(Bloomberg) -- An increase in trading revenue gave Canada’s big banks a boost during a quarter largely dominated by larger loan-loss provisions and growing credit stress. 

Five of the country’s six largest lenders beat fiscal first-quarter earnings expectations this week even as they recorded higher-than-expected provisions for potentially bad loans. Bank of Montreal was the outlier, and its shares took a tumble when it reported results that missed analysts’ forecasts on Tuesday. 

“A large portion of the banks beating consensus related to the fact that they had strong capital-markets results, and this more than offset the generally higher provisions that we saw in the quarter,” John Aiken, an equity analyst with Jefferies Financial Group Inc., said in an interview, adding that the capital-markets strength was led by a “very strong rebound in trading from the fourth quarter.”

That’s not necessarily surprising, since the three months through January is often characterized by elevated activity as institutional clients rebalance their portfolios at the end of the calendar year. But Aiken said he found the strength of the surge notable this year, given that “each of the banks significantly beat our forecast.” 

“If this can be sustained in the second quarter and third quarter, the market’s going to have to reassess what their outlook is for trading capital-markets fees,” he said.

Conference calls with executives this week were dominated by talk of higher provisions for loan losses as analysts sought insight into how weakening credit conditions are affecting Canadian households, as well as the performance of the banks’ investments in the US market, particularly loans on office properties.

Read More: Rising Loan Delinquencies Hurt BMO, Scotiabank Earnings

On top of the elevated trading revenue, some banks also saw an increase in advisory work. Canadian Imperial Bank of Commerce said Thursday that it had a 45% year-over-year increase in corporate and investment banking revenue.

“A lot of that was driven by the advisory business,” Chief Financial Officer Hratch Panossian said in an interview. “We saw a few more deals than we were seeing recently. There’s a good pipeline of strategic M&A deals and there has also been some issuances starting to come in.”

While the first quarter was marked by particular strength in trading, looking forward to the rest of the year, “we feel good about growing the capital-markets business,” he said. 

Toronto-Dominion Bank, which acquired US investment bank Cowen Inc. last March, benefited from the added revenue this quarter as it bounced back from a weak fourth quarter for its capital-markets unit.

“TD Cowen was a big factor as we integrate both operations,” Chief Financial Officer Kelvin Tran said in an interview. “The environment was also quite supportive of the capital-markets businesses. We see it in equity-trading commissions. We see it in fee income as well.”

Royal Bank of Canada and National Bank of Canada, both of which reported on Wednesday, also saw a boost to results from trading revenue, contributing to earnings that topped forecasts.

Bank of Nova Scotia beat relatively low analysts’ estimates on other factors, and was rewarded with a large increase to its share price Tuesday.

Read More: Scotiabank Beats Estimates Even as Loan-Loss Provisions Rise

Aiken, the Jefferies analyst, attributed that to the long-time bias investors have against trading revenues, which are inherently volatile and therefore not as prized as a quality source of outperformance on earnings estimates. 

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