- BMO’s (TSX:BMO) adjusted third-quarter profit rose 19 per cent, driven by strong capital markets performance and growth in its Canadian and U.S. banking businesses
- Scotiabank’s (TSX:BNS) third-quarter profit increased as higher net interest income, record wealth management earnings, and strong capital markets results boosted revenue
- Both banks reported solid capital levels and continued returning capital to shareholders through dividends and share buybacks despite ongoing credit quality pressures
- Scotiabank stock (TSX:BNS) opened trading at C$122.31 and BMO stock (TSX:BMO) opened trading at C$242.00
Canadian lenders BMO Financial Group (TSX:BMO) and Bank of Nova Scotia (TSX:BNS) reported stronger third-quarter results on Tuesday, benefiting from robust performance in their capital markets operations and resilient lending businesses despite a still-challenging credit environment.
BMO said adjusted profit rose sharply in the quarter ended July 31, driven by strength across its capital markets, Canadian banking and U.S. banking operations. Meanwhile, Scotiabank reported higher earnings supported by growth in net interest income, record wealth management results and a strong showing from its global banking and markets division.
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BMO reported adjusted net income of C$2.86 billion, up 19 per cent from C$2.40 billion a year earlier. Adjusted earnings per share climbed 22 per cent to C$3.96, while adjusted return on equity improved to 14.0 per cent from 12.0 per cent.
“Every business segment delivered record pre-provision pre-tax earnings, with sustained momentum in Capital Markets and Wealth Management, and continued commercial loan growth in both Canada and the U.S. as we deepen client relationships across our franchise,” BMO Financial Group’s CEO, Darryl White stated in a news release.
However, on a reported basis, BMO’s net income fell 25 per cent to C$1.75 billion, or C$2.38 per share, compared with C$2.33 billion, or C$3.14 per share, a year earlier. The decline was largely attributable to a C$962 million after-tax charge related to the announced sale of the bank’s Transportation Finance and Vendor Finance businesses, including a reduction in goodwill.
BMO’s capital markets division was a standout performer during the quarter. Reported net income in the segment rose 46 per cent to C$645 million, reflecting higher revenue from global markets activities and investment and corporate banking, as well as lower provisions for credit losses.
The bank also reported solid gains in its core retail banking franchises. Canadian personal and commercial banking earnings increased 16 per cent to C$980 million, supported by higher net interest income and lower credit loss provisions. U.S. banking earnings rose 13 per cent to C$868 million, benefiting from improved margins and growth in non-interest revenue.
Wealth Management earnings increased 4 per cent to C$408 million, while adjusted earnings in the segment surged 22 per cent as strengthening global markets boosted assets under management and client activity.
Credit quality showed modest improvement at BMO. Total provisions for credit losses fell to C$722 million from C$797 million a year earlier, primarily due to lower provisions in Canadian and U.S. banking operations.
BMO maintained a strong capital position, ending the quarter with a Common Equity Tier 1 (CET1) ratio of 13.0 per cent. The lender repurchased 3.8 million shares during the quarter under its normal course issuer bid and announced a quarterly dividend of C$1.71 per share, up 5 per cent from a year ago.
Scotiabank also delivered stronger third-quarter results, reporting net income of C$2.95 billion, up from C$2.53 billion a year earlier. Diluted earnings per share increased to C$2.27 from C$1.84, while return on equity improved to 14.1 per cent from 12.2 per cent.
On an adjusted basis, Scotiabank earned C$2.97 billion, up from C$2.52 billion a year earlier, with adjusted diluted earnings per share rising to C$2.28 from C$1.88.
“Q3 was a record quarter for the bank, as all business lines reported strong results and we exceeded our medium-term objectives in the period,” Scotiabank’s president and CEO, Scott Thomson said in a media statement. “In particular, we exceeded our 14 per cent return on equity target this quarter, highlighting the improvements that we have made across the bank to increase margins and fee income.”
The bank’s revenue growth was supported by higher interest income. Net interest income increased to C$5.87 billion from C$5.49 billion a year earlier, helping drive total revenue up 11 per cent to C$10.54 billion.
Scotiabank’s Canadian Banking division earned C$1.07 billion, a 12 per cent increase from last year, helped by record revenue, continued margin expansion and strong fee income growth. International Banking income rose 8 per cent to C$766 million, supported by margin expansion and improving credit quality.
Global Wealth Management posted a record quarter, with earnings increasing 23 per cent to C$518 million, driven by higher mutual fund fees, brokerage revenue and net interest income. Assets under management grew 16 per cent to C$474 billion.
Scotiabank’s Global Banking and Markets business also delivered record results. Earnings in the segment jumped 37 per cent to C$647 million, boosted by strong capital markets activity and record underwriting and advisory fees.
Credit costs remained elevated but manageable. The bank’s provision for credit losses increased slightly to C$1.08 billion from C$1.04 billion a year ago, while its CET1 ratio stood at 13.1 per cent. During the quarter, Scotiabank repurchased 8.6 million shares and said it has returned C$6.3 billion to shareholders through dividends and buybacks so far this year.
Traders now wait for National Bank (TSX:NA) to release its quarterly report on Wednesday. CIBC (TSX:CM), Royal Bank of Canada (TSX:RY) and Toronto-Dominion Bank (TSX:TD) report their results on Thursday.
With assets of C$1.4 trillion as of April 2025, Scotiabank is one of the largest banks in North America by assets. Bank of Montreal provides diversified financial services primarily in North America. It operates through Canadian Personal and Commercial Banking; U.S. Banking; Wealth Management; and Capital Markets segments.
Scotiabank stock (TSX:BNS) opened trading more than 3 per cent higher at C$122.31 and BMO stock (TSX:BMO) opened trading almost half a per cent higher at C$242.00.
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