and governance excellence will likely shape the sector’s trajectory in 2025 and beyond. Stakeholders—from borrowers and investors to regulators and employees—will be closely watching how banks translate this year’s theoretical advantages into tangible outcomes: greater access to credit for qualified borrowers, more affordable mortgage renewals over time, stronger capital buffers, and a climate-conscious approach to financing that supports a sustainable, inclusive, and stable financial system for Canada.