Canada’s largest lenders have raised bonuses across the board to cap off a year when tariff turmoil prompted an influx of activity in capital markets and wealth management, boosting profits at the banks.
Performance-based compensation at Canada’s biggest banks rose 15 per cent on average to a combined total of $27.3-billion this year, up from a 12-per-cent increase in 2024. All of the Big Six banks increased their bonus pools this year, ranging from a 24-per-cent jump at National Bank of Canada NA-T to 13-per-cent increases at Bank of Montreal BMO-T and Royal Bank of Canada RY-T.
“Activity levels are very high and investment banks and other advisory firms are bullish on 2026 and beyond,” said Adam Dean, founder and president of Dean Executive Search. “Our clients have had phenomenal fiscal years, and if you’re not getting paid well on Bay Street in a year like 2025, I’d say that you never will.”
Earlier this year, the U.S. trade war caused concerns that 2025 would be marked by fewer business transactions and stunted investment in growth plans. Instead, volatility sparked trading and deal-making activity, particularly in industries considered central to Canada’s economic growth, including energy and mining.
The economic outlook improved in the U.S., where there was a rush of deals. Canadian banks benefited through their significant business units in that country.
“It’s pretty crazy when you think back to the February/March time frame of this year, because everything that was planned got shelved in light of the uncertainty coming out of the U.S.,” Mr. Dean said. “The year that people thought we were going to have in the spring through the summer ended up getting pushed from the summer to the fall and now into the winter.”
Bonuses are based on performance, and most of that compensation is paid to capital markets staff, which include analysts, traders and investment bankers, whose pay is more variable depending on performance and market conditions.
National Bank of Canada boosted variable compensation by 24 per cent to $1.9-billion compared with 14 per cent last year. Profit in its capital markets unit climbed 34 per cent from last year to $1.7-billion and its share price has risen 32 per cent this year-to-date.
Bank of Nova Scotia BNS-T set aside $2.6-billion in performance-based pay, a 19-per-cent increase year-over-year, as capital markets profit jumped 30 per cent to $1.9-billion. In 2024, the bank increased bonuses by 4 per cent. The lender’s share price has risen 27 per cent this year.
Canadian Imperial Bank of Commerce CM-T bumped up its bonus pool by 17 per cent to $3.5-billion. Last year, the bank increased bonuses by 19 per cent. Profit in its capital markets division surged 44 per cent to $2.3-billion from the year prior. CIBC’s stock has climbed 39 per cent since the start of 2025.
“When it comes to compensation, we pay competitively and we’ve got a pay-for-performance philosophy,” CIBC chief financial officer Robert Sedran said in an interview.
“But if you’re attracting people just on the back of pay, you may not be building the culture that you want, and we have a focus on team-based culture and ensuring that the long-term needs of all our stakeholders, including our team members, are met.”
CIBC, TD and BMO beat analysts’ profit estimates as banks benefit from tumultuous markets
Shares of Toronto-Dominion Bank TD-T soared 57 per cent so far this year, recovering from its losses after an investigation by U.S. regulators into the lender’s anti-money-laundering failings.
TD allocated $5.1-billion for incentive pay, a 14-per-cent increase compared with 2024. Last year, it increased incentive pay by 10 per cent from the year prior. Profit in its capital markets unit jumped 44 per cent from the previous year.
“We have strong financial performance across the enterprise, and that was a big driver of variable compensation,” TD chief financial officer Kelvin Tran said in an interview. “The bright spot is in markets-related businesses, and that would be both in wealth management and wholesale banking.”
Royal Bank of Canada allocated $9.98-billion for variable compensation, a 13-per-cent jump year-over-year but less than the 16-per-cent increase in 2024. Capital markets profit increased 18 per cent from last year to $5.4-billion. Shares of RBC rose 29 per cent so far this year.
Bank of Montreal allocated $4.2-billion for performance-based pay, a 13-per-cent increase year-over-year as capital markets profit rose 29 per cent from the year prior. Its share price has risen 27 per cent year-to-date. Last year, BMO increased bonuses by 5 per cent.
“The bank-owned dealers like the Big Six are moving toward a star culture model, meaning recognition of the outperformers. And those outperformers are all getting paid this year,” Mr. Dean said.
