TD, BMO and CIBC wrapped up fourth-quarter earnings Thursday for Canada’s biggest banks.Fred Lum/the Globe and Mail
Three of Canada’s biggest banks have beaten analysts’ profit expectations, topping off a year when markets shrugged off economic concerns over trade disputes while deal activity surged on renewed interest in key resource sectors.
Toronto-Dominion Bank TD-T, Bank of Montreal BMO-T and Canadian Imperial Bank of Commerce CM-T capped off a string of strong earnings results from the country’s largest lenders this week.
Even as consumers and businesses navigated uncertainty and high costs caused by tariffs, the banks’ capital-markets and wealth-management units were inundated with advisory and trading activity that spurred a surge in profits.
A breakdown of the big banks’ year-end earnings
Earlier this year, the U.S. trade war sparked concerns about an economic downturn, and businesses put their growth investment plans on hold. Those fears eased as markets climbed higher and as sectors seen as instrumental to redrawing Canada’s trade routes attracted renewed interest, including energy and mining.
The Canadian banks also have large businesses in the U.S., where bankers were busy brokering deals as the American economic outlook improved in the latter half of the year.
CIBC’s capital-markets profit surged 58 per cent to $548-million from the same quarter last year as growth in lending and a boost in underwriting and advisory activity drove higher corporate and investment-banking revenue.
“While there was some uncertainty around trade, that creates some volatility as well, and after a while, capital-markets participants need to enter the market to transact,” CIBC chief financial officer Robert Sedran said in an interview.
“We then have the benefit of advising clients through some pretty volatile times. They still have their businesses that they have to run, they still have their positions that they have to take, and in a lot of ways, they need more advice in those periods than in more stable times.”
At TD, capital-markets net income more than doubled to $494-million from the same quarter last year, as revenue jumped 24 per cent to $2.2-billion across global markets, and corporate and investment banking.
BMO’s earnings from capital markets nearly doubled to $521-million on higher revenue from investment banking and trading.
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CIBC’s profit rose in the fourth quarter, topping estimates from analysts. TD reported lower profit after recording restructuring charges and BMO posted earnings that were largely flat. After adjusting for certain items, TD and BMO said that profits increased and beat analysts’ expectations.
TD, BMO and CIBC wrapped up fourth-quarter earnings reporting on Thursday for Canada’s biggest banks. Earlier in the week, Bank of Nova Scotia BNS-T, Royal Bank of Canada RY-T and National Bank of Canada NA-T posted higher profits that beat analysts’ estimates.
RBC increased its target for return-on-equity (ROE) – a key measure of profitability – to 17 per cent or more in the next few years after the bank surpassed the 16-per-cent goal it set at its investor day in March.
National Bank of Canada posted progress toward raising its ROE higher to 17 per cent from its current level of 14.6 per cent.
BMO has been working on improving its ROE toward a goal of 15 per cent or more in the next few years. In 2025, the bank’s ROE rose to 11.3 per cent from 9.8 per cent the previous year.
As part of its plan to boost its profitability, BMO reorganized its U.S. business earlier this year by combining personal, business, commercial-banking and wealth-management units. Aron Levine from Bank of America Corp. joined the bank to lead the division.
The lender also closed 138 branches in locations where BMO believes it would not be able to grow in a way that would allow it to compete in the market.
BMO chief executive Darryl White said the bank plans to add 150 new branches over the next five years in California, along with other efforts to improve the profitability of the U.S. business.
In response to analyst questions on whether BMO would consider selling stock or abandoning its ROE target to purchase a financial institution in the U.S., Mr. White said the lender would not make either move for an acquisition.
“Achieving the ROE targets is the top imperative across the bank and in U.S. banking, so every decision that we make is evaluated through that lens,” Mr. White said.
He said the bank is focused on improving its U.S. division by building its business in local markets that are key to its strategy.
“A tuck-in opportunity in those markets that would enable us to continue our ROE journey and not slow it down, but would accelerate it, might we look at it? Sure. But if it doesn’t meet those criteria – both strategically and financially – we’re not on. Our number one priority is to grow organically and we’re confident we could do that.”
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As TD cuts costs to address remediation efforts stemming from its past anti-money-laundering failings, the bank took a restructuring charge of $190-million in the quarter. It expects to book a final $125-million charge as part of the restructuring program in the first quarter of 2026.
Its cuts include winding down certain business and reducing its real estate footprint. On Thursday, the bank said the restructuring also includes a 3-per-cent work-force reduction – an increase from the 2-per-cent cut it previously announced in May.
At its investor day in September, TD unveiled its turnaround strategy and pledged to cut between $2-billion and $2.5-billion in annual costs.
In October, The Globe and Mail reported that TD was laying off staff and staggering its four-day return-to-office mandate.
TD has also been restructuring its U.S. balance sheet, which has included selling loans to stay under the regulatory asset cap levied on its U.S. retail bank.
The bank said it reached its 10-per-cent asset-reduction target. As of Oct. 31, the total assets in its U.S. business were US$382-billion, well under the US$434-billion asset cap levied by regulators, providing the bank with room to continue lending and growing the business without exceeding the limit.
“The balance-sheet restructuring is to create capacity to support our clients, but to also look at reallocating resources and exiting less-profitable businesses,” TD chief financial officer Kelvin Tran said in an interview.