Royal Bank of Canada (RBC) exceeded analyst expectations for its second-quarter earnings on Thursday, reporting higher profits across all business segments and reducing provisions for potential loan losses. Canada's largest bank posted net income of $5.5 billion for the three months ending April 30, an increase of $1.12 billion or 25 percent compared to the same period last year. Earnings per share reached $3.85.
On an adjusted basis, which excludes one-time items, net income was $5.6 billion, up 23 percent year-over-year, with adjusted earnings per share of $3.90. This surpassed analysts' consensus estimate of approximately $3.80 per share.
Strong Performance Across Segments
RBC's personal banking segment generated net income of $1.87 billion, a 17 percent increase from last year, driven by higher net interest income. The commercial banking segment contributed $854 million, up 43 percent year-over-year. Capital markets net income rose 23 percent to $1.4 billion, while wealth management net income increased 28 percent to $1.18 billion.
Provisions for Credit Losses Decline
Total provisions for credit losses (PCLs) fell to $912 million, down from $1.09 billion in the previous quarter and $1.4 billion a year ago. The bank attributed the decline primarily to lower provisions in commercial and personal banking, noting that higher PCLs last year were due to trade disruptions and tariffs.
Dividend Increase
RBC raised its quarterly dividend by 12 cents to $1.76 per share, payable on or after August 24. CEO Dave McKay stated, "Our second-quarter earnings showcase our consistency. Looking ahead, we remain focused on building the bank of the future and evolving with the needs of those we serve."
The Big Six banks' earnings often provide insights into the Canadian economy, which has faced additional strain due to the Iran conflict driving up energy prices and increasing economic uncertainty. Analysts note that ongoing uncertainty may compel banks to maintain high provisions for bad loans, a shift from earlier expectations of improvement in the second half of 2026.
