Slow profit growth business concept as a snail creating a hole shaped as a financial arrow chart in a leaf by eating the plant as a metaphor for economic slowdown.

Earnings growth and asset quality at the Canada’s big banks are expected to suffer in 2020 amid growing economic headwinds, says Toronto-based DBRS Ltd. in a report released Thursday.

The rating agency said it expects earnings momentum to slow for the Big Six in fiscal 2020 due to economic uncertainties and lower interest rates, along with a continued rise in their credit loss provisions.

“With economic conditions remaining challenged this year, given persistent uncertainty around trade and rising political tensions in the Middle East, we expect earnings growth to moderate for the large Canadian banks,” said Robert Colangelo, senior vice president, global financial institutions group, at DBRS, in a commentary.

“In addition, the low interest-rate environment will lead to pressured net interest margins while [provisions for credit losses] will continue their path to normalization,” he added.

As earnings growth eases, DBRS said  it expects the banks’ asset-quality metrics to weaken, too.

In particular, the rating agency said it remains concerned about “highly leveraged consumers and elevated housing prices in [Vancouver and Toronto], where housing activity picked up in the latter part of 2019.”

Despite the challenges, DBRS doesn’t anticipate a deterioration in the banks’ credit ratings in the year ahead.

“We believe that the large Canadian banks are well positioned to navigate these economic uncertainties, given their highly diversified core earnings power,” it said.