RBC tops expectations, hikes dividend after profits rise across the board

Royal Bank of Canada reported earnings on Thursday. Photo by Peter J. Thompson/National Post

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Canada’s largest bank topped analysts’ second-quarter earnings expectations on Thursday as it posted higher profits in each of its business segments and kept aside a lower amount of money to tackle potentially bad loans.

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Royal Bank of Canada’s net income for the three months ending April 30 was $5.5 billion, up $1.12 billion, or 25  per cent, from the same period last year, resulting in net earnings per share of $3.85.

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Its adjusted net income — which removes the impact of non-recurring items — was $5.6 billion, up 23 per cent year over year, resulting in adjusted earnings per share of $3.90, which topped analysts’ expectations of about $3.80 per share.

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“Our second-quarter earnings showcase our consistency,” RBC chief executive Dave McKay said in a statement. “Looking ahead, we remain focused on building the bank of the future and evolving with the needs of those we serve.”

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The Big Six banks‘ earnings tend to provide insights into the Canadian economy, which has been under further strain since the Iran conflict pushed up energy prices and added more economic uncertainty.

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Analysts say the ongoing uncertainty will compel banks to continue to keep aside a high amount of money for loans that may potentially go bad. That marks a shift from earlier forecasts, which had anticipated a gradual improvement in provisions for credit losses (PCLs) in the second half of 2026.

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RBC’s total PCLs, however, decreased to $912 million from $1.09 billion in the previous quarter and $1.4 billion a year ago.

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“Our consolidated results reflect a decrease in total PCLs of $512 million from a year ago, primarily due to lower provisions in commercial banking and personal banking,” the bank said, adding that PCLs were higher last year due to the impacts of trade disruptions, including tariffs.

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The bank’s net income was $1.87 billion in its personal banking segment, up 17 per cent from last year due to higher net interest income, while it earned $854 million through its commercial banking segment, up 43 per cent from a year ago.

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Its capital markets segment’s net income was $1.4 billion, up 23 per cent, while its wealth management business’s net income was 1.18 billion, up 28 per cent.

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The bank also increased its quarterly dividend by 12 cents to $1.76 per share, payable to shareholders on or after Aug. 24.

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