Bank of Montreal and Rival Lenders Lift Dividends on Back of Earnings Growth — Update

By Robb M. Stewart

OTTAWA--Canada's biggest banks are bumping up shareholder payouts after logging a jump in quarterly earnings and a drop in loan-loss provisions, despite the heightened uncertainty created by the Middle East conflict.

Bank of Montreal, Bank of Nova Scotia and National Bank of Canada kicked off earnings season for the country's largest lenders with plans to lift their dividends, supported by capital reserves that remain well above the minimum required by the industry regulator even with ongoing share buybacks.

The banks, which rank among the six biggest that together control most of Canada's banking assets, each recorded underlying earnings for the fiscal second quarter that topped analyst forecasts and improvement in return on equity, a closely watched measure of profitability.

Bank of Montreal said its dividend will rise 2.4% for the current quarter, while Scotiabank's is increasing 3.6% and smaller National Bank's by 6.5%.

The banks have modestly reined in global economic growth expectations as the Iran war has curtailed oil supplies and added fresh risk to the outlook, though each expects modest growth to continue in Canada after a contraction in the final quarter of 2025 and a healthier pace of growth in the U.S. even with fresh inflation concerns.

Canada stands to benefit from the spike in crude prices as a net oil exporter, though higher energy costs and the potential for food prices to rise due to the disruption in fertilizer shipments through the Strait of Hormuz could constrain household spending. Bank of Montreal Chief Executive Darryl White said a business-friendly government under Prime Minister Mark Carney and the prospect of increased investment in the country added to confidence in the outlook for Canada. Scotiabank Chief Scott Thomson said Canada has in the past suffered from capital leaving the country, yet there is a lot of foreign money looking to invest.

Bank of Montreal's net income climbed to 2.63 billion Canadian dollars (US$1.95 billion), or C$3.53 a share, in the three months to April 30 from C$1.96 billion, or C$2.50, a year earlier. On an adjusted basis used by the lender to reflect its underlying business performance, earnings rose to C$3.67 a share to beat the C$3.45 consensus forecast of analysts polled by FactSet.

Growth was driven by the bank's capital markets business and its operations in the U.S., where Bank of Montreal has moved to boost its return on equity. Overall revenue for the period rose 10% to C$9.57 billion, with net interest income up 3.4% and noninterest revenue 20% higher.

Bank of Montreal's overall provision for credit losses totaled C$739 million for the latest quarter. That was down from the C$746 million put aside the quarter before to cover loans than may soar and C$1.05 billion a year earlier.

White said the bank was on track to hit a target of exiting 2027 with a return on equity of 15%, after the metric expanded to 13% in the latest quarter from 9.4% the year before.

Bank of Montreal said it is increasing its dividend by C$0.04 to C$1.71 a share for the third quarter.

Scotiabank has its sights on a return on equity of 14%-plus in 2027, a target Thomson said remains reachable. The measure grew 2 percentage points on the previous quarter and 3 points on a year earlier to 13.1% in the second quarter.

Its net income for the three months increased to C$2.63 billion, or C$2 a share, from C$2.03 billion, or C$1.48, a year earlier, bolstered by its Canadian banking arm. On an adjusted basis, per-share earnings came in at C$2.02 a share against the C$1.93 mean forecast of analysts.

Overall revenue increased 8.3% to C$9.84 billion for the for the second quarter and Scotiabank's provision for credit losses totaled C$1.22 billion, compared with C$1.4 billion last year. The provision did rise C$41 million from the prior quarter and the allowance for credit losses on impaired loans was C$121 million higher at C$2.4 billion, though Chief Risk Officer Shannon McGinnis said that was due to a single customer in Brazil and not reflective of any systemic stresses.

Scotiabank said it plans to lift its quarterly dividend by C$0.04 to C$1.14 a share.

Montreal-based National Bank's second-quarter net income came in at C$1.23 billion, or C$3.06 a share, up from C$896 million, or C$2.17, a year earlier. Revenue climbed to C$3.91 billion for the period from C$3.65 billion last year, beating the C$3.81 billion expected.

National Bank's return on equity expanded to 15.9% from last year's 11.9%. And it recorded C$233 million in provisions for credit losses in the latest period, down sharply from C$545 million a year earlier and below the roughly C$260 million analysts anticipated.

It plans to increase its dividend by C$0.08 to C$1.32 a share for the new quarter.

Write to Robb M. Stewart at robb.stewart@wsj.com

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May 27, 2026 11:38 ET (15:38 GMT)