National Bank Reports Strong Q3 Earnings, Mortgage Portfolio Stays Resilient

A Profitable Quarter Despite Economic Pressures

The National Bank of Canada has reported a solid set of third-quarter results, highlighting the strength of its mortgage portfolio and resilience in an environment where many lenders are facing headwinds. The Montreal-based bank posted C$1.07 billion in net income, a 3% gain from last year, and noted a 15% increase in total revenues thanks to stronger lending activity and the successful integration of Canadian Western Bank (CWB).

For a financial institution often overshadowed by the “Big Five,” this performance demonstrates not only growth potential but also the robustness of its retail mortgage business at a time when interest rates remain elevated and renewal risks loom for many households.

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Mortgage Portfolio Performance

A large part of National Bank’s earnings story this quarter is tied to the resilience of its mortgage book. Despite rising credit provisions—essentially the buffer banks set aside for possible loan defaults—mortgage demand and repayment discipline remain surprisingly stable.

• Arrears remain low, with fewer than 0.25% of mortgages showing signs of distress.
• Growth was fueled by both new mortgage originations in Quebec and the addition of CWB’s loan book, which expands National Bank’s footprint in Western Canada.
• The bank is forecasting steady mortgage demand into 2026, despite regional slowdowns in Ontario and B.C.

Executives emphasized that prudence in underwriting and a diversified customer base are insulating the bank from the worst of renewal stress.

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Renewals: The Elephant in the Room

National Bank acknowledged that roughly half of its fixed-rate mortgage portfolio will come up for renewal over the next 24 months. This is a reality facing all Canadian lenders, as the ultra-low rate mortgages signed between 2020 and 2021 mature into a much higher rate environment.

• The bank estimates that the average monthly mortgage payment will rise by 10–11% for households renewing between now and 2026.
• While painful, executives argued that most clients have the income capacity to absorb the increase, partly because lenders applied the OSFI mortgage stress test at higher qualifying rates when these loans were first issued.
• Borrowers who do face difficulty are being offered flexibility measures, including extended amortizations and refinancing options.

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Integration of Canadian Western Bank

The acquisition of Canadian Western Bank is already contributing to growth. This deal gives National Bank greater exposure to Alberta and British Columbia, provinces with dynamic but volatile housing markets.

• Western Canada’s role: Alberta’s economy has benefited from energy sector stability, while B.C. continues to experience housing affordability challenges.
• By combining CWB’s local footprint with National Bank’s capital strength, the merged entity expects stronger mortgage origination in Western markets that had been historically harder to penetrate.
• Integration costs were higher this quarter, but executives expect synergies to improve margins by 2026.

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What It Means for Borrowers

For Canadian homeowners, these earnings and comments from National Bank provide several important takeaways:

1. Mortgage Stability
   The fact that arrears remain low shows households are prioritizing mortgage payments even under higher rates. For borrowers, this signals a stable lending environment without sudden pullbacks.
2. Renewal Strategies
   With payment increases averaging 10–11% at renewal, planning ahead is crucial. National Bank’s willingness to extend amortizations or restructure loans provides a cushion for families facing sticker shock.
3. Regional Differences
   Borrowers in Western Canada may benefit from a stronger local presence now that CWB is integrated. In Alberta, where affordability is better than in Toronto or Vancouver, more competitive products may be available.

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Broader Context in the Mortgage Market

National Bank’s earnings fit into a broader trend among Canadian lenders:

• Resilience Despite Stress: Even with household debt at record highs, Canadians continue to keep up with payments, suggesting the OSFI stress test has done its job.
• Pressure on Renewals: Renewal risk is the biggest theme of 2025–26. Households will need to budget for higher costs, but few expect a systemic crisis.
• Shift in Demand: While demand in Ontario and B.C. is slowing, Quebec and the Prairies are emerging as steadier growth regions for mortgage lending.

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Analysts’ Perspective

Market watchers view National Bank’s results as cautiously optimistic. Analysts note that while earnings are strong, risks remain:

• Unemployment: If jobless rates rise, especially in Toronto and Vancouver, mortgage arrears could begin climbing.
• Housing Starts: A sharp drop in new construction across Ontario (down 58% in Toronto year-over-year) could tighten supply, putting upward pressure on prices despite higher rates.
• Consumer Spending: Rising mortgage costs leave less disposable income, which could slow economic growth.

Still, analysts agree that Canadian banks remain among the most conservative and well-capitalized in the world, and National Bank’s performance reinforces that reputation.

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Looking Ahead

The coming quarters will test just how resilient borrowers are. By late 2026, most of the low-rate mortgage cohort will have renewed. If arrears remain stable through that cycle, it will mark a major success for Canadian regulators and lenders alike.

National Bank itself is aiming for mid-single-digit loan growth, driven by continued expansion in Quebec and Western Canada. Executives have also hinted at more digital innovation, with tools to help borrowers model renewal impacts and payment scenarios.

National Bank’s strong Q3 performance is more than just a profit story—it’s a reassurance for homeowners navigating an uncertain landscape. Yes, renewals will bring higher payments, but the fact that banks like National Bank are prepared with flexible solutions shows the system is working.

For Canadian borrowers, the message is clear: start planning early, know your numbers, and don’t wait until the last minute to explore renewal options.

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✦ Mortgage.Expert Insight: Renewal stress doesn’t have to become a crisis. Explore refinancing or amortization strategies now. Talk to a Mortgage Expert →