Royal Bank Notches Record Earnings as Quarterly Results From Canada's Biggest Banks Beat Expectations -- Update

By Robb M. Stewart

Royal Bank of Canada's record earnings in the latest quarter capped a strong period for the country's big lenders, as growth in markets-exposed operations and resilient customers helped drive stronger-than-expected results despite the uncertain backdrop for global trade.

Canada's six largest banks are looking to maintain the momentum through the remainder of the year, backed by loan-loss provisioning they say captures heightened risk and capital reserves that sit well above the minimum required by the industry regulator. The latest tariffs being imposed by the U.S. aren't expected to derail growth or the recovery expected for Canada's economy, bank executives say.

Royal Bank, Canada's biggest bank by market value and one of the largest in North America by assets, reported record net income of 6.02 billion Canadian dollars (US$4.34 billion), or C$4.23 a share, in the fiscal third quarter against C$5.41 billion, or C$3.75 a share, a year earlier.

Adjusted per-share earnings, a stripped down measure tracked by analysts, came in at C$4.28 for the three months to July 31, beating the C$4.07 expected by analysts polled by FactSet. Total revenue increased 9.1% to C$18.54 billion, where analysts were expecting C$18.2 billion.

Royal Bank, like its peers in the country, said growth was seen broadly across business segments. The bank's buoyed by higher fee-based revenue, reflecting strength in financial markets during the period, while revenue in its capital markets segment was driven by a rise in corporate and investment banking and global markets activity. Net interest income was lifted by average volume growth in personal banking, commercial banking and wealth management, it said.

"The Canadian economy and labor market have performed well, having already absorbed multiple shocks over the past 18 months. Our clients have also continued to spend and delinquencies remain well-controlled," Chief Executive Dave McKay told investors.

The big banks remain wary of headwinds from U.S. trade policy and higher crude oil prices with the conflict in the Middle East, but forecast official data due out Friday to show Canada's economy rebounded solidly in the second quarter after back-to-back quarterly contractions. Growth for the full year is expected to be weak after the rough start to 2026 but pick up next year, with fresh U.S. tariffs on a range of goods imported from Canada expected to knock half a percentage point or less off gross domestic product.

Toronto-Dominion Bank, Canada's second-largest bank, recorded third-quarter net income of C$4.62 billion, or C$2.74 a share, against C$3.34 billion, or C$1.89 a share, last year thanks to markets-facing businesses and record earnings in the bank's Canadian operations with loan growt in personal and commercial banking. The lender also said it has seen momentum in the U.S., and it has plans to add 100 branches in the country by the end of 2028 as it rebuilds following failings in its anti-money laundering program that led it to accept limits on its growth in the U.S.

On an adjusted basis, TD's per-share earnings came in at C$2.77, beating the C$2.47 mean estimate of analysts. Revenue was 10% higher at C$16.89 billion, ahead of the roughly C$15 billion expected.

Canadian Imperial Bank of Commerce released results the same day, with quarterly net income rising to C$2.41 billion, or C$2.47 a share, from C$2.1 billion, or C$2.15 a share, a year earlier.

CIBC's adjusted earnings jumped 26% to C$2.73 a share, a ninth consecutive quarter of double-digit growth and ahead of the C$2.53 mean estimate. Revenue for the three months increased 15% to C$8.37 billion, above the C$8.06 billion analysts anticipated.

"We approach the balance of fiscal 2026 with measured confidence. The trade environment will continue to evolve and we aren't going to speculate on where it lands. What we can control is how we show up for our clients and how we run our bank," said CIBC CEO Harry Culham, pointing to an unchanged playbook of remaining close to clients, maintaining credit discipline and investing strategically in the bank's platform.

Royal Bank's return on equity, a closely watched measure of profitability and efficiency, continued to lead its peers and expanded to an adjusted 18.1% in the recent quarter from 17.7% the year before. TD's return on equity advanced to 15.8% from 11.3% a year earlier, and CIBC's improved to 16.8% from 16.4%.

Like the other big banks in Canada, each of the lenders continued to maintain a common equity Tier 1 capital ratio well above minimum required and even as they continue to buy back shares.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 27, 2026 12:23 ET (16:23 GMT)