Key Takeaways:
Royal Bank of Canada reported fiscal second-quarter adjusted earnings of CAD 5.6 billion, or CAD 3.90 per share, beating the consensus estimate of CAD 3.77 by 3.45%.
"The quarter represented RBC's second highest quarterly performance on record," President and Chief Executive Officer Dave McKay said. Pre-provision, pre-tax earnings rose 15% from a year earlier, supported by 11% revenue growth and all-bank operating leverage of more than 3%, he said.
Revenue of CAD 17.45 billion topped the CAD 17.15 billion consensus and climbed 11% from a year earlier. The bank posted a return on equity of 17.2% and a Common Equity Tier 1 ratio of 13.5%. Net income of CAD 5.5 billion compared with CAD 4.4 billion in the year-ago period.
Capital Markets posted record net income of CAD 1.5 billion, up 23% from a year earlier, as global markets revenue rose 16% and investment banking revenue increased 27%. Wealth Management net income climbed 28% to CAD 1.2 billion, with assets under management surpassing CAD 800 billion and Canadian wealth assets under administration exceeding CAD 1 trillion. Canadian Personal Banking net income rose 18% to CAD 1.9 billion, while Commercial Banking net income jumped 43% to CAD 854 million.
The bank took CAD 18 million in provisions on performing loans and CAD 899 million in provisions for credit losses on impaired loans, or 34 basis points. Gross impaired loans rose CAD 623 million from the prior quarter to CAD 9.8 billion, driven by Capital Markets and Wealth Management. Chief Risk Officer Graeme Hepworth said the bank added modest severity to its downside macroeconomic scenarios and retained elevated weightings to those scenarios, citing geopolitical risks and trade uncertainty.
RBC increased its quarterly dividend by CAD 0.12 per share, a 14% year-over-year increase, and repurchased 7.4 million shares for approximately CAD 1.7 billion during the quarter. The bank also announced its intention to begin a normal course issuer bid to repurchase up to 45 million common shares. McKay said buybacks remain an important method of returning capital, adding that RBC believes its intrinsic value remains above current valuations.
The bank maintained its 2026 guidance for mid-single-digit net interest income growth and mid-single-digit expense growth. McKay said the Canadian economy remains resilient, with annualized GDP growth tracking at 1.7% in the first quarter, though uncertainty tied to CUSMA negotiations and the Middle East conflict persists.
Shares fell 1.6% in pre-market trading to CAD 186.10, paring a 12-month gain of about 51%. The guidance hold signals management expects the bank's diversified model to sustain earnings momentum despite macro headwinds. Investors will watch the next quarterly results for updates on credit trends and the pace of share buybacks.
This article is for informational purposes only and does not constitute investment advice.
