Created Sep 22, 2026 · Latest reported quarter, ended Jul 31, 2026 (fiscal Q3): RY, TD, BMO, BNS, CM, NA
RY TD BMO BNS CM NA — together roughly 30% of the S&P/TSX 60's weight on their own. If you can compare these six fluently, you've covered the single largest block of Canadian equity market cap a client will ever ask you about.
| Bank | Distinguishing characteristic |
|---|---|
| RY Royal Bank | Canada's largest bank by market cap and assets. Broadest domestic franchise, plus a growing US/international wealth and capital-markets presence — recently reinforced by the HSBC Canada acquisition (still generating purchase-price-accounting noise in reported NII this quarter). |
| TD TD Bank Group | Historically ran the largest US retail banking footprint of the six, but is currently working through balance-sheet growth caps tied to a US anti-money-laundering remediation settlement — constraining US growth while it targets 13% CET1 by 2H FY2027. |
| BMO Bank of Montreal | Significantly expanded US retail scale via the 2023 Bank of the West acquisition, giving it one of the larger US regional-bank footprints among Canadian peers. Also carries a sizeable capital-markets/trading business. |
| BNS Scotiabank | Historically the most internationally diversified via its "International Banking" segment — Mexico, Peru, Chile, Colombia — though it has been rebalancing back toward North America (Canada/US/Mexico) in recent years. |
| CM CIBC | More domestically concentrated than peers — Canadian personal/business banking is the largest single earnings driver — with a smaller but growing US commercial/private-banking arm and capital markets business. |
| NA National Bank | Smallest of the Big Six by assets and market cap. Earnings concentrated in Quebec retail/commercial banking, with a disproportionately large and profitable capital-markets segment relative to its size, recently expanded via the Canadian Western Bank acquisition. |
Definitions for every metric below live in the Sector KPI Glossary — Banking. Read that first if any term feels rusty; it won't be re-explained here.
| Metric (fiscal Q3 2026) | RY | TD | BMO | BNS | CM | NA |
|---|---|---|---|---|---|---|
| ROE (adj.) | 17.9%† | 16.0% | 14.0% (ROTCE 18%) | 14.2% | 16.8% | 16.8% |
| Efficiency ratio | 52.0% | 55.2%‡ | 54.9% | 52.5% | 52.7% | 49.8% |
| CET1 ratio | 13.5% | 14.3% | 13.0% | 13.1% | 13.4% | 13.5% |
| Market cap (CAD, approx.) (~Sep 2026) | ~$400B | ~$300B | ~$170B | ~$150B | ~$145B | ~$89B |
| P/E (TTM, approx.) (~Sep 2026) | ~17.5–18.1x | ~18x | ~17.1x | ~17.1x | ~15.8x | ~17–18.5x |
† RY figure is reported (not adjusted) ROE. ‡ TD's efficiency ratio nets out insurance service expenses; reported basis is ~50.2%. Definitional differences like this mean a 2–3 point cross-bank gap may not reflect a real efficiency gap — see the caveat below.
The target payout ratio is durable, disclosed policy. Yield, price, and the current (actual) payout ratio are point-in-time — flagged below.
| Metric | RY | TD | BMO | BNS | CM | NA |
|---|---|---|---|---|---|---|
| Target payout ratio (policy) | 40–50% | 40–50% | 40–50% | 40–50% | 40–50% | 40–50% |
| Current payout ratio (~Sep 2026) | ~41–46% | ~45–48% | ~56% (above target) | ~60–74% (above target) | ~42.6% | ~43% |
| Dividend yield (~Sep 2026) | 2.45% | 2.59% | 2.79% | 3.45% | 2.65% | 2.46% |
| Most recent increase | +7% (May 2026) | +3.7% (May 2026) | +5% YoY (May 2026) | +3.6% (May 2026) | +10.3% (Dec 2025) | +6.5% (May 2026) |
Total return (price + dividends reinvested), TSX-listed, CAD, five-year window ending ~Sep 22, 2026. Source: stockanalysis.com total-return series. USD/ADR-based trackers will show different numbers for the same banks — they embed CAD/USD movement, so don't mix the two when comparing.
| Rank | Bank | 5-Yr Total Return |
|---|---|---|
| 1 | CM CIBC | +187% |
| 2 | RY Royal Bank | +174% |
| 3 | NA National Bank | +171% |
| 4 | TD TD Bank | +161% |
| 5 | BMO Bank of Montreal | +142% |
| 6 | BNS Scotiabank | +127% |
All six posted triple-digit five-year returns — the whole group re-rated hard (the Big Six were up roughly 53% in the trailing twelve months alone as of August 2026). The 60-point spread between best and worst is driven by idiosyncratic stories, not a shared macro factor:
This is the single largest idiosyncratic event in the group over the period, and the clearest example of "idiosyncratic overlay on top of a cyclical story" flagged earlier — worth understanding in enough detail to explain to a client, not just gesture at.
On October 10, 2024, TD Bank N.A. and its parent pleaded guilty to conspiracy to violate the Bank Secrecy Act and to commit money laundering — the first bank in US history to plead guilty to a money-laundering conspiracy charge — in a coordinated resolution with the DOJ, Federal Reserve, OCC and FinCEN. From January 2014 to October 2023, TD failed to maintain a BSA/AML program adequate to detect money laundering, including hundreds of millions of dollars moved through TD accounts by drug traffickers.
Total penalties: ~US$3.09 billion, split across four regulators (figures overlap partially rather than simply summing, since the DOJ forfeiture satisfies part of the FinCEN penalty concurrently):
| Regulator | Penalty |
|---|---|
| DOJ | $452.4M forfeiture + $1.43B criminal fine |
| FinCEN | $1.3B civil penalty (largest in FinCEN history) |
| OCC | $450M civil penalty + cease-and-desist + growth restriction |
| Federal Reserve | $123.5M |
The asset cap: the OCC order caps the combined consolidated total assets of TD Bank N.A. and TD Bank USA N.A. at approximately US$434 billion — frozen at the level reported as of September 30, 2024. Three scope details matter for reasoning about this correctly:
Path to lifting the cap: TD agreed to a three-year independent compliance monitor under the DOJ agreement and a four-year monitorship under the FinCEN consent order, plus an independent consultant assessment of its BSA/AML program and a multi-year remediation plan — including a "lookback" review of historically unreported suspicious activity that TD's own guidance expects to complete in calendar 2027.
Why the stock recovered anyway: the recovery catalyst was capital, not compliance news. TD sold its entire 10.1% Charles Schwab stake (184.7M shares) in a deal that closed February 12, 2025, generating ~C$20B in net proceeds and ~247bps of CET1 capital. TD funneled C$8B of that into a buyback and added a further US$6–7B buyback authorization for fiscal 2026. Combined with the market's realization that the cap constrains only US retail balance-sheet growth — leaving wealth, capital markets, and the Canadian bank free to grow — that capital-return story drove a reported 70%+ rally off the 2024 lows into early 2026, with TD hitting an all-time high of C$175.33 on July 15, 2026.
This part is durable, unlike a quarter's headline narrative — a bank's structural sensitivity to a given macro environment doesn't reset every quarter the way its stock price or current talking points do.
NIM typically compresses first — asset yields reprice down faster than sticky deposit costs — but loan growth, mortgage refinancing volume, and capital-markets activity (M&A, underwriting, trading) tend to pick up as rates fall, and credit stress generally eases with a lag. Banks with capital-markets segments that are large relative to their overall size (RY, BMO, NA) tend to get a disproportionate lift from the underwriting/trading pickup; more purely retail-weighted banks (CM) benefit more slowly, mainly through loan growth.
Initially margin-positive — assets reprice up faster than sticky deposits — but aggressive or sustained hikes build mortgage-renewal shock and consumer stress with a lag. This lagged effect is exactly what drove the 2023–24 market concern specifically around uninsured Canadian mortgages and HELOCs.
PCL ratios rise across the board, but unevenly. Banks with larger unsecured-consumer and card exposure, and larger US retail books (historically TD and BMO), tend to see credit costs move fastest in a US-led downturn. Banks carrying elevated uninsured-mortgage/HELOC concentration in Canadian housing (CM has historically run higher than peers here) are more exposed to a Canada-specific housing downturn in particular. Capital-markets-heavy segments don't escape recessions either — trading and underwriting revenue is cyclical too, just on a different clock: it dries up fast in a sharp risk-off shock and recovers with the eventual rebound, rather than tracking the slower consumer-credit cycle.
A weaker Canadian dollar is a translation tailwind for whichever bank has the largest foreign-currency earnings base — TD and BMO on the US side, BNS on the Latin America side — since those foreign profits translate into more CAD on the way home. A stronger CAD works against the same names.
RY generally trades as the group's "flight to quality" scale leader. CM and NA have periodically traded at a discount to the group — the question worth asking is whether that discount reflects a real, still-live structural risk (e.g. CIBC's historically elevated uninsured-mortgage concentration) or a scar from a concern that's fading, which is where a re-rating case would come from.
CM is closest to a domestic-pure-play. TD and BMO carry the most direct US-economy optionality — though TD's is currently capped by its own AML remediation situation, which is a name-specific, idiosyncratic overlay on top of the cyclical US story and worth reasoning about separately from a pure macro call. BNS is the outlier with Latin America exposure — a genuine diversifier from the other five, but one that comes with EM currency and political risk attached.
RY, BMO and NA carry capital-markets segments that are large relative to their size, adding earnings volatility (and upside) tied to trading/underwriting cycles that more retail-weighted banks (CM, BNS) don't carry to the same degree.
A bank sitting close to its regulatory CET1 minimum, or working toward a specific stated target (like TD's path to 13% by 2H FY2027), has less near-term room for buybacks or dividend growth than one with more headroom. Worth checking current CET1 against both the regulatory minimum and the bank's own stated target — not just the raw ratio in isolation — before assuming capital-return capacity. The payout ratio table above is the other half of this picture: a bank already running above its own target payout range (BMO, BNS) has less flexibility to keep growing the dividend at its recent pace than one still sitting inside target (RY, CM, NA), independent of how strong its CET1 ratio looks.
Fifteen questions covering business model, KPIs, dividends, five-year returns, TD's AML settlement, and the environment/positioning material above. No review questions yet — this is the first module. From module 0002 onward, a couple of these will resurface interleaved with new content.