In a significant move reflecting a bustling year, Canada's largest financial institutions have collectively set aside 15% more funds for employee bonus pools for the fiscal year 2025. This notable increase comes after a period of heightened activity in capital markets divisions, fueled by deal-making and trading volatility linked to US policy shifts under President Donald Trump.
Which Banks Increased Bonuses the Most?
The surge in incentive pay reserves was not uniform across the board. Bank of Nova Scotia, National Bank of Canada, and Canadian Imperial Bank of Commerce (CIBC) implemented the most substantial boosts. Their increases ranged from 17% to 24% compared to the previous fiscal year.
Meanwhile, the country's other banking giants also raised their provisions. Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), and Bank of Montreal (BMO) allocated approximately 13% to 14% more for bonuses this year, as detailed in their fiscal fourth-quarter reports. This follows an average 12% bump in fiscal 2024 and a 9% rise the year before.
Mark Stipe, president of Toronto-based financial recruitment firm Vlaad and Co., expressed surprise at the year's outcome. "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 remarked in an interview. He pointed to tariff-related noise as a key driver for trading group performance.
Drivers Behind the Bonus Boom
According to industry experts, several factors converged to create a profitable year for Canadian banks' capital markets units. Deals activity, particularly within the mining and natural resources sectors, provided a major lift. Additionally, fixed-income trading desks reported strong performance.
This operational success translated directly to the bottom line. On average, the capital markets divisions at Canada's Big Six banks witnessed a 29% increase in net income for the year. This robust performance is now feeding into employee expectations, with many professionals anticipating bonus increases of at least 10% over last year.
It is crucial to note that the reported figures represent funds reserved for variable compensation, which is performance-based, and not the final amounts paid out. The fiscal year concluded on October 31, with bonuses typically distributed in December.
Talent Demand and Strategic Moves
The buoyant capital markets environment has sparked intense competition for talent. Demand is high for both senior managing directors and junior bankers across Canadian institutions, global banks, and boutique firms. "We’ve witnessed in the last three weeks just an absolute surge in new opportunity," Stipe observed.
Individual bank strategies and performances further colored the bonus story:
Royal Bank of Canada (RBC), the nation's largest lender, earmarked a staggering nearly C$10 billion ($7.2 billion) for incentive pay. Its capital-markets arm generated record revenue and C$5.4 billion in earnings, up about 18% year-over-year. CEO Dave McKay credited investments in talent, including hiring in the US and Europe.
TD, BMO, and Scotiabank are each navigating strategic transitions—regulatory realignment, rebuilding returns, and proving a new geographic focus, respectively. Despite announcing cost-cutting restructures, their markets units performed strongly, directing the bulk of incentive pay.
CIBC continued its streak of "clean" results, beating analyst estimates with strong capital markets performance. National Bank bolstered its scale by acquiring Canadian Western Bank, contributing to a more than 34% earnings rise in its capital-markets division and affecting its bonus calculations.
For professionals in investment banking, sales, trading, and analysis, these bonuses form a critical component of total compensation, underscoring the direct link between market activity and pay in the high-stakes world of finance.
