Key facts
- Bank of Montreal (BMO) reported adjusted earnings of C$3.96 per share, surpassing the C$3.76 estimate.
- Bank of Nova Scotia (Scotiabank) reported adjusted earnings of C$2.28 per share, exceeding the C$2.10 estimate.
- BMO's capital markets segment income increased by 45% in the third quarter.
- Scotiabank's global banking and markets unit income grew by 37%.
- BMO's overall adjusted profit rose 19.2% to C$2.86 billion.
- Scotiabank's overall adjusted profit increased 18% to C$2.97 billion.
Canadian lenders Bank of Montreal (BMO) and Bank of Nova Scotia (Scotiabank) surpassed analyst profit expectations for the third quarter, driven by strong performance in their capital markets divisions and domestic operations. BMO reported adjusted earnings of C$3.96 per share, beating the C$3.76 estimate, while Scotiabank's adjusted profit came in at C$2.28 per share, above the C$2.10 estimate.
BMO's capital markets segment saw a 45% rise in adjusted net income, supported by higher fee income and lower loan loss provisions. Its U.S. banking business grew 11% and Canadian personal and commercial banking increased 15%. Scotiabank, which operates internationally, reported a 37% increase in income from its global banking and markets unit, fueled by record underwriting and advisory fees. Its international business grew 8% and its Canadian operations saw 12% growth.
Scotiabank CEO Scott Thomson highlighted the quarter as a 'record quarter' for the bank, with two segments achieving record earnings and one reaching record revenue, exceeding their 14% return on equity target. Both banks have benefited from reserves built up to cover potential loan defaults, as credit losses have remained manageable despite volatile financial markets influenced by Middle East conflict and ongoing trade tensions between Canada and the U.S.
Choppy market conditions tend to favor trading desks at large banks, as investors adjust portfolios to hedge against risks. Analysts noted that businesses and banks are managing trade tensions as normal operational challenges rather than major hurdles. The Canadian economy has also shown resilience, adding more jobs than expected in July and seeing the unemployment rate drop to a two-year low, indicating an ability to cope with U.S. tariffs and international uncertainties.