Canadian Banks Boost Bonus Pools by 15% as Markets Surge

Canada’s leading banks have increased their bonus pools by an average of 15% for fiscal year 2025, driven by robust activity in their capital markets divisions. This surge in incentive pay comes as firms capitalized on heightened deal-making and trading opportunities, largely influenced by changing policies from the United States.

Among the most significant increases were noted at the Bank of Nova Scotia, National Bank of Canada, and Canadian Imperial Bank of Commerce, where bonuses rose between 17% and 24% compared to the previous year. In contrast, Royal Bank of Canada, Toronto-Dominion Bank, and Bank of Montreal allocated approximately 13% to 14% more for bonuses this year, according to their fiscal fourth-quarter reports.

Market Dynamics Fueling Growth

The increase in bonus allocations follows a 12% average rise in fiscal 2024 and a 9% increase the year prior. Mark Stipe, president of Toronto-based recruitment firm Vlaad and Co., noted, “If you were to predict what the year was going to look like in February or March, I don’t think we’d be saying this right now today.” He attributed the heightened activity to significant market volatility, particularly during intense tariff discussions.

Canadian banks also benefited from strong performance in the mining and natural resources sectors, with capital markets units across the Big Six reporting an average net income increase of 29% this year. This performance has heightened expectations for bonuses, with many professionals anticipating increases of at least 10% over last year.

Variable compensation at Canadian banks is performance-based, reflecting the amounts reserved rather than the actual payouts. The fiscal year concluded on October 31, with bonuses typically distributed in December. For many capital markets professionals, including investment bankers and traders, incentive pay constitutes a substantial portion of their overall compensation.

Strategic Investments and Hiring Trends

The demand for talent in capital markets remains high, particularly for senior leaders and junior bankers. Stipe observed an “absolute surge in new opportunity” within the last few weeks, indicating robust hiring across Canadian institutions, global banks, and boutique firms.

Royal Bank of Canada, the nation’s largest lender, allocated nearly C$10 billion (approximately $7.2 billion) for bonuses, nearly double that of its closest competitor, Toronto-Dominion Bank. The bank’s capital-markets division reported record revenue, achieving C$5.4 billion in earnings for fiscal 2025, an increase of about 18% from the previous year. CEO Dave McKay emphasized that this growth continues to be driven by significant investments in talent, especially among senior coverage and relationship managers in global markets and investment banking.

Toronto-Dominion Bank, Bank of Montreal, and Bank of Nova Scotia are navigating transitions while still posting strong results in their market-related units. Toronto-Dominion is realigning its business following a US anti-money-laundering settlement, while Bank of Montreal is focused on rebuilding its return on equity. Scotiabank is attempting to demonstrate that its North America-centric strategy, introduced two years ago, will yield positive outcomes.

Spokesperson Clancy Zeifman from Scotiabank indicated that the bank assesses its ability to deliver for shareholders and clients when determining bonus pay. At Toronto-Dominion, Gabrielle Sukman noted that incentive pay reflects the bank’s strong financial performance and specific business successes in wealth management and capital markets.

Bank of Montreal’s spokesperson Jeff Roman affirmed that their bonus structure is competitive and based on business results.

National Bank Expands and Improves Performance

National Bank of Canada, the smallest of Canada’s Big Six banks, has been expanding its operations, completing the acquisition of Edmonton-based Canadian Western Bank in February. The bank is expected to gain further scale next year with plans to acquire Laurentian Bank of Canada’s retail and small business deposit and loan portfolios.

The capital-markets division of National Bank has seen earnings rise by over 34% in fiscal 2025, with bonus allocations impacted by the integration of employees from Canadian Western Bank. Spokesperson Alexandre Guay stated, “Our variable compensation reflects revenue growth and the strong performance of our teams across business lines.”

This strategic uptick in bonus pools reflects not only the competitive landscape of Canada’s banking sector but also the ongoing adaptability of these institutions in a rapidly changing market environment.