04:42 PM EDT, 08/27/2025 (MT Newswires) -- The Toronto Stock Exchange posted a second-straight record close on Wednesday, its fourth in the last five sessions and the eighth in August, even as Canada's big banks while reporting earnings increases for the third quarter, are also flagging some issues with provisions for credit losses (PCL).

Buoyed by higher commodity prices, the resources-heavy S&P/TSX Composite Index closed up 93.12 points, or 0.33%, at 28,433.0, with most sectors higher, led by Energy, up 1.5%, Financials, up 1.1%, and Health Care, up 1%. Base Metals was down about 0.7% and Utilities down near 0.2%.

The financials sector was boosted by Royal Bank of Canada ( RY ) , was up 5% today to $200.07 level and up 28% over the last 12 months after it reported higher earnings for the third quarter, reflecting "strong growth" across each of its business segments." But its consolidated results reflected an increase in total PCL of $222 million from a year ago.

National Bank (NA.TO) fell 3.8% to $144.71 after it reported mixed earnings in the third quarter as it continues to integrate the Canadian Western Bank acquisition and as provisions for credit losses rose. PCLs rose $55 million year over year, mainly due to the provisions for credit losses on impaired loans.

Big bank earnings season continues Thursday with CIBC (CM.TO, CMO) at 5.30 a.m. eastern time and then TD Bank (TD.TO, TD) at 6 a.m.

For CIBC, National Bank in a preview note published earlier this month forecast cash EPS of $1.90 compared to a consensus $2.00. Key themes National will be keeping an eye on with CIBC include: that no "catch up" provisioning is expected, or required; that the P&C banking segment continues to outperform peers; and a likely renewal of its buyback.

With TD, National forecast cash EPS of $2.07 versus a consensus $2.05. National will be keeping an eye out for: whether TD's Canadian P&C segments remains a "laggard"; the U.S. P&C NIM benefits from balance sheet positioning; and whether TD's buyback pace has slowed.

On CIBC, National Bank noted the bank was a standout during Q2 in that its 10 bps performing PCL ratio was around 40% below the peer average of 17 bps. But it said context is important, and noted the bank recorded a 9 bps performing PCL ratio during Q1 2025, nearly double the peer average. Moreover, it added, the bank's 62 bps performing ACL ratio represents 2.0x trailing four quarter impaired loan losses (vs. 1.6x peer average). As such, National does not believe CM will need any "catch-up" provisioning to make up for last quarter's deviation versus peers.

National noted an important driver of CIBC's stock performance has been the strength of its Canadian P&C segment at a time of growth concerns facing the domestic banking industry. CIBC's P&C segment has delivered 11% PTPP growth this year, including 12% during Q2 2025, easily outpacing the group. CM has delivered this outperformance despite loan growth of only 3% Y/Y in the first half of 2025. National Bank said the key drivers have been "stellar" NIM performance (+11 bps Y/Y in H1/25) as well as "disciplined" expense management (+3% YTD operating leverage).

According to SEDI filings, CIBC repurchased 5.5-million shares during the quarter, bringing its total repurchases to 20-million shares. This figure represents all of CIBC's buyback program capacity, which expires on September 9. National noted the bank's Q2 2025 CET 1 ratio of 13.4% is above its minimum target range of 12.75%-13% (i.e., the base level assumption behind its 15%+ medium-term ROE objective). "Given this excess capital position, and the de-intensification of the domestic regulatory environment, (CIBC) could easily accommodate a larger buyback program. However, the bank will most likely renew the standard 2% program, especially if it has an expectation of stronger organic growth prospects in the year ahead."

National Bank noted TD's Investor Day, to be held on September 29, will provide an updated overview of the bank's future growth strategy and said a key question for investors revolves around what TD's future EPS growth could be, considering the headwinds imposed by the U.S. asset cap. The Canadian P&C segment is a key component of TD's future growth potential, and investors expect an "accelerated" growth strategy from this business, National added. National noted delivering "accelerated" growth is easier said than done, with TD's historical track record having exhibited lagging performance. And that laggard status has persisted in 2025, with the Canadian P&C segment having delivered 4% PTPP growth during H1/25 versus a 7% peer average, including 2% during Q2/25. compared to a 6% peer average.

In the wake of the imposition of the asset cap, National Bank noted TD's U.S. P&C segment is in the midst of its transition year and an important component of this period involves the disposition of up to US$50 billion of low-yielding securities. The strategy comes with an upfront cost of US$1.5 billion of crystallized losses, including losses on other asset dispositions, offset by higher asset yields over time. As a result, TD's U.S. NIM is expanding rapidly this year, up 27 bps from fiscal Q4 2024 levels. The U.S. Call Reports indicate another period of accelerated NIM expansion. National is forecasting 13 bps of Q/Q NIM expansion, bringing segment NIM to 3.17%. Another aspect of the balance sheet restructuring involves the disposition of what National Bank expects to be near US$30 billion of loans. National Bank estimates that TD will have completed roughly 50% of this plan by Q3 2025.

Following the sale of its 10% stake in Charles Schwab, National noted, TD implemented a near $8-billion buyback program for up to 100-million shares. The bank repurchased 15.5=million shares during Q3 2025, down from the 30 million of repurchases during Q2 2025. While National expects TD will fulfill its buyback commitment, it said the stock's 30%-plus rise this year will reduce the amount of shares repurchased. Based on the current stock price, National estimates that TD will repurchase around 40-million additional shares, near 2% of outstanding shares, to fulfill its $8 billion buyback commitment. If completed, the total buyback would amount to nearly 5% of TD's shares outstanding.

Of commodities, gold moved higher late afternoon Wednesday as the dollar gave up early gains amid concerns over U.S. President Donald Trump's move to take control of the Federal Reserve board, which continues to prompt safe-haven buying. Gold for December delivery was last seen up $116.10 to US$3,449.10, falling off the highest since August 8.

Also, West Texas Intermediate crude oil closed higher after the United States placed hefty secondary tariffs on India to discourage its imports of Russian oil even as a report showed a larger than expected drop in U.S. oil inventories last week. WTI crude for October delivery closed up $0.90 to settle at US$64.15. per barrel, while October Brent crude was last seen up $0.75 to US$67.97.