Royal Bank Of Canada NYSE: RY reported record first-quarter fiscal 2026 results, driven by strong revenue across wealth management, capital markets, and Canadian banking, while management highlighted continued uncertainty tied to trade policy and pockets of elevated credit losses.
Record earnings and capital position
CEO Dave McKay said the bank delivered record reported earnings of CAD 5.8 billion and adjusted earnings of CAD 5.9 billion. Pre-provision, pre-tax (PPPT) earnings were nearly CAD 8.5 billion, up 14% year over year, supported by record revenue of nearly CAD 18 billion and 5% operating leverage. Return on equity was 17.6%, and return on assets rose to nearly 90 basis points.
RBC repurchased over 4 million shares during the quarter for approximately CAD 1 billion. CFO Katherine Gibson said the Common Equity Tier 1 (CET1) ratio increased to 13.7%, up 20 basis points from the prior quarter, reflecting strong internal capital generation of 79 basis points along with modest benefits from regulatory updates and market-driven OCI gains. Those positives were partly offset by higher dividends, higher risk-weighted assets (RWA) linked to client-driven growth, and the impact of buybacks.
On a per-share basis, RBC posted diluted EPS of $4.03 and adjusted diluted EPS of $4.08, which Gibson said was up 13% year over year.
Canadian banking: modest loan growth, strong “money-in” flows
Management described a resilient Canadian economy despite geopolitical and trade uncertainty, while noting that tariff impacts varied by sector and geography. McKay reiterated that mortgage demand remained soft in key regions due to affordability challenges, economic uncertainty, and lower immigration levels. RBC maintained its low- to mid-single-digit mortgage growth guidance for the year.
Personal Banking produced record net income of approximately CAD 2 billion. Gibson said Canadian personal banking net income rose 18% year over year, with 9% revenue growth and 9% operating leverage. Net interest income increased 10% on higher margins and volumes, and non-interest income rose 8%, helped by mutual fund revenue. Loan growth was 4%, while deposits were flat as demand deposit growth was offset by declines in term deposits amid lower interest rates.
RBC emphasized what it called the strength of its “money-in” franchise. McKay said aggregate flows into personal and savings accounts, GICs, and mutual funds increased almost 50% from the prior quarter. Gibson added the bank generated over CAD 2 billion in retail mutual fund net sales in the quarter, compared with CAD 5 billion generated in all of fiscal 2025, and said momentum is expected to continue into next quarter, including seasonal benefits during the retirement contribution period.
Commercial Banking also posted record results, with net income of CAD 863 million, up 11% year over year. Loans grew 4% year over year, with strength in healthcare and agriculture, but management cited tariff-related headwinds in certain supply-chain sectors and ongoing demand-related pressure in commercial real estate, which McKay said represents about 40% of the portfolio. Deposits rose 5% year over year in a competitive environment.
Wealth and capital markets deliver record quarters
Wealth Management generated what McKay called a “very strong” quarter, with revenue of over CAD 6 billion, PPPT of CAD 1.7 billion, and net income of CAD 1.3 billion. Gibson said segment net income increased 32% year over year, reflecting record revenue and higher fee-based assets driven by market appreciation and net new assets. RBC also cited continued advisor recruitment and client activity in U.S. Wealth Management.
McKay highlighted that assets under administration in Canadian Wealth Management rose 13% year over year and surpassed CAD 1 trillion for the first time. U.S. Wealth Management AUA increased 12% to $777 billion, and RBC Global Asset Management AUM rose 11% to $796 billion. City National’s results improved materially, with Gibson noting City National net income increased to $143 million and management saying earnings more than doubled year over year. During Q&A, McKay and Gibson characterized City National’s credit experience as strong and said the business has been delivering profitable growth and efficiencies over several quarters.
Capital Markets posted a record quarter as well, with revenue of CAD 4 billion, PPPT of CAD 1.9 billion, and net income of CAD 1.5 billion. Global Markets revenue rose 7% year over year on record equity trading and strength in repo products, partially offset by softer credit trading. Investment banking revenue was described as down 6% year over year, while lending and transaction banking revenue increased 6%. McKay said the bank continues to see a healthy M&A and origination pipeline.
Credit trends: elevated wholesale volatility, Ontario softness in retail
Chief Risk Officer Graeme Hepworth said RBC remains “cautiously optimistic” on Canada’s outlook and has maintained a prudent approach to allowances given ongoing trade uncertainty. He said RBC’s base outlook assumes current CUSMA exemptions and tariffs continue, while the bank has retained elevated weightings to downside scenarios consistent with recent quarters.
RBC recorded CAD 28 million (1 basis point) of provisions on performing loans. Total credit loss (TCL) and impaired loans were 40 basis points, up 2 basis points sequentially, with higher provisions in capital markets and personal banking partly offset by lower provisions in commercial banking. Hepworth noted capital markets impaired provisions rose CAD 130 million from the prior quarter, including a large provision tied to a borrower in the consumer discretionary sector and another related to a previously impaired borrower in financial services. He also said the bank continues to see provisions in commercial real estate consistent with headwinds.
In personal banking, provisions increased CAD 27 million, driven by higher provisions in residential mortgages and credit cards. Hepworth said impacts have been more localized in retail portfolios, with higher provisions linked to softness in Ontario and the Greater Toronto Area, including pressures from higher payments at mortgage renewal. He said RBC expects those renewal-related pressures to abate as it exits 2026, with average payment increases at renewal decreasing substantially in 2027.
Gross impaired loans totaled CAD 9.2 billion, up CAD 485 million quarter over quarter, largely driven by increases in personal banking (residential mortgages), wealth management (including commercial real estate and consumer staples), and commercial banking (including transportation and industrial products). Hepworth reiterated that full-year 2026 provisions on impaired loans are expected to remain within prior guidance.
Margin and expense commentary; outlook points for 2026
Gibson said all-bank net interest income rose 8% year over year (or 7% excluding trading revenue). All-bank net interest margin declined 7 basis points sequentially, largely due to seasonally higher financing activities in capital markets. Canadian banking NIM was flat quarter over quarter, with benefits from product mix (non-maturity deposit growth) and structural hedging offset by pricing competition and lower purchase price accounting (PPA) accretion benefits related to the HSBC Canada acquisition. Gibson said excluding the PPA accretion roll-off impact, Canadian banking NIM would have been up 2 basis points.
On expenses, adjusted non-interest expense increased 3% year over year, driven largely by higher variable compensation tied to higher revenues in wealth management and capital markets, as well as higher salary, pension, and benefits costs associated with higher headcount.
For fiscal 2026, RBC reiterated several expectations, including:
- Mid-single-digit annual all-bank net interest income growth (excluding trading).
- Non-interest income supported by robust client activity in market-related businesses, with capital markets typically seasonally stronger in the first quarter.
- All-bank expense growth in the mid-single digits, while still targeting positive operating leverage for the year, including 1% to 2% for Canadian banking.
- A remaining $80 million of PPA accretion roll-off expected largely next quarter, translating to about a 4 basis point impact to Canadian banking NIM.
- A modest 10 basis point negative CET1 impact next quarter from changes to retail capital parameters.
McKay also said RBC is continuing to invest in technology and highlighted a leadership change tied to its AI push, with Bruce Ross set to lead a newly created AI group and Naimi Kazmi moving into the Group Head, Technology and Operations role.
About Royal Bank Of Canada NYSE: RY
Royal Bank of Canada NYSE: RY is a diversified financial services company and one of Canada's largest banks. Founded in 1864 in Halifax, Nova Scotia, the firm is now headquartered in Toronto, Ontario. It provides a broad range of banking and financial services to individuals, businesses, and institutional clients through a network of branches, digital platforms and international offices.
RBC operates across several principal business segments including personal and commercial banking, wealth management, insurance, investor and treasury services, capital markets, and global asset management.
See Also
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Royal Bank Of Canada, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Royal Bank Of Canada wasn't on the list.
While Royal Bank Of Canada currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Explore Elon Musk’s boldest ventures yet—from AI and autonomy to space colonization—and find out how investors can ride the next wave of innovation.
Get This Free Report
