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Tougher credit conditions and market volatility curbed earnings for the big Canadian banks in the latest quarter, says DBRS Ltd. in a new report.

The Toronto-based rating agency reports that while collective net income for the Big Six banks was up 3.7% on a year-over-year basis in the third quarter, the banks’ earnings were essentially flat from the previous quarter as a tougher credit environment weighed on results.

DBRS says that, while the banks reported “solid revenue growth” in the quarter, this was tempered by higher operating expenses and higher provisions for credit losses.

“Given the recent rate cut by the U.S. Federal Reserve, net interest margins remain under pressure, particularly in the banks’ U.S. and international businesses,” DBRS notes.

And, it says the banks’ capital markets earnings were also “negatively impacted by continued market volatility.”

Despite the increase in credit provisions, the rating agency says that “overall asset quality remains sound.”

Still, it suggests that credit losses will continue to rise, as trade turmoil and interest rate uncertainty weighs on global growth.

“DBRS expects earnings growth for the large Canadian banks to continue to moderate for the remainder of the year, given headwinds to revenue growth caused by economic uncertainty,” said Robert Colangelo, senior vice-president, Canadian banking financial institutions at DBRS.