Toronto-Dominion Bank, Bank of Montreal and Canadian Imperial Bank of Commerce in Toronto's financial district. Canada’s banks have been on similar journeys as they reduce costs and adopt technology to make their operations more efficient.Carlos Osorio/Reuters
Three of Canada’s banks capped a week of first-quarter earnings marked by a string of surging profits at the six largest lenders across all their businesses even as trade uncertainty looms.
Royal Bank of Canada RY-T, Toronto-Dominion Bank TD-T and Canadian Imperial Bank of Commerce CM-T all reported earnings Thursday that beat analysts’ expectations. The lenders have largely been shrugging off concerns over geopolitical and trade tensions.
Canada’s banks have been on similar journeys, restructuring their businesses to reduce costs and making their operations more efficient through technology and artificial intelligence. While demand for mortgages as well as consumer and business loans has waned, market volatility has spurred activity in trading in capital markets and wealth management.
A breakdown of the big banks’ first-quarter earnings
Those factors converged in the first quarter, launching a strong start to the year for the sector. Even as uncertainty over tariffs and the fate of the United States-Mexico-Canada Agreement underpin concerns over loan losses, senior bankers say Canada’s attempts to bolster its economy and diversify its trade partners should provide opportunities for growth in the year ahead.
RBC chief executive officer David McKay said Ottawa’s efforts to deploy defence spending and build energy and critical minerals infrastructure will result in a “significant number of projects” getting built.
“It’s going to require significant domestic and foreign capital,” Mr. McKay said during a conference call with analysts. He added that RBC has a role in managing and directing the movement of the money being invested, in particular in global markets such as the Middle East.
“From that perspective, we see an acceleration of growth opportunities coming at us on the organic side. We’re trying to anticipate the timing on that – it’s hard to predict some of these larger projects – but we anticipate good growth coming.”
In January, Mr. McKay told The Globe and Mail that RBC is applying for banking licences to operate capital markets and wealth-management businesses in the Middle East.
RBC CEO Dave McKay in Calgary in October, 2025.Jeff McIntosh/The Canadian Press
During fourth-quarter earnings in December, RBC raised its target on return on equity (ROE) – a metric that measures profitability – to 17 per cent or more after surpassing the 16-per-cent goal the bank set at its investor day in March. In the quarter, the bank posted an adjusted ROE of 17.8 per cent.
TD and CIBC have also set goals to improve their profitability. In the quarter, TD posted 14.2-per-cent ROE, up from 12.8 per cent in the previous quarter and higher than the bank’s target of 13 per cent in 2026.
CIBC booked a boost in profitability at 17.4 per cent, up from 15 per cent in the previous quarter. In December, CIBC set a target of 15-per-cent ROE for this year.
CIBC chief financial officer Robert Sedran said the bank has been improving its ROE over time, and that while 17 per cent or more has not necessarily become the new target, the bank expects to continue improving its profitability.
“We have a strong result in capital markets and strong results in all our business units this quarter, so that very strong start to the year pushed the ROE higher,” Mr. Sedran said in an interview.
“We’ve got the right technology, we’ve made the right investments, and we have the right people to continue to execute and control what we can control to move that ROE higher over time.”
RBC, TD and CIBC are the final lenders of the six biggest banks to report earnings for the fiscal first quarter. Earlier in the week, National Bank of Canada, Bank of Montreal and Bank of Nova Scotia also reported higher profit that beat analysts’ estimates.
BMO and National Bank say they expect trade uncertainty to weigh on economy
RBC’s profit climbed 13 per cent to $5.8-billion, or 4.03 a share, in the three months that ended Jan. 31, driven by higher earnings in personal banking and wealth management. Adjusted to exclude certain items, the bank said it earned $4.08 a share, beating the $3.84 a share analysts expected, according to S&P Capital IQ.
Profit at CIBC surged 43 per cent to $3.1-billion, or $3.21 a share, bolstered by personal and business banking, as well as capital markets. The bank said it earned $2.76 on an adjusted basis, exceeding analysts’ estimates of $2.40 a share.
TD’s profit jumped 45 per cent to $4.04-billion, or $2.34 a share, as earnings in capital markets soared on higher trading revenue and advisory fees. Adjusted to exclude certain items, including restructuring charges, the bank said it earned $2.44 a share, topping the $2.26 a share analysts expected.
As TD cuts costs to address remediation efforts tied to its past anti-money-laundering failings, the bank took a final restructuring charge of $200-million pretax in the quarter. In the fourth quarter of last year, it said it expected to book a final $125-million charge in the first quarter of 2026.
The cuts include winding down certain businesses and reducing its real estate footprint. In December, the bank said the restructuring would also include a 3-per-cent work-force reduction – an increase from the 2-per-cent cut it previously announced in May.
“We continue to look at different ways of driving productivity, and we found more opportunities to optimize,” TD chief financial officer Kelvin Tran said in an interview. “That’s across the board; there’s no specific area.”