Second quarter earnings were solid for the big Canadian banks, but are expected to weaken in the months ahead against a backdrop of slower economic growth, says DRBS Ltd.

In a new report, the Toronto-based rating agency said that net income for the large Canadian banks increased by 7.1% year over year in the second quarter, and by 8.9% quarter over quarter.

“Results for the Canadian personal and commercial businesses were relatively sluggish, while the U.S. and international businesses… continued to show strong volume growth,” it said.

At the same time, DBRS said that the banks’ capital markets businesses rebounded, and credit quality remains sound.

However, DBRS expected earnings growth “to moderate” in the rest of 2019, “given slower GDP growth in Canada relative to last year.”

“Economic momentum stalled over the last two quarters, with this stagnation partly driven by temporary factors such as lower oil prices, mandated production cuts in Alberta and a bout of severe winter weather,” it said.

Additionally, DBRS noted that “escalating trade tensions pose a downside risk to the outlook.”