Canada's major financial institutions have significantly increased the money reserved for employee bonuses, reflecting a year of heightened activity in deal-making and financial markets. The collective move points to a robust period for the country's banking sector.
Substantial Increases Across the Board
The Big Six Canadian banks allocated an average of 15 percent more for their bonus pools in the fiscal year that ended on October 31, 2025. This notable rise follows a 12 percent average increase in fiscal 2024 and a more modest nine percent bump the year before. The surge is attributed to busier capital-markets divisions and trading desks that responded to market volatility.
Not all banks increased their reserves at the same rate. Bank of Nova Scotia, National Bank of Canada, and Canadian Imperial Bank of Commerce led the pack with the most substantial boosts. Their increases in incentive pay provisions ranged from 17 percent to 24 percent compared to the previous fiscal year.
The country's other banking giants also raised their allocations significantly. Royal Bank of Canada, Toronto-Dominion Bank, and Bank of Montreal each set aside approximately 13 to 14 percent more for variable compensation this year, according to their fourth-quarter financial reports.
Drivers of the Bonus Boom
Industry experts point to two primary engines behind the profitable year: a resurgence in deals and active trading. "When the tariff noise was its loudest, that seemed to be when we saw the most activity and performance out of trading groups," said Mark Stipe, president of Toronto-based financial recruitment firm Vlaad and Co. He referred to policy shifts under U.S. President Donald Trump that created market movements.
Canadian banks additionally benefited from strong activity in mergers and acquisitions, particularly within the mining and natural resources sectors. Fixed-income trading desks also reported powerful performance throughout the year.
The direct financial impact was clear. On average, the capital markets units at the Big Six banks saw their net income jump by an impressive 29 percent in fiscal 2025. This stellar performance is now flowing through to compensation expectations. Stipe noted that most professionals he has spoken with are anticipating a bonus increase of at least 10 percent over what they received last year.
Compensation Structure and Talent Demand
It is important to note that the figures reported by the banks represent the amount reserved for variable compensation, not the sum that has been paid out. This compensation is based on performance. The fiscal year concluded on October 31, but the bonuses are typically distributed to employees in December.
Incentive pay is a critical component of total earnings for capital-markets professionals, including investment bankers, traders, analysts, and salespeople. Employees in other divisions, such as wealth management and insurance, also receive bonuses on top of their base salaries.
The active market has sparked a parallel surge in hiring. "We've witnessed in the last three weeks just an absolute surge in new opportunity," Stipe observed. Demand is high for talent at all levels, from junior bankers to senior managing directors, at Canadian banks, global firms, and boutique shops.
Royal Bank of Canada, the nation's largest lender, underscored its capital-markets dominance by earmarking nearly $10 billion for incentive pay—almost double its closest competitor, Toronto-Dominion Bank. RBC's capital-markets franchise generated record revenue and $5.4 billion in earnings, up about 18 percent from the prior year.
