Canada’s “Big Six” banks reported higher-than-expected profits in Q4 fiscal 2025. Their collective earnings totaled $16.5 billion, up 12% from Q4 fiscal 2024. The giant lenders also delivered a very strong year, notwithstanding domestic pressures and trade tensions with the U.S.
Investors looking toward 2026 could consider taking positions in two strong bank stocks before year-end. The compelling value cases are the Bank of Montreal (TSX:BMO) and the Canadian Imperial Bank of Commerce (TSX:CM). Both are best positioned for outperformance because of their robust financial performance in fiscal year 2025.
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Attractive value proposition
BMO is Canada’s oldest financial institution and the TSX’s dividend pioneer. The $128.5 billion bank began paying dividends in 1829, a track record that is only 4 years shy of 2 centuries. As of this writing, the share price is $181.30. Current investors enjoy a 35.6% year-to-date return, in addition to the 3.7% dividend.
The completed integration of the Bank of the West has improved BMO’s fundamentals and credit quality in its U.S. operations. More importantly, there’s better revenue diversification. In Q4 fiscal 2025, all of BMO’s diversified businesses reported revenue increases.
“Fiscal 2025 was a strong year for BMO, with consistent execution and growing momentum to achieve our commitments to shareholders. We enter 2026 in a position of financial strength,” said Darryl White, CEO of BMO Financial Group.
In the 12 months ending October 31, 2025, revenue and net income increased 11% and 19% year-over-year to $36.3 billion and $8.7 billion, respectively. Provision for credit losses (PCL) declined 4% to $3.6 billion compared to fiscal 2024.
The Bank of the West acquisition in 2023 led to BMO’s massive footprint expansion across the border. Its U.S. banking segment is now coast-to-coast, including the lucrative Western U.S., particularly California. BMO plans to streamline operations further to optimize the balance sheet.
Record top and bottom-line results
The record financial performance in fiscal 2025 lends confidence to invest in CIBC. Its President and CEO, Harry Culham, said, “In a dynamic operating environment, our proactive and disciplined approach to managing our business, our resilient capital position, and our deep client relationships supported robust growth while maintaining strong credit quality.”
According to Christian Exshaw, Senior Executive Vice-President and Group Head of CIBC Capital Markets, the first strategic priority is to grow the mass affluent and private wealth franchise, especially in the U.S. He notes that the U.S. business accounts for up to 35% of CIBC’s capital markets revenue.
In fiscal 2025, Canada’s fifth-largest bank saw its revenue and net earnings rise 14% and 18% year-over-year, respectively, to $29.1 billion and $8.5 billion. Both are new records for CIBC. However, management increased PCL by 44% in Q4 fiscal 2025 to $605 million versus Q4 fiscal 2024 for good measure.
Nonetheless, the Board approved a $ 0.10-per-share dividend increase in common shares for Q1 fiscal 2026. Performance-wise, CM is up nearly 45% year-to-date. At $127.84 per share, the dividend yield is 3.4%. CIBC’s dividend track record is 157 years and counting.
More upside ahead
BMO and CIBC remain skewed to the upside largely due to their post-earnings momentum and financial strength. Overall, Canada’s banking sector is well prepared to weather macro headwinds following a strong fiscal year.
