Canada's largest financial institutions significantly increased bonus payouts to their employees in fiscal 2025, rewarding staff for strong performances in key business areas despite ongoing economic uncertainty. The collective move by the Big Six banks highlights a resilient sector where dealmaking and wealth management have become major profit drivers.
Double-Digit Increases in Variable Compensation
Overall, performance-based, incentive, and variable compensation across the Big Six banks rose by approximately 15 per cent in 2025 compared to 2024. This acceleration outpaces the 12 per cent increase recorded in the previous fiscal year. The surge in compensation expenses was anticipated by banking analysts, who pointed to a notable rise in dealmaking activity as the primary catalyst.
The banks' profits were largely fueled by two segments: capital markets, which assists corporations with fundraising and trading, and wealth management, which serves high-net-worth clients. For professionals in these areas, particularly capital markets, variable pay constitutes a critical component of their total earnings.
Bank-by-Bank Breakdown of Bonus Pools
The increases were not uniform across all institutions. National Bank of Canada allocated about $1.9 billion for performance-based pay, marking a substantial 24 per cent jump from the $1.54 billion set aside in 2024.
Bank of Nova Scotia increased its bonus pool to $2.59 billion, a 19.35 per cent rise. Bank of Montreal reported a 10.81 per cent increase, bringing its variable compensation to $4.1 billion.
Royal Bank of Canada, the country's largest lender, earmarked $9.98 billion for variable compensation. This represents a 13 per cent increase over the $8.83 billion reported in 2024, which itself followed a 16 per cent hike the year before.
Canadian Imperial Bank of Commerce set aside $3.5 billion, a 17 per cent increase from $2.99 billion in 2024. This growth rate was slightly lower than the 19 per cent increase seen in the prior year.
Even Toronto-Dominion Bank, which is currently executing a restructuring plan expected to reduce its workforce by three per cent, reported a 13.8 per cent hike in incentive compensation to $5.1 billion, up from $4.48 billion.
Profits Amid Persistent Economic Concerns
This generous compensation trend unfolded against a backdrop where bank executives consistently voiced caution regarding the uncertain economic outlook for Canada. Despite these concerns, the institutions comfortably exceeded analysts' profit expectations for the fiscal year, thanks to the standout performances of their capital markets and wealth management divisions.
The data confirms that while the broader economy faces headwinds, specific high-fee, transaction-driven banking activities have thrived. The significant rise in bonus pools directly reflects the revenue generated from advising on mergers, acquisitions, and trading, as well as managing assets for affluent clients.
The fiscal 2025 results underscore a diverging reality within Canada's financial sector: robust profitability in certain elite business lines is translating into substantial rewards for employees, even as the banks prepare for potential challenges in the wider economy.
