Banker Bonus Pools Rise 15% at Canada’s Big Lenders in Busy Year

(Bloomberg) -- Canada’s biggest lenders set aside 15% more for banker bonus pools in fiscal 2025, a year when the firms’ capital-markets divisions were more active on deals and US President Donald Trump’s policy swings kept trading desks busy. 

Bank of Nova Scotia, National Bank of Canada and Canadian Imperial Bank of Commerce boosted the amount they reserved for incentive pay the most, with increases ranging from 17% to 24% compared with last year. 

Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal, meanwhile, all put aside about 13% to 14% more this year, according to their fiscal fourth-quarter reports.   

The increase in incentive pay comes after a 12% average bump in fiscal 2024 and just a 9% average increase the year before.

“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,” Mark Stipe, president of Toronto-based financial recruitment firm Vlaad and Co., said in an interview. 

“When the tariff noise was its loudest, that seemed to be when we saw the most activity and performance out of trading groups,” he said. 

Canadian banks also benefited from deals activity — particularly in the mining and natural resources sectors — plus strong performance on fixed-income desks, according to Stipe. 

Capital markets units at the Big Six saw net income increase by 29% on average this year. That performance is feeding into bonus expectations, he said, with most people he’s spoken with recently looking for an increase of at least 10% over last year’s incentive pay. 

Variable compensation at Canadian banks is based on performance, and the figures the firms report in their quarterly filings reflect the amount reserved, not paid out. The fiscal year ended on Oct. 31, but bonuses are typically distributed in December.

Incentive pay is especially crucial to capital-markets professionals — including investment bankers, analysts, salespeople and traders — who count on it for a large portion of their compensation. Employees in other divisions, such as wealth management, insurance and asset management, also receive bonuses on top of their base salaries.

With all of the activity in capital markets, Stipe said demand for talent is high for both senior leaders at the managing director level, as well as more junior bankers. Hiring is happening at Canadian institutions, global banks and boutique firms. “We’ve witnessed in the last three weeks just an absolute surge in new opportunity,” he said.

Royal Bank, the country’s biggest lender, earmarked almost C$10 billion ($7.2 billion) for incentive pay, nearly double its closest competitor in Toronto-Dominion. RBC’s capital-markets franchise is a juggernaut, generating record revenue and C$5.4 billion in earnings in fiscal 2025, up about 18% from last year. 

Growth in the business was “enabled by continued investments in talent, with accelerated hiring of senior coverage and relationship managers in global markets and investment banking across the United States and Europe,” Chief Executive Officer Dave McKay said on an earnings call Wednesday. The bank also added 90 new financial advisers in its US wealth-management business and plans to keep hiring there, he said.  

TD, BMO and Scotiabank

These three lenders are all undergoing transitions of sorts. Toronto-Dominion is realigning its business in the wake of its US anti-money-laundering settlement, Bank of Montreal is on a path to rebuilding its return on equity, and Scotiabank is still working to prove its North America-focused strategy, announced two years ago, will pay off. 

They’ve all announced restructuring programs with a view to cutting costs by reducing their workforces. But the trio also saw strong results in their markets-related units this year and that’s where the majority of incentive pay is directed. 

Scotiabank spokesperson Clancy Zeifman said that when calculating bonus pay, the bank accounts for its “ability to deliver for shareholders and clients, our relative performance compared to peers, and individual performance.”

At Toronto-Dominion, incentive pay reflected “stronger financial performance for the bank,” spokesperson Gabrielle Sukman said, adding that there were “higher business-specific incentives reflecting strong performance” in the wealth-management and capital-markets units. 

Bank of Montreal’s bonus pay structure reflects business results and is competitive with the market, spokesperson Jeff Roman said. 

‘Clean’ CIBC

The country’s fifth-largest lender has been on a two-year streak of beating analyst estimates and won a reputation for “clean” results with few surprises. It continued that on Thursday, with earnings that topped forecasts and strong performance in capital markets. 

“We pay competitively and have a pay-for-performance philosophy that aligns compensation to our bank’s financial and non-financial performance,” spokesperson Tom Wallis said. 

National’s Acquisition

National Bank, the smallest of Canada’s Big Six, got a bit larger this year as it completed the acquisition of Edmonton-based Canadian Western Bank in February. (It’ll gain even more scale next year after agreeing to acquire Laurentian Bank of Canada’s retail and small business deposit and loan books.)

National Bank’s capital-markets division saw earnings rise by more than 34% in fiscal 2025 and bonus pay was also affected by the CWB deal, according to spokesperson Alexandre Guay. 

“Our variable compensation reflects revenue growth and the strong performance of our teams across business lines, and was further increased to account for the integration of CWB employees who joined National Bank during the year,” he said. 

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