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Loan books and margins should be under pressure in the near term, analysts said, as oil pipeline congestion weighs on the energy-reliant economy, record household debt curbs mortgage growth and global economic uncertainty keeps interest rates low.

That has weighed on bank stocks, with the Canadian banks index rising just 9.4 per cent over the past year, less than the 13 per cent gain in the broader Toronto stock benchmark.

“There is downside risk to (banks’) share prices, given a challenging operating environment,” Credit Suisse analyst Mike Rizvanovic wrote in a note, adding that fiscal 2020 average EPS estimates have declined by more than 4 per cent since Jan. 1, 2019. Bank of Nova Scotia kicks off earnings reporting on Tuesday, with Canada’s remaining five major banks following next week.

Credit Suisse expects a 26 per cent rise in fourth-quarter loan-loss provisions for the sector from a year ago, driven by consumer insolvencies, which jumped 19 per cent in September, the largest increase since at least 2011.

There is downside risk to (banks') share prices, given a challenging operating environment Credit Suisse analyst Mike Rizvanovic

Challenges also linger for banks’ beleaguered capital markets businesses, the only segment to deliver negative earnings growth with a 12 per cent decline so far this year, according to National Bank of Canada.

Banks’ investments to expand their capital markets’ businesses, particularly in the U.S., have not yet generated revenues, Gabriel Dechaine, an analyst at National Bank of Canada, wrote in a note.