Key Takeaways
- The Big Six Canadian banks reported continued strength in their capital markets businesses in the first half of 2026, with revenue up 14% year over year.
- Trading, underwriting, and advisory revenue reached record levels in the first half.
- Trading momentum is expected to continue into the second half as elevated volatility persists.
Strength in the Big Six Canadian banks’ capital markets businesses continued in the first half of 2026, with aggregate revenue up 14% year over year, as both trading revenue and underwriting and advisory revenue again reached record levels. These business lines continue to bolster bank earnings in an otherwise-challenging operating environment, forming at least 20% of total revenue in the past two quarters.
The Big Six are Royal Bank of Canada RBC, TD Bank TD, Bank of Nova Scotia BNS, Bank of Montreal BMO, Canadian Imperial Bank of Commerce CIBC, and National Bank of Canada NA.
Equity and derivative trading volumes were higher on the back of volatility driven by the Middle East conflict. Meanwhile, North American stock indexes remained near record highs, further driving equity trading and issuance volumes. We expect trading momentum to continue into the second half of 2026 as elevated volatility persists.
Although investment banking revenue has been robust, we note that it can be highly unpredictable and lumpy, particularly as the size of the average merger and acquisition grows. Meanwhile, smaller midmarket deals face continued headwinds from tariff-related uncertainty.
Market Volatility Drove Strong Trading Revenue Growth in the First Half of 2026
Total trading-related revenue for the Big Six reached record levels in the first half of 2026, up 8% from the previous high set in the first half of 2025 and up 26% from the second half of 2025. Trading revenue was strong in both the first and second quarters of 2026 compared with historical levels, driven by market volatility. That said, revenue softened somewhat in the second quarter, declining 16% from the first.
In Canada, equity trading volumes remained elevated following significant growth in the fourth quarter of 2025, with first-half 2026 volumes up 35% year over year. Equity trading volumes were particularly strong in January and March, the former likely driven by ongoing market optimism as the Toronto Stock Exchange continued to climb to record highs, while the latter was driven by the Middle East conflict, which began on the last day of February.
Derivative trading volumes increased 9% year over year in the first half of 2026, again driven by notably higher March trading. On the fixed income side, total Canadian domestic bond trading reached a new high in the second quarter of 2026, with traded value up 11% year over year. In the United States, equity average daily trading volume rose 17%, while fixed income average daily trading volume rose 11% in the first half.
Investment Banking Revenue Reaches New Heights
Underwriting and advisory revenues for the Big Six also reached record levels in the first half of 2026, up 2% from the previous high set in the second half of 2025 and up 28% year over year. The Big Six noted in public remarks that market conditions remain constructive for corporate activity, driving strong advisory and equity underwriting fees.
Global volumes (on a dollar basis) across M&A and equity capital markets remained robust for the year as of June 9, up 35% and 60% year over year, respectively, while debt capital markets were up a solid 10%. In Canada, dollar volumes were up a more modest 13% year over year in M&A, while ECM volume increased a sizable 74% and DCM volume was up 28%.
Canadian M&A activity moderated in the first quarter of 2026 from a strong 2025, with Bennett Jones reporting USD 62 billion in deal value, compared with USD 87 billion in the fourth quarter of 2025. Canada’s M&A market continues to be defined by the concentration of value in larger transactions, as the top 10 deals in the first quarter of 2026 accounted for nearly 70% of total deal value. As we have noted previously, this is likely driven by larger, financially stronger companies completing deals as they remain confident in their ability to weather the current environment. Meanwhile, smaller midmarket companies wait for more certainty in US trade policy, such as a resolution of Canada-United States-Mexico Agreement negotiations. Canadian deals have also been concentrated in the mining and energy sectors, which have benefited from strong commodity prices and increasingly supportive federal government policy.
In ECM, Canadian activity has rebounded from historical lows, with full-year 2025 equity financings on the TSX and TSXV up 60% year over year, largely driven by supplemental financings. This growth has continued into 2026, with equity financings doubling year over year as of April 30. On an annualized basis, 2026 is on track to be up 10% from 2025 (note that 2025 volume was heavily weighted toward the second half of the year).
Although initial public offerings remain a small portion of total financings, corporate (i.e., non-exchange traded fund) IPOs are starting to return to the market, and TMX Group has noted there is a deep pipeline of potential deals. Elevated equity prices will likely continue to drive equity financing activity, but any significant stock market correction or sustained market volatility could cause a pullback in deals.
In DCM, foreign corporations issuing Canadian dollar-denominated bonds, or maple bonds, have partially driven growth in Canada. Strong maple bond issuance has been supported by favorable currency exchange rates, relatively lower interest rates, and a 2025 change allowing maple bonds to be included in the FTSE Canada Universe Bond Index. Positively, two notable deals, both of which occurred after the Big Six’s second quarter of 2026 ended, include record-breaking maple bond issuances of C$8.5 billion and C$14 billion from Alphabet and Amazon.com, respectively.
Positive Capital Markets Momentum
A direct comparison between the Big Six and its US capital markets peer group is difficult, given the significantly larger scale of the US banks’ capital markets franchises, as well as their different fiscal quarters. Overall, both Canadian and US banks have seen positive momentum in their capital markets businesses, with largely comparable growth in IB and trading in recent quarters. The exception is the Big Six’s trading growth in the second quarter of 2026, which is compared with a strong second quarter of 2025, as noted above.
