Strong Earnings and Revenue Growth

Banks and insurers exceeded expectations, driven by broad-based revenue gains. Wealth management, capital markets, and trading were key contributors, benefiting from market activity. RBC, BMO, and TD saw double-digit revenue growth, while Manulife and Great-West Lifeco posted record results.

Managing Economic Uncertainty

Provisions for credit losses rose as banks took a cautious stance on evolving credit conditions and U.S. trade risks. RBC, TD, and BMO each set aside over $1 billion in provisions. Regulatory compliance and restructuring were key focuses for TD and Scotiabank, which undertook major strategic shifts.

Capital Deployment and Strategic Investments

Firms made bold capital moves to strengthen balance sheets and drive growth. TD’s $13.9 billion Schwab stake sale and $8 billion buyback reinforced capital strength. BMO, RBC, and National Bank pursued geographic expansion, while Scotiabank refocused on North America, and National Bank expanded through its Canadian Western Bank acquisition.

Wealth Management and Insurance Growth

Wealth management and insurance divisions saw strong growth, fueled by market strength and increased client activity. Manulife and Sun Life posted record insurance sales and asset inflows, while CIBC and National Bank reported double-digit gains in wealth management.

Top Portfolio Holdings in the Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund

Royal Bank of Canada (RY)

1Y Total Return: 40.02%

• EPS: $3.620 reported vs Bloomberg estimate of $3.257
• Revenue: $16.739B reported vs Bloomberg estimate of $15.723B

“RBC’s first quarter exemplifies our commitment to staying ahead of our clients’ expectations in an increasingly complex world. In Q1, we delivered strong results and client-driven growth across our businesses, while prudently managing risk and making investments in technology and talent to position the bank for the future.” – Dave McKay, CEO.

RBC reported a strong first-quarter 2025 performance, with net income rising to $5.13 billion, up from $3.58 billion a year earlier, driven by broad-based business growth and the acquisition of HSBC Bank Canada. Adjusted earnings per share reached $3.62, surpassing analyst expectations of $3.26, while revenue increased 24% year-over-year to $16.74 billion.

Provisions for credit losses rose to $1.05 billion from $813 million, reflecting a more cautious approach amid evolving economic conditions. RBC’s personal and commercial banking divisions posted strong growth, with personal banking earnings climbing 24% to $1.68 billion and commercial banking rising 20% to $777 million. Wealth management profits surged 48% to $980 million, and capital markets earnings grew 24% to $1.43 billion. The bank’s insurance segment also saw gains, reporting $272 million in earnings.

Toronto-Dominion Bank/The (TD)

1Y Total Return: 6.91%

• EPS: $2.020 reported vs Bloomberg estimate of $1.949
• Revenue: $13.538B reported vs Bloomberg estimate of $13.201B

“TD started the year with strong momentum and record revenue across many of our businesses. While expenses remain somewhat elevated, we delivered solid earnings, which positions us well as we begin the new fiscal year. U.S. AML remediation remains our top priority and we continue to make consistent progress to strengthen the Bank.”- Raymond Chun, CEO.

TD Bank delivered strong Q1 results, surpassing analyst expectations with adjusted earnings of $2.02 per share, compared to the projected $1.95. Strong performances in wealth management and capital markets drove the beat, with wealth earnings reaching $680 million, well above the $578 million estimate. Like its peers, TD benefited from heightened trading activity, mirroring trends seen in major U.S. banks. Provisions for credit losses totaled $1.21 billion, slightly above forecasts, as Canadian lenders prepare for potential economic headwinds, including the uncertainty surrounding U.S. tariffs. Other major banks also set aside over $1 billion in provisions, reflecting a cautious outlook. TD is in the midst of a strategic transition following its US$3.1 billion settlement with U.S. authorities over compliance failures. The bank is restructuring its U.S. balance sheet and investing heavily in regulatory measures, incurring $927 million in related costs this quarter.

In a significant capital move, TD sold its 10.1% stake in Charles Schwab Corp., netting US$13.9 billion after taxes and fees. New CEO Raymond Chun has committed to reinvesting in the bank’s Canadian operations and capital markets franchise. TD also secured regulatory approval for an $8 billion share buyback program, reinforcing its capital strength and long-term growth strategy.

Bank of Montreal (BMO)

1Y Total Return: 19.27%

• EPS: $3.040 reported vs Bloomberg estimate of $2.418
• Revenue: $9.266B reported vs Bloomberg estimate of $8.573B

“With the strength of our deep geographic and business diversification, we are well positioned to compete and grow in this dynamic operating environment. Our balance sheet is strong, and we’re serving our clients with robust capital and liquidity and business strategies aimed at providing trusted advice – just as we have for over 200 years throughout Canada and the United States.” – Darryl White, CEO.

BMO reported strong quarterly results, with net income rising to $2.14 billion, up from $1.29 billion in the same period last year. Adjusted net income increased to $2.29 billion, while adjusted EPS reaching $3.04. Revenue growth across all operating segments drove positive operating leverage, despite higher provisions for credit losses, which increased to $1.01 billion. The bank’s return on equity improved to 10.6%. BMO maintained a solid capital position with a CET1 ratio of 13.6%. The Canadian Personal & Commercial segment saw a slight decline in earnings despite revenue growth, while U.S. P&C showed mixed results due to higher credit loss provisions. Wealth Management earnings surged 53%, supported by stronger markets and higher net sales. Capital Markets posted a 49% profit increase, driven by robust Global Markets performance. BMO declared a quarterly dividend of $1.59 per share, reflecting a 5% year-over-year increase, and repurchased 1.2 million shares.

Bank of Nova Scotia/The (BNS)

1Y Total Return: 25.71%

• EPS: $1.760 reported vs Bloomberg estimate of $1.648
• Revenue: $9.372B reported vs Bloomberg estimate of $8.866B

“Our results this quarter demonstrate the value of our diversified franchise and continued focus on deepening relationships with clients across our footprint.” – Scott Thomson, CEO.

Scotiabank surpassed analyst expectations in its fiscal first quarter, benefiting from lower funding costs driven by the Bank of Canada’s 200-basis-point rate cuts since last June. The bank reported earnings of $1.76 per share, exceeding the $1.65 estimate, with net interest income rising 8.4% year-over-year to $5.17 billion. Despite stronger earnings, the bank increased provisions for credit losses to $1.16 billion, above analyst forecasts. Net income dropped 55% to $993 million, largely due to a $1.36 billion after-tax impairment from the transfer of its Colombian, Costa Rican, and Panamanian operations to Banco Davivienda. The move aligns with Scotiabank’s strategy to refocus capital on Canada and the US, highlighted by its recent 14.9% stake acquisition in KeyCorp.

Canadian Imperial Bank of Commerce (CM)

1Y Total Return: 58.14%

• EPS: $2.200 reported vs Bloomberg estimate of $1.973
• Revenue: $7.281B reported vs Bloomberg estimate of $6.865B

“In the first quarter of 2025, we delivered another strong financial performance by continuing to execute on our client-focused strategy, which is generating consistent results for our stakeholders.” – Victor G. Dodig, CEO.

CIBC posted strong Q1 results, with net income rising 26% to $2.17 billion and adjusted earnings per share reaching $2.20, beating analyst expectations of $1.97. Revenue grew 17% year-over-year to $7.28 billion, driven by solid performances across business segments. The bank’s capital markets division reported a 19% increase in earnings to $619 million, benefiting from favourable market conditions and heightened investor activity. Provisions for credit losses stood at $573 million, reflecting stable credit quality. CIBC’s CET1 ratio improved to 13.5%, underscoring its strong capital position. The board declared a quarterly dividend of $0.97 per share. CEO Victor Dodig credited the results to the bank’s client-focused strategy and diversified business model, highlighting its ability to navigate economic uncertainty while delivering consistent growth.

Manulife Financial Corp (MFC)

1Y Total Return: 52.70%

• EPS: $1.030 reported vs Bloomberg estimate of $0.945
• Revenue: $13.031B reported

“2024 was a banner year for Manulife on many fronts and we finished the year with very strong results. We delivered record insurance new business results for the full year, including 30%+ increases year-over-year across APE sales, new business CSM and new business value.” – Roy Gori, CEO.

Manulife delivered record financial results in 2024, with core earnings of $7.2 billion, up 8% from the prior year, and fourth-quarter earnings rising 6% to $1.9 billion. Core earnings per share grew 11% to $3.87, and core return on equity remained strong at 16.4%. Asia operations led growth with over 30% increases in insurance sales and new business metrics. Global Wealth and Asset Management saw net inflows exceeding $13 billion, driving a 30% rise in core earnings. Manulife returned $7 billion to shareholders through dividends and share buybacks. Reflecting confidence in its outlook, the company raised its quarterly dividend by 10% and announced plans to repurchase up to 3% of its outstanding shares.

Sun Life Financial Inc (SLF)

1Y Total Return: 25.60%

• EPS: $1.680 reported vs Bloomberg estimate of $1.769
• Revenue: $7.672B reported

“In 2024 Sun Life achieved strong underlying net income in Asia and Canada, growing 17 percent and six percent over last year, respectively. We also experienced solid growth in Individual Protection with a 20 percent increase in sales over last year, and an 18 percent increase in new business CSM. “ – Kevin Strain, CEO.

In 2024, Sun Life reported underlying net income of $3.86 billion, a 3% increase from the previous year, with a fourth-quarter figure of $965 million, slightly down by 2% from Q4 2023. The company’s underlying return on equity was 17.2% for the year. Assets under management grew by 10%, reaching $1.54 trillion. The Wealth & Asset Management segment saw an 11% rise in underlying net income, totaling $486 million in Q4, contributing to a 6% annual increase. Individual Protection sales experienced a 20% surge over the previous year, with new business Contractual Service Margin increasing by 18%. SLC Management, Sun Life’s alternative asset management arm, reported a 33% boost in net inflows and raised $24 billion in capital throughout the year. Reflecting confidence in its financial strength, Sun Life’s Board of Directors announced a dividend increase to $0.84.

National Bank of Canada (NA)

1Y Total Return: 32.75%

• EPS: $2.930 reported vs Bloomberg estimate of $2.666
• Revenue: $3.230B reported vs Bloomberg estimate of $3.023B

“The Bank generated strong first quarter financial results, reflecting solid execution across business segments and our diversified earnings power. We were also pleased to recently complete the acquisition of Canadian Western Bank, marking a significant step forward in the acceleration of our domestic growth and toward extending the depth of our banking capabilities to the benefit of all our clients.” – Laurent Ferreira, CEO.

National Bank of Canada reported strong first-quarter results, with net income rising to $997 million, up from $922 million a year earlier, driven by solid performances in wealth management and financial markets. Adjusted EPS, excluding the impact of the Canadian Western Bank acquisition, rose to $2.93, surpassing analyst expectations of $2.67. Revenue grew 17% year-over-year to $3.23 billion. The bank’s provisions for credit losses increased to $254 million, reflecting an evolving credit cycle amid a challenging macroeconomic environment. Wealth management earnings rose 23% to $242 million, while the financial markets segment delivered a 35% increase in profit to $417 million. Conversely, personal and commercial banking earnings declined 14% to $290 million due to higher credit provisions. U.S. specialty finance and international business contributed $183 million, up from $150 million.

National Bank completed its acquisition of Canadian Western Bank on February 3, positioning it for expanded growth in Western Canada.

Great-West Lifeco Inc (GWO)

1Y Total Return: 10.14%

• EPS: $1.200 reported vs Bloomberg estimate of $1.132
• Revenue: $7.055B reported

“Great-West Lifeco delivered record results in 2024, with strong momentum across segments, positioning the Company for continued growth in 2025 and beyond. The strength of the Company’s earnings momentum and the value created for shareholders is reflected in the 10% increase in the Company’s dividend and our intention to repurchase additional common shares.” – Paul Mahon, CEO.

Great-West Lifeco delivered record fourth-quarter and full-year 2024 results, with strong momentum across all segments. Q4 base earnings rose 15% to $1.1 billion, while full-year base earnings increased 14% to $4.2 billion. Net earnings from continuing operations climbed 50% year-over-year in Q4 to $1.1 billion and 40% for the full year to $4.0 billion. The company’s base return on equity reached 17.5%, exceeding its medium-term objectives, while the LICAT ratio improved two points to 130%. Great-West Lifeco raised its quarterly dividend by 10% to $0.61 per share and announced plans to repurchase an additional $500 million in shares. Assets under administration exceeded $3.2 trillion, with robust growth across all segments. Empower, the largest contributor to U.S. earnings, posted a 30% full-year base earnings increase, fueled by strong market performance, positive net flows, and operational efficiencies.

 

*1Y Total return as at January 31, 2025. EPS and Revenue data via Bloomberg in CAD.

Source: Getty Images Credit: Pakawadee Wongjinda

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