Canada's Scotiabank, BMO Profit on Capital Markets, Wealth Management Strength

TORONTO, Feb. 25, 2025 – Canada's Scotiabank and BMO have reported strong financial results for the first quarter of 2025, driven by robust performance in their capital markets and wealth management divisions. Both banks have benefited from a rebound in dealmaking activity, increased demand for private credit, and growth in AI and infrastructure spending.

Scotiabank's Global Wealth Management division reported adjusted earnings of $416 million, up 22% year-over-year, driven by solid revenue growth from higher mutual fund fees, brokerage revenues, and net interest income across the Canadian and International wealth businesses. Assets under management grew by 16% year-over-year to $396 billion (Scotiabank, 2025). The bank's capital markets business also contributed to its overall profitability, with adjusted earnings up 33% compared to the prior year, driven by strong performance across its capital markets business and higher underwriting and advisory fees in its corporate and investment banking business.

BMO's capital markets business reported a 45% increase in adjusted earnings to C$591 million ($414.39 million) in the first quarter of 2025, driven by a revival in dealmaking activity, which boosted fees from underwriting stock and bond sales, as well as advising on deals (BMO, 2025). The bank's wealth management division also contributed to its overall profitability, with adjusted earnings up 33% compared to the prior year, driven by strong performance across its capital markets business and higher underwriting and advisory fees in its corporate and investment banking business.



The growth in capital markets and wealth management for both banks can be attributed to several specific factors, including lower interest rates and subdued inflation, growth in M&A activity, private credit demand, AI and infrastructure spending, and pent-up investor demand. These factors have contributed to an influx of cash into all asset classes, leading to increased activity in capital markets and wealth management (Morgan Stanley, Feb 18, 2025).



Scotiabank and BMO's strategic initiatives, such as the sale of Latin American operations and the acquisition of KeyCorp, have also had an impact on their financial performance and risk profile. Scotiabank's sale of its Latin American operations in Colombia, Costa Rica, and Panama to Davivienda resulted in an impairment loss of $1.355 billion, contributing to a decrease in reported net income. However, the sale is expected to simplify the bank's international banking portfolio and generate additional profitability in its priority North American markets (Scotiabank, 2025). BMO's acquisition of KeyCorp in the United States has allowed the bank to expand its presence in the U.S. market and gain access to new revenue streams, but also exposes it to additional risks, such as integration challenges and increased competition.

In conclusion, Canada's Scotiabank and BMO have reported strong financial results for the first quarter of 2025, driven by robust performance in their capital markets and wealth management divisions. The banks have benefited from a rebound in dealmaking activity, increased demand for private credit, and growth in AI and infrastructure spending. Their strategic initiatives have also had an impact on their financial performance and risk profile, with Scotiabank's sale of Latin American operations and BMO's acquisition of KeyCorp contributing to their overall results. As the economy continues to recover and dealmaking activity increases, these divisions are expected to remain significant contributors to the banks' bottom lines.