The U.S. market is no longer the beacon of commercial loan growth that it once was for Canadian banks.

A widespread reluctance among businesses to borrow has led to flat U.S. commercial loan growth for big banks from Canada that also operate here, and it has created a drag on their overall quarterly results.

Executives from TD Bank Group in Toronto during an earnings call Wednesday sought to focus the conversation on more positive developments. Data published earlier in the day, for instance, said that the Canadian economy is growing at its fastest rate in six years. Revised U.S. growth figures, meanwhile, showed that the economy grew at a 3% pace from April through June.

But Canadian executives — much like their U.S. peers — are struggling to square those statistics with the stagnation in U.S. business lending.

At TD, for instance, U.S. commercial loans grew by less than 1% for the three-month period ending July 31 compared with the prior quarter. Balances have been mostly flat, hovering around $80 billion for the past nine months.

Greg Braca, president and CEO of TD’s U.S. division, brushed off the signs of a slowdown, describing the anemic pace as the result of the company’s commercial lending division reaching a more “natural” size.

“We’ve signaled since Q4 of last year that the aggregate loan growth we’ve seen at the bank in the U.S. was going to come off some of those peaks," Braca said.

Braca added, however, that TD still has plenty of room to grow on the consumer side of its U.S. business, including in credit cards, mortgages and home equity lines of credit. TD operates more than 1,200 branches along the East Coast.

Bank of Montreal, meanwhile, blamed the slowdown in its U.S. division, including at BMO Harris Bank in Chicago, on legislative gridlock. Efforts to overhaul health care failed this summer, and Congress has yet to move forward on efforts to reduce the corporate tax rate.

“Expectations were high coming off of the U.S. election,” Chief Financial Officer Tom Flynn told Bloomberg News this week. “And it looks like, given some of the uncertainty about the timing of the implementation of some of the policies of the new administration, there’s been what feels like a spreading out of some investment decisions by companies.”

U.S. commercial loans at BMO were $51 billion at July 31, up 2% from three months earlier after dipping slightly in the previous quarter.

The tepid pace of business loan growth partially undercut the dominant narrative of Canadian banking in recent years — that big banks up north are relying on their U.S. operations to stave off economic worries at home.

In recent years, of course, big banks up north have been the dominant buyers of prominent U.S. banks. Royal Bank of Canada, for instance, acquired City National in Los Angeles in late 2015. CIBC, meanwhile, acquired Private Bancorp in Chicago this summer.

BMO, which is based in Toronto, has also bulked up on U.S. assets, buying GE Capital’s transportation finance business in 2015. It also acquired Marshall & Ilsley in Milwaukee in 2011, among other acquisitions.

During its earnings call Thursday, TD signaled that it is looking to add U.S. assets on the retail side, keeping an eye out for portfolio acquisitions in credit cards.

“In the U.S., we have a very liquid balance sheet, and the loan-to-deposit ratio remains at around 1-to-2,” said Riaz Ahmed, TD’s CFO, who said that looking for portfolio deals will “remain a priority.”

However, despite the drag in U.S. business loans, earnings in TD’s U.S. division were boosted by strong growth in fees. Net income in the U.S. increased 11% to $678 million. Total loans, meanwhile, increased 5%.

In the months ahead, TD should continue to benefit from further increases in short-term rates in the U.S. and broader signs of strength in both the U.S. and Canadian economies, CEO Bharat Masrani said during the call.

“If you believe some of those growth numbers in both of those major economies will continue to be sustained, then you’ll know it’s a positive environment for TD,” Masrani said.

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