Raymond James' recent review of trading income across Canada’s largest banks highlights material variation in how much trading contributes to overall revenue and how volatile those trading streams have been. The investment bank quantified trading revenue as a share of total revenue and measured variability using the coefficient of variation - calculated as standard deviation divided by the mean - across the past 12 years.
The report finds that, on a last twelve months basis, trading revenue averaged 9.3% of total revenue across the Big 6 Canadian banks. Within that group, Raymond James splits trading into three buckets: Equities; Commodities, Foreign Exchange and Other; and Interest Rate & Credit.
National Bank of Canada recorded the largest relative reliance on trading activity, with trading revenue representing 14.9% of the bank's total revenue. Raymond James also notes National Bank displayed the greatest variability in those trading receipts, posting the highest coefficient of variation at 40%. The firm further highlights that National Bank's trading results are especially sensitive to movements in equity markets.
Canadian Imperial Bank of Commerce was categorized as high beta in the study. Raymond James reports that roughly 80% of CIBC's trading revenue derives from more variable streams - notably Equities and Commodities, plus Foreign Exchange and Other - which increases its exposure to market-driven swings.
Bank of Montreal and Bank of Nova Scotia were described as having average exposure and variability, with both institutions showing a more diversified segment mix across the trading categories. Toronto-Dominion Bank exhibited the smallest trading share at 5.9% of total revenue and displayed only moderate variability in those trading receipts.
Royal Bank of Canada emerged as the most defensive among the six, posting the lowest coefficient of variation at 25%. Raymond James attributes that lower volatility in part to the relative stability of the bank's Interest Rate & Credit trading revenue.
The analysts emphasize that trading revenue is predominantly determined by client supply and demand dynamics and that much of the activity is agency-based rather than facilitation. That characterization underpins the report's focus on how market-driven flows and segment mix translate into revenue sensitivity for each bank.
Implications - The analysis underscores divergent business mixes across Canada’s major banks and quantifies which franchises carry greater trading income volatility versus those supported by steadier rate and credit flows.