Canada’s Big Six banks, which control around 90% of the market, are known collectively as a bedrock of stability. Call it a regulatory regime, but the strict requirements of the Office of the Superintendent of Financial Institutions (OSFI) shield these lenders from failures.
In September 2022, Peter Routledge, the head of the OSFI, said, referring to the banking giants, “We want them to take smart risks.” It doesn’t mean the regulator will relax its rules or be less conservative.
Routledge notes that these banks lend more to households (73%) than businesses (27%). The trend is understandable since mortgages are generally lower risk than commercial loans. However, the OSFI is prepared to adjust the capital treatment for certain commercial loans to prompt banks to expand lending. It could unlock up to $1 trillion in additional loans.
Source: Getty Images
Recession risks
Any plans to change course and pursue more commercial loans might stall for now. Based on the Bank of Canada’s third-quarter Market Participants Survey results, about 35% of poll respondents think that Canada is in recession or about to go into technical recession within the next six months.
The survey participants include bank representatives, insurers, pension funds, and dealers, as well as asset management and research firms. Most expect two consecutive quarters of negative GDP growth. The trade war remains a headwind that 87% of respondents believe trade tensions are the biggest risk to the economy.
Meanwhile, income-focused investors should feel safe owning shares of Royal Bank of Canada (TSX:RY) or Canadian Imperial Bank of Commerce (TSX:CM) amid the uncertainty. Dividend sustainability is assured regardless of the economic environment.
U.S. expansion
RBC continues to keep pace with the TSX; both are up 24% year to date. The $291.7 billion bank is the most valuable publicly listed Canadian company. Its 155-year dividend track record is a compelling reason to invest right now. At $208.76 per share, you can partake in the modest but safe 2.98% dividend yield. More importantly, you get peace of mind.
In September 2025, Bloomberg reported that RBC was eyeing expansion of its U.S. banking operations. Asia is also under consideration. On November 10, 2025, the bank’s Wealth Management division opened a new branch in New Orleans. It intends to capture the Louisiana market, particularly ultra-high-net-worth and high-net-worth clients.
Well-diversified
CIBC, Canada’s fifth-largest bank, is a reliable passive income provider like RBC. No investor can outlive its 157-year dividend payment record. At $121.89 per share, the dividend offer is 3.23%. The $111.66 billion bank reported robust financial results in the third quarter (Q3) of fiscal 2025.
The bank’s Capital Markets business segment led the strong showing, with net income rising 87% year over year to $540 million. In the three months ending July 31, 2025, net income rose 17% to $812 million compared to Q3 fiscal 2024.
CIBC’s loan portfolio is well-diversified between consumer (61%) and business & government (39%) clients. Digital transformation through CIBC AI is also a top priority.
Income stability
Routledge assures that the OSFI will enable Canadian financial institutions to play a central role in reinforcing Canada’s economic strength in this era of great uncertainty. As to investors, RBC and CIBC are solid options if you want income stability.
