How Exposed Are Canada’s Big Banks to the 3 Hardest-Hit Sectors of the Economy?

Retail, energy, and real estate are suffering. Canada’s big banks are not equally well positioned to withstand the fallout.

The COVID-19 crisis has ravaged the retail, energy, and real estate sectors. Canadians might be wondering how exposed the Big Five banks are to these sectors, given the Big Five’s importance to the Canadian economy. Below are the weightings of each sector in each bank’s business and government loan portfolio.

TD RBC CIBC BMO BNS
Retail 4% – 3% 9% 12%
Energy 4% 2% 5% 5% 7%
Real Estate 27% 16% 20% 15% 14%

These are approximations, as each bank breaks out sectors slightly differently. In one case, retail was not listed as a sector. All percentages are derived from 2019 annual reports.

Toronto-Dominion Bank was the only bank to include a separate sector breakdown for its non-Canadian business and government loan portfolio in its 2019 annual report. TD’s global business and government loan portfolio totals approximately $252 billion. The retail, energy, and real estate sector exposure is almost identical in Canada and the U.S., collectively representing about $44 billion of loans in Canada and $43 billion in the United States.

TD’s largest client sector, globally, in its business and government loan portfolio is real estate, comprising about $69 billion of loans to real estate businesses in Canada and the United States.

Royal Bank of Canada has a business and government loan portfolio of $371 billion. Its largest client sector is government clients, who represent over $105 billion, or 28%, of the portfolio. RBC also has $61 billion in loans to real estate companies.

RBC’s annual report does not break out loans for the retail sector, but instead uses “consumer discretionary” and “consumer staples” sector categories. If we include both consumer discretionary and consumer staples as part of retail, RBC’s collective exposure to retail, energy, and real estate is almost $91 billion, or 24%, of its business and government loan portfolio.

CIBC possesses a global business and government loan portfolio worth over $182 billion. Its largest customer sector is governments, with almost $54 billion of loans, comprising over 29% of its business and government loan portfolio. Real estate companies are the third-biggest customer sector for CIBC, after financial institutions.

While CIBC is not overexposed to retail or energy, its business and government loan portfolio is more concentrated than its peers. CIBC has three sectors (financial institutions, real estate, and governments) that collectively account for just over $127 billion, or almost 70% of the entire business and government loan portfolio.

Bank of Montreal has a global business and government loan portfolio of approximately $251 billion. BMO’s largest client sector is “service industries,” representing about $46 billion in outstanding loans. Unfortunately, this sector description is not detailed enough to allow for thorough analysis. Some service sectors, like personal transportation, have been decimated in the current environment, while others, like food delivery, have held up well.

BMO has nine sectors that account for over $10 billion in client loans each. BMO is also one of the three banks, along with RBC and CIBC, whose largest client sector is not real estate.

Bank of Nova Scotia, also known as Scotiabank, has an approximately $227 billion global business and government loan portfolio. Its largest client sector is “real estate and construction,” with about $32 billion owed.

Among the Big Five, Scotiabank has the highest exposure to the energy sector, with almost $17 billion in energy industry loans. While Scotiabank is also listed as having the highest retail exposure, this is only because Scotiabank broke out results into “wholesale and retail,” whereas other banks, like BMO, broke out retail and wholesale separately. Scotiabank is second to BMO in collective retail and wholesale exposure.

Takeaway

TD, RBC, BMO, and Scotiabank are well diversified across sectors, and this is an advantage in the current environment. An obvious concern for the Big Five, and the Canadian economy as a whole, is the outsized reliance on the real estate sector. This is not news to Canadians.

The Motley Fool recommends BANK OF NOVA SCOTIA. Fool contributor Kyle Walton has no position in the companies mentioned.

More on Bank Stocks

Real estate investment concept with person pointing on growth graph and coin stacking to get profit from property
Stocks for Beginners

The Home Buyers’ Plan Limit is $60,000, and This Mortgage Lender Could Benefit

The HBP can strengthen a down payment, while EQB offers investors a different way to participate in Canadian housing.

Read more »

Real estate investment concept
Stocks for Beginners

Got $8,000 in Your FHSA? You May Still Have $8,000 in Unused Room

An FHSA can make saving for a first home easier, even when you can't afford the full contribution immediately.

Read more »

woman holding steering wheel is nervous about the future
Stocks for Beginners

Can You Still Catch Up on Retirement at 55? Here’s What’s Possible

Starting at 55 still leaves room for meaningful progress, with regular contributions and a realistic retirement date improving the numbers.

Read more »

dividends grow over time
Stocks for Beginners

Boosting Your Income is Only Half the Battle: What You Do Next Matters More

As you increase your income, also increase the amount you invest for the long term.

Read more »

Group of people in a line at an ATM waiting to make a cash withdrawal
Stocks for Beginners

Canadian Bank Stocks in Late 2026: Which Ones I’d Buy and Which I’d Skip

Canadian bank stocks offer different buying cases in late 2026. Compare Scotiabank, TD and Royal Bank on income, earnings and…

Read more »

customer uses bank ATM
Dividend Stocks

TFSA Withdrawal Rules Every Canadian Investor Should Know

Beware that re‑contributing withdrawn funds in the same calendar year can lead to a penalty from potential excess contribution.

Read more »

data analyze research
Stocks for Beginners

Maxing Out Your TFSA Isn’t the Final Step: Here’s What Is

A full TFSA still needs a plan: protect near-term spending, diversify long-term holdings, and understand when withdrawals restore room.

Read more »

senior couple looks at investing statements
Bank Stocks

BMO Says Canadians Need $1.7 Million to Retire: Your Number Could Be Very Different

BMO says Canadians need $1.7 million to retire, but your number may differ. See how CPP and OAS cut the…

Read more »