As economy sputters, capital markets thrive

With the underlying economy struggling, the Big Six banks are benefiting from their robust capital markets businesses, which produced record revenues in the first half, Morningstar DBRS says in a new report.

Through the first six months of the year, aggregate revenues from the big banks’ capital markets units were up 14% on a year-over-year basis, as trading, underwriting and advisory revenues all hit 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 report said. 

Within the capital markets segment, total trading revenues for the Big Six were up 8% in the first half, driven by heightened market volatility.

“Equity and derivative trading volumes were higher on the back of Middle East conflict-driven market volatility, while North American stock indexes remained near record highs, further driving equity trading and issuance volumes,” DBRS said. 

At the same time, the value of domestic bond trading was up 11% in the first half. 

“We expect trading momentum to continue into the second half of 2026 as elevated volatility persists,” DBRS noted.

Alongside the strength in trading, revenues from underwriting and advisory services also hit record levels — rising 28% in the first half compared with the first half of 2025, although revenues were only up 2% from the second half of 2025. 

Looking ahead, the prospects for investment banking are less certain, the report suggested.

“Although investment banking revenue has been robust, we note that it can be highly unpredictable and lumpy, particularly as the average merger and acquisition (M&A) transaction deal size grows larger,” it said. “Meanwhile, smaller mid-market deals also face continued headwinds from continued tariff-related uncertainty.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.