Canada's largest bank beats analyst forecasts in Q2 2026, raises dividend, and signals confidence in its lending portfolio
Royal Bank of Canada reported an increase in second-quarter profit on Thursday, as lower provisions for credit losses and broad-based revenue growth pushed earnings well past analyst expectations. The result will offer mortgage professionals a measure of reassurance about the health of Canada's largest lender.
Net income for the three months ended April 30 reached $5.5 billion, up from $4.4 billion in the same quarter a year ago, translating to $3.85 per diluted share.
On an adjusted basis, the bank earned $3.90 per share, clearing the analyst consensus estimate of $3.78 per share.
"Our second-quarter earnings showcase our consistency in delivering premium profitability and long-term shareholder value, underpinned by solid growth across our diversified businesses and balance sheet strength," RBC chief executive Dave McKay said in a statement.
Read more: TD posts record Q2 Canadian banking profit on higher interest income
Credit quality improves as provisions fall
Total provisions for credit losses came in at $912 million. That's a decline of $512 million, or 36%, from a year ago, which is driven primarily by lower provisions in commercial banking and personal banking. The provision on loans ratio fell 23 basis points to 35 bps.
That improvement stands in sharp contrast to the same period in 2025, when RBC set aside $1.4 billion in reserves ahead of a potential economic downturn tied to trade uncertainty.
Personal banking net income rose 17% year over year to $1.9 billion, while commercial banking climbed 43% to $854 million.
Wealth management posted $1.2 billion, up 28%, while capital markets earned $1.5 billion, a 23% gain.
Read more: National Bank releases second-quarter results amid Big Six reporting week
Dividend raised and buyback announced
RBC declared a quarterly dividend of $1.76 per share, an increase of $0.12, and said it intends to seek approval to repurchase up to 45 million common shares, roughly 3% of shares outstanding as of May 15, 2026.
Adjusted return on equity came in at 17.4%, up from 14.7% a year earlier.
The results arrive at a nuanced moment for Canada's housing market. RBC's own research has pointed to cautious optimism for the second half of 2026, with improving rate conditions and a gradual return of first-time buyers noted as key drivers.
Earlier analysis from RBC Economics forecast annualised Q1 2026 GDP growth of 1.7%, with Bank of Canada rate cuts over the past 18 months continuing to ease pressure on household balance sheets.
For brokers navigating client conversations around lender stability and credit availability, RBC's Q2 results point firmly toward a bank operating with confidence, not caution.
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