As the European sovereign debt crisis deepens, Canadian banks could soon feel the pinch.

In a note Tuesday evening, National Bank Financial analyst Peter Routledge said that the turmoil unfolding on the other side of the Atlantic and soft economic growth at home has made the outlook for Canada’s big six banks bleaker than what most analysts are expecting.

“Despite the strength in the quarter, we are convinced that earnings estimates will fall short of consensus over the near to medium terms,” he said. “[The third fiscal quarter] will be the last ‘good’ quarter for some time.”

Routledge estimates that in 2012, the average earnings-per-share (EPS) growth for the big six banks will be just 6.7 per cent -- barely half of what is was in 2011.

“We think capital markets will be down materially in the fourth quarter and will remain depressed really through much of 2012,” he told The Huffington Post. “We think the economy will not grow rapidly, which means tighter net interest margins and slow loan growth.”

Though Routledge says earnings growth at Canada’s big six -- of which National Bank is one -- will be “somewhat muted,” he does not anticipate a return to recession, and a situation where clients start defaulting on their loans, and banks’ earnings shrink.

“There is still expected EPS growth, rather than negative EPS growth, so it’s not a disaster scenario,” he says. “It’s just we’re a little more bearish than the street.”

In 2009, average EPS growth for the big six contracted by 2.2 per cent.

But despite the pessimistic forecast, Routledge, who spoke out in defence of Canada’s banks in August when an American blog raised questions about the stability of the sector, maintains that “Canadian banks are generally quite solid and quite profitable.”

Though Routledge concedes that a contraction in earnings could cause a slide in RRSPs and equity valuations, he says that in this case, the overall implications will be negligible.

“I don’t see the EPS outlook for Canadian banks having a material impact on the economy,” he told HuffPost. “It’s the other way: If the Canadian economy stays out of recession, EPS will be down marginally. We’ll still have EPS growth and valuations will probably correct up from where they are.”