BMO Financial Group delivered the most dramatic profit surge of the three major Canadian banks, with net income climbing 34% year-over-year to $2.63 billion, or $3.53 per diluted share, for the quarter ended April 30. On an adjusted basis, earnings reached $3.67 per diluted share, well ahead of the consensus estimate of $3.45. Bank of Nova Scotia kicked off the reporting season with adjusted earnings of $2.02 per share, topping the consensus estimate of $1.93. National Bank of Canada rounded out the trio with adjusted earnings of $3.23 per share, beating the $3.14 estimate on adjusted revenue of $3.918 billion against expectations of $3.81 billion. Following the earnings announcements, Scotiabank's shares rose 1.2% in Toronto trading, while BMO was flat and National Bank slipped 2.7%.
All three banks announced increased quarterly dividends as part of their strong financial performance. BMO raised its quarterly dividend to $1.71 per share from $1.67, while National Bank increased its dividend by 6.5% to $1.32 per share. Scotiabank maintained its quarterly dividend at $1.14 per share, up from $1.10 per share. Capital markets emerged as a standout performer, with BMO's advisory fees up 35% sequentially and National Bank's capital markets division profit rising 11% to $457 million. The strong capital markets performance contributed significantly to overall growth across all three institutions, with revenue reaching CAD 9.85 billion for Scotiabank, up 13% year-over-year. National Bank also repurchased almost seven million common shares for a total price of $1.2 billion during the six-month period ending April 30.
BMO's provisions for credit losses fell sharply to $739 million from $1.05 billion year-over-year, representing a significant improvement in asset quality. Scotiabank's provisions for credit losses came in at $1.22 billion, above the $1.11 billion estimate, though Jefferies noted the result reflected continued efficiency gains and improving profitability across most operating segments. The exception was Global Banking and Markets, which saw a modest sequential decline. Scotiabank's CET1 capital ratio held at 13.3%, while National Bank's CET1 ratio edged down 10 basis points to 13.5% following share repurchases. National Bank's provisions for credit loss (PCLs) were $233 million, less than half of the $545 million it recorded a year ago. Chief risk officer Jean-Sébastien Grisé noted that while the bank expects further gradual increases in PCL, its defensive qualities and prudent allowances position it well for the remainder of the year.
BMO announced the sale of its Transportation and Vendor Finance businesses to Stonepeak, a move expected to trigger a $1.1 billion charge next quarter. Scotiabank demonstrated strong financial performance in Q2 2026, with significant revenue growth and improved profitability driven by strategic technology initiatives. The bank launched Scotia Intelligence and Scotia Navigator, with Scotia Intelligence unifying capabilities and platforms for AI delivery at scale. Jefferies raised its target price by $7 to $112, noting that Scotiabank is narrowing the gap to peers even as loan growth in its international segment remains negative. The banks' strong performance reflects their ability to navigate challenging economic conditions while capitalizing on growth opportunities in capital markets and digital transformation initiatives.
BMO's Jefferies noted that much of the upside came from capital markets rather than domestic retail, which underperformed. Scotiabank's CEO Scott Thomson expressed relative optimism about Canada's economic outlook despite acknowledging macroeconomic challenges, including the Iran war and trade relationship uncertainties with the United States. Speaking with analysts, Thomson identified three key factors supporting his positive outlook: Canada's position as an oil-exporting nation with oil prices hovering above US$90 per barrel, enabling significant fiscal stimulus by the Canadian government. He highlighted the first-time homebuyers' GST and HST rebate that eliminates federal tax on new homes valued up to CAD 1 million for first-time buyers. National Bank CEO Laurent Ferreira noted that despite macroeconomic uncertainty, clients remained active throughout the quarter and market conditions were favourable, reflecting strong growth in both balance sheet and key base businesses. The strong quarterly results across all three major Canadian banks demonstrate resilience in the current economic environment and position them well for continued growth.
