Canadian Bank Earnings Season: BMO and BNS Deliver Record Q3 Results With EPS and ROE Beats

The Quick Take

• Bank of Montreal (TSX: BMO) posted record Q3 EPS and highlighted strategic progress in its US commercial banking operations, confirming that the Bank of the West integration is contributing to earnings growth
• Bank of Nova Scotia (TSX: BNS) reported record EPS alongside a surge in return on equity past its target threshold, reflecting improved credit quality and operating leverage in its international banking segment
• Both results signal that Canadian banks have successfully navigated the higher interest rate environment, with net interest margins and loan growth both contributing to earnings expansion above consensus

Bank of Montreal and Bank of Nova Scotia both reported record Q3 2026 earnings that beat analyst consensus, marking a strong start to the Canadian bank reporting season and reinforcing investor confidence that the major Canadian banks have successfully managed through the rising rate and credit cycle challenges of the past two years. BMO posted record EPS for the quarter with management highlighting strategic progress on the integration of Bank of the West, the US retail and commercial banking operation acquired from BNP Paribas in 2023. The US business has moved from an integration drag to an earnings contributor, adding geographic diversification to BMO's traditionally Canada-heavy revenue mix.

Bank of Nova Scotia reported record EPS alongside a notable improvement in return on equity, which surpassed the bank's medium-term ROE target for the quarter. Scotiabank has been undertaking a strategic pivot under CEO Scott Thomson, shifting focus away from its expansive Latin American and Caribbean franchise towards higher-return North American banking businesses, including a deepened partnership with KeyCorp in the United States. The improved Q3 ROE metrics suggest the repositioning strategy is generating financial results ahead of the market's original expectations, which had modelled a longer transition period before profitability improvement would be visible in reported results.

The strong results from BMO and BNS set a positive tone for the remainder of the Canadian bank reporting season, with Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce yet to report. For investors in Canadian bank stocks, the key forward variables are the trajectory of Canadian consumer and commercial credit quality as higher-for-longer interest rates continue to pressure mortgage renewals and business borrowing costs, and the sustainability of net interest margins if the Bank of Canada continues its rate normalisation cycle. Dividend growth and share buyback capacity, which both BMO and BNS have maintained through the cycle, will also be closely watched.

Synthesized from 2 sources.