Canada’s economy

remains sluggish, as evidenced by the recent lacklustre

gross domestic product

and job numbers, but that didn’t stop the heads of the country’s

biggest banks

from

maintaining their optimism

about future growth and the country’s potential to become an energy superpower.

The chief executives of the

Big Five

agree the current situation is difficult for Canadians, but during their annual general meetings over the past week or so they also focused on how this was the right time for Canada to promote itself as a stable source of energy amidst the global uncertainty.

“These aren’t easy times and there are a variety of factors that are playing into that,”

Bank of Montreal

chief executive Darryl White said at the bank’s AGM last Wednesday.

But compared to the rest of the world, as far as the flow of trade and the impact of the war on energy prices and inflation are concerned, he said Canada is “sitting in as good a place as anywhere as we look out over the course of the next couple of years.”

White said the current global environment has led to an “uneven outcome” for Canada with “pockets of difficulty.”

At the

Bank of Nova Scotia

‘s AGM on April 14, chief executive Scott Thomson also talked about how parts of Canada are being hit unequally due to the rise in

oil prices

from the ongoing war in the Middle East.

He referred to the war as a tragedy and something he hopes will get resolved soon, but said there is about a five per cent positive impact on Canada’s economy for each US$10 increase in West Texas Intermediate, which is a benchmark price for crude oil.

“In a weird way, the war does help the economy,” he said, before once again adding that “we all want the war to end.”

The challenge, Thomson said, is that all the provinces don’t benefit equally. There is a lot of resource production in Western Canada, but not much in Ontario. As such, affordability becomes more of an issue in some places.

Overall, Canada’s economy performed better than what many had feared, but that still isn’t good enough because “being resilient doesn’t create prosperity,” he said.

For growth to take place, Thomson said Canada needs to restore investor confidence and get capital flowing into the country’s major projects.

“The capital exists, but misalignment between policy infrastructure and investment still holds Canada back,” he said.

This mismatch is a concern shared more broadly across Bay Street.

Royal Bank of Canada

, in a report published last week, said Canada needs to invest $1.8 trillion in capital investment over the next decade to meet its economic potential and finance major projects.

This includes investing $705 billion in the oil and gas sector to help build new oil pipelines and liquefied natural gas terminals and $670 billion in electricity systems to

boost energy

from sources such as wind and nuclear.

RBC said Canada doesn’t lack capital for these investments, but that the capital doesn’t flow to where it is needed at the speed or scale required.

That’s because large investors have thresholds that need to be met for them to deploy their capital and Canada has too few of these projects and too few companies of sufficient scale to attract that capital.

There are lots of mid-sized companies that need an extra leg of capital to grow and reach scale, so this mismatch needs to be addressed, RBC said.

Still, there are signs that global investors are taking notice as foreign direct investment hit nearly $100 billion last year, which is the highest since 2015 and the first time in a decade when inflows exceeded outflows.

For every dollar that flowed into Canada between 2015 and 2024, two dollars left the country, with the net outflow of $1 trillion being the

“most significant capital exodus”

in modern Canadian history, RBC said.

Canadian investment abroad isn’t necessarily a bad thing, but it took place when the country was

“starved for capital domestically,”

said Jordan Brennan, managing director at RBC Thought Leadership.

The rise in foreign direct investment last year suggests global investors see Canada as a “stable, reliable partner in a volatile world,” and Canada needs to make the most of it, RBC chief executive Dave McKay said at the bank’s AGM on April 9.

“I believe Canada can become the world’s premier destination for long-term investment,” he said. “But only if it moves with purpose, urgency and speed in a race for capital that’s never been more intense.”

For that to happen, the private sector, government and Indigenous groups need to prove that they can “come together to get major energy and infrastructure projects built on time and on budget,” Harry Culham, chief executive of

Canadian Imperial Bank of Commerce

, said at the bank’s AGM last Thursday.

“The actions we take today as a country will define the success we achieve tomorrow. Our collective ability to execute has never been more important.”

Culham also said he has been meeting CEOs, clients and political leaders and believes there is a cautious optimism regarding Canada’s future despite complexity about the near term.

“There is belief that our time is now,” he said. “In every conversation, the urgency is clear.”

At Toronto-Dominion Bank’s AGM on the same day, chief executive Raymond Chun expressed a similar sense of optimism.

“There is uncertainty ahead, but one thing is absolutely clear: tomorrow will not look like today,” he said.

But while the Big Five CEOs were generally optimistic about

Canada’s future growth

at their respective AGMs, RBC and Scotiabank subsequently dropped their climate targets due to the uncertainty.

RBC, in its Annual Sustainability Report released on Thursday, said it has retired its 2030 emission reduction targets.

The bank had initially set these targets in 2022 with respect to its oil and gas, power generation and auto sectors. In its last sustainability report, it said it was reviewing these targets given “changes to the facts and circumstances” in areas such as geopolitical developments, energy demand and security.

“Following our review, we have concluded that the changing and uncertain operating environment makes some of our interim targets not reasonably achievable and the outlook for others unclear,” it said in its latest report.

Scotiabank, in its report released on Thursday, said it was withdrawing both its 2030 target and its goal to achieve net-zero emissions by 2050 for financed emissions.

“Taking into account current conditions and trends, there is much uncertainty as to their future path,” the report said.

  • Canada needs to invest $1.8 trillion over the next decade in six key sectors, says RBC
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The bank said projected energy demand is going to be higher than initially assumed, driven partly by the growth in demand for artificial intelligence. It also said that the uptake of carbon capture technology isn’t progressing at the rate that was initially projected.

It said recent government policy decisions, such as the temporary elimination of the federal fuel charge, the decision to not implement the oil and gas emissions cap and the postponement of other climate targets, are likely to decelerate decarbonization activities.

• Email: nkarim@postmedia.com