Scotiabank, BMO Beat Profit Forecasts On Capital Markets

Canada's Bank of Nova Scotia (Scotiabank) and Bank of Montreal (BMO) exceeded analysts' expectations for quarterly profits, driven by strong performances in capital markets and wealth management businesses, according to a report by Arasu Kannagi Basil, Jaiveer Shekhawat, and Nivedita Balu for Reuters.

Despite strong earnings, both banks have set aside significant provisions to guard against potential bad loans amid ongoing trade tensions between Canada and the U.S. I Photo: Raysonho @ Open Grid Scheduler / Grid Engine

Lower interest rates have fueled increased mergers and acquisitions activity. Meanwhile, reduced regulation, lower corporate taxes, and a broadly pro-business stance in the United States are expected to further boost market momentum.

The wealth management sector, a fee-based and capital-light business, has also experienced growth, driven by a rising number of high-net-worth individuals and increased investments.

Despite strong earnings, both banks have set aside significant provisions to guard against potential bad loans amid ongoing trade tensions between Canada and the U.S., a key market for Canadian lenders.

U.S. President Donald Trump has threatened to impose a 25% tariff on all non-energy Canadian imports starting in March.

Scotiabank reported provisions of C$1.16 billion ($813.81 million) due to uncertainties surrounding the impact of tariffs on Canada and Mexico. Analysts had projected provisions of C$1.12 billion, according to LSEG data.

BMO CEO Darryl White expressed confidence in the bank's ability to navigate the evolving financial landscape, stating, “We are well positioned to compete and grow in this dynamic operating environment.”

BMO, which had previously projected its credit issues would normalize in 2025, recorded provisions for credit losses of C$1.01 billion—lower than analysts' expectations of C$1.14 billion.