COMP NEWS – Canada’s six biggest banks are united in boosting employer bonuses across the board, even as profits receded for half of them.

Half of Canada’s six biggest banks reported higher profits for their 2023 fiscal year and half saw profits sink, but year-end bonus payments were consistent: They were boosted across the board.

While the increase in performance-based compensation varied widely from as low as 0.2 per cent at National Bank of Canada to a whopping 23 per cent at Toronto-Dominion Ban, all six institutions collectively set aside $21.2-billion for bonus pay in the fiscal year ended Oct. 31. That total represents a 9-per-cent increase from 2022.

Last year, the country’s largest lenders raised bonuses by a narrow 1.9 per cent amid a tight labour market that sparked competition for talent. Compensation experts had been expecting draconian cuts to Bay Street bonuses this year amid weak deal-making activity and plans for widespread job cuts of between 2 per cent and 5 per cent of each bank’s global work force.

Despite the dramatic increase the banks delivered instead, many bankers are still likely to receive smaller payouts.

“Depending on what room you sit in and at what bank, your bonus conversation is likely to be very different this year,” Travis O’Rourke, president of recruitment agency Hays Canada, said in an interview. “M&A activity has been very slow. IPOs have been very slow, so it is likely that bonuses will be low if you’re in one of those sections. Your A players are still your A players, but those who are on a list somewhere as maybe more expendable, they are the ones who are feeling the brunt of this. C players know they are C players.”

The boom in bonuses stems from several factors such as foreign exchange rates and recent acquisitions.

The boom in bonuses is coming from several factors, including the bank’s larger employee base, its acquisition of New York-based investment bank Cowen Inc. and impact from foreign exchange owing to a stronger U.S. dollar, TD chief financial officer Kelvin Tran said in an interview. Incentive pay was partly offset by lower financial performance, he added.

“We are delivering compensation that is market competitive and performance-based, and also with practices in place to promote fair and consistent outcomes and alignment between executives and our employees,” Mr. Tran said.

Bank of Montreal set aside $3.6-billion in performance-based pay, a 12-per-cent increase year-over-year as the lender brought on bankers from its takeover of California-based Bank of the West. This year’s boom in bonuses compared with a 1-per-cent drop in 2022. The bank’s profits edge higher by 5 per cent to $1.7-billion as a boost in revenue in corporate and investment banking offset a drop in underwriting and advisory activity

Canadian Imperial Bank of Commerce increased its bonuses by 2.2 per cent to $2.5-billion, a drop from last year’s 5.6-per-cent increase. Capital market net income edged higher by 4 per cent to $2-billion.

National Bank of Canada raised bonuses by the slimmest margin, increasing variable compensation by 0.2 per cent to $1.3-billion. Last year, the lender increased bonuses by 5 per cent.

To read more about the bonuses Canadian banks are giving out, click here.

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