By Ambrose O’Callaghan
Canada’s big six banks – Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal, Scotiabank, Canadian Imperial Bank of Commerce (CIBC), and National Bank of Canada – have long stood as pillars of the domestic economy. These financial behemoths are shaped by a uniquely concentrated market structure and reinforced by decades of prudent regulation.
Their oligopolistic positioning has enabled Canada’s big banks to navigate economic cycles with resilience. Indeed, the big six bank shave maintained strong balance sheets through multiple crises, including the Great Recession and the COVID-19 pandemic. Moreover, they have historically maintained dependable earnings streams with entrenched market share across lending, wealth management, and capital markets.
The durability of Canada’s big six banks has translated into enduring investment appeal. Their ability to generate substantial cash flow supports reliable dividends, while their heavily diversified business lines provide multiple layers for profit growth.
Against this backdrop, we turn our attention to the current bank earnings environment, and why timing matters in 2026. There remains an opportunity for investors looking to capitalize on the strength of Canada’s big banks, and the dynamics of today’s market conditions. The Harvest Premium Yield Canadian Bank ETF (TSX: HPYB), offers access to the underlying and an innovative and dynamic strategy to monetize market uncertainty.
Bank earnings backdrop | Why timing matters
Canada’s big six banks have enjoyed one of the most constructive earnings environments in years. All six of the big banks exceeded earnings expectations in the first quarter of 2026. Collectively, the big six banks generated approximately $19 billion in combined profit.
That is up from roughly $14 billion in the same period in 2025. Wealth management divisions stood out as key drivers for the big six, bolstering profitability. Banks also benefited from resilient capital markets and core lending operations.
*Scotiabank Q1 2025 reported figure (0.99B) includes a $1.355B one-time impairment charge. Adjusted Q1 2025 net income was ~2.36B; adjusted YoY growth ~+14%.
Source: Individual company earnings press releases for the quarter ended January 31, 2026, sourced from each bank’s investor relations website (RBC, TD, BMO, Scotiabank, CIBC, National Bank of Canada).
HPYB | Strategy architecture
The Harvest Premium Yield Canadian Bank ETF (TSX: HPYB) is the first of two Harvest ETFs that operate on a Premium Yield architecture. HPYB is the first Canadian bank ETF with covered call and put options. It is actively managed, designed to pay unitholders distributions that are paid twice, every month.
This strategy focuses on utilizing selling options to generate tax-efficient income, but also time entries and exits on the underlying stocks. Through this strategy, Harvest portfolio managers can dynamically adjust to markets. The Premium Yield suite earnings income while systematically buying and selling at predetermined price levels.
Active Equity Income Strategy
- Rally Phase: Covered Calls Active
- Sell Equities into Rally
- Correction Phase: Written Puts Active
- Buy Equities on Dip
- Back to Rally Phase
This structure helps HPYB meet its high income targets, while also moderating risk relative to traditional equity income ETFs. The Premium Yield structure, combined with a tactical approach to increasing and decreasing equity exposure, results in a carefully engineered portfolio that genuinely differentiates HPYB.
Summary
HPYB is more than a high-yield bank ETF or a pure options overlay strategy. It is a structured income vehicle designed to generate value from three sources: bank dividends, option premiums, and leverage. It is built on one of the most proven sectors in the Canadian market.
The first quarter 2026 earnings validate the underlying equities emphatically. All six big banks delivered earnings beats in Q1 2026. These profit machines continue to demonstrate capital strength. The macro environment, while uncertain at this stage, is producing the kind of elevated volatility that an active options strategy can consistently monetize.
HPYB offers a compelling case for income investors, particularly when we consider its twice-monthly distribution target. The big six banks have proven to be an attractive investment, delivering strong earnings even in a tumultuous environment. HPYB blends the quality of the underlying with an innovative options strategy that aims to generate high income, twice every month.
Disclaimer
Harvest Premium Yield Canadian Bank ETF
Commissions, management fees and expenses all may be associated with investing in HARVEST Exchange Traded Funds managed by Harvest Portfolios Group Inc. (the “Funds” or a “Fund”). Please read the relevant prospectus before investing. The Funds are not guaranteed, their values change frequently, and past performance may not be repeated. Tax investment and all other decisions should be made with guidance from a qualified professional.
Distributions are paid to you in cash unless you request, pursuant to your participation in a distribution reinvestment plan, that they be reinvested into Class A units of the Fund. If a Fund earns less than the amounts distributed, the difference is a return of capital.
The Fund is categorized as a liquid alternative ETF. This means it can use leverage and can invest more than 10% of its assets in a single issuer. The Fund employs modest leverage, which can amplify both gains and losses.
Certain statements included in this communication constitute forward-looking statements (“FLS”, including, but not limited to, those identified by the expressions “expect”, “intend”, “will” and similar expressions to the extent they relate to the Funds. The FLS are not historical facts but reflect the Harvest’s and the portfolio manager of the Funds current expectations regarding future results or events. These FLS are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although Harvest and the portfolio manager of the Funds believe that the assumptions inherent in the FLS are reasonable, FLS are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. The Funds, Harvest and the portfolio manager of the Funds undertake no obligation to update publicly or otherwise revise any FLS or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
