Canadian banks had a remarkably resilient year, evidenced by their robust earnings growth in fiscal 2025. The “Big Six,” especially, once again proved they are bedrocks of stability, notwithstanding massive market headwinds. Because of their financial performance, Canada’s banking sector might attract more investors next year.
The National Bank of Canada (TSX:NA) is a top contender if you’re assessing which bank stock is the ‘best buy’ for 2026. It doesn’t have the scale and size of its larger industry peers, although in terms of share price appreciation, NA has consistently outperformed them in recent years.
Established income provider
NA is Canada’s sixth-largest bank by market capitalization. The $67.9 billion lender has rewarded investors with a nearly 35% total return as 2025 draws to a close. At $172.32 per share, the dividend yield is 2.9%. Besides the 15-year dividend growth streak, the bank stock raised its dividend twice in 2025.
Given its 13.8% Common Equity Tier 1 (CET1) ratio, NA enters 2026 in a position of strength. Furthermore, the bank has ample excess capital to continue its “hike-and-buyback” strategy. Some analysts say two dividend hikes in 2026 are possible because of a Western growth engine. NA is no longer a Quebec-centric player.
Strong financial performance
Laurent Ferreira, President and CEO of NA, said the bank met all its medium-term financial objectives in fiscal 2025. The result is strong financial performance. In Q4 and full year fiscal 2025 (12 months ending October 31, 2025), net income increased 11% and 5% to $1 billion and $4 billion, respectively.
NA also achieved positive operating leverage in fiscal 2025. Revenues rose faster than expenses in all four quarters. The provision for credit losses (PCL), however, increased 51% year over year in Q4 fiscal 2025 to $244 million.
The year’s highlight was the completed acquisition of Canadian Western Bank (CWB), NA’s largest acquisition ever. “With our strengthened national presence, diversified business mix, strong capital ratios and prudent credit profile, we are well-positioned to generate continued growth and superior returns, in what will remain a complex macro-environment,” Ferreira added.
The CWB acquisition significantly expanded NA’s presence in Western Canada and should boost its commercial lending activities. According to Ferreira, the transaction, which combines two banks with complementary footprints in personal and commercial banking, is primarily about growth.
New acquisition
On December 3, 2025, Laurentian Bank announced the sale of its retail and small- and medium-sized enterprise (SME) portfolios, including retail loans and deposits, to National Bank of Canada. Ferreira said the regional bank’s retail, SME, and syndicated loan clients will benefit from NA’s digital services and have access to an extensive branch network.
Like with the CWB transaction, NA assures successful integration of LB’s portfolio and seamless continuity and superior service throughout the transition period. Around $3.3 billion of retail banking loans and $7.6 billion of retail banking deposits from Laurentian Bank will soon migrate to NA.
“Leveraging our strong presence in Québec, this transaction aligns with our domestic growth strategy and is a natural fit,” Ferreira added.
Timely transformation
There is more to like about National Bank than its financial results, steady stock performance, and dividend consistency. The regional success story is undergoing a coast-to-coast transformation, making it the best buy for 2026.
