Royal Bank of Canada (RBC) posted stronger-than-expected earnings for its fiscal first quarter, driven by impressive performances in its capital markets and wealth management divisions, both benefiting from favorable market conditions.
The bank earned C$3.62 per share on an adjusted basis, surpassing the C$3.26 average analyst estimate, according to a statement released Thursday. Net income in RBC’s capital markets unit surged 24% to C$1.43 billion ($999 million) for the three months through January, exceeding the C$1.19 billion average estimate from three analysts surveyed by Bloomberg.
RBC generates more than half of its capital markets revenue in the U.S., where recent dealmaking and trading activity have been robust. Large American banks, including JPMorgan Chase & Co., Goldman Sachs Group Inc., and Bank of America Corp., also topped analysts’ estimates for their fourth-quarter results, driven by a surge in fee-based revenue.
The wealth-management unit reported a 48% increase in net income, reaching C$980 million for the fiscal first quarter, surpassing the C$919 million average estimate. The growth was attributed to “market appreciation and net sales,” according to the company’s statement.
Provisions for credit losses totaled C$1.05 billion, higher than the C$896 million analysts had forecast. Trade tensions with the U.S. have raised concerns over the economic outlook for Canada, leading to an increase in provisions as RBC adjusts to the potential risks in the credit market.
Other Canadian banks, including Bank of Nova Scotia and Bank of Montreal, also reported substantial provisions in their quarterly results. Both banks disclosed provisions exceeding C$1 billion for the quarter. National Bank, which reported its results on Wednesday, set aside C$254 million for potentially bad loans.
RBC’s strong performance also comes after it acquired HSBC Holdings Plc’s Canadian assets in March 2024. This acquisition, along with organic growth, has contributed to the bank’s stronger domestic banking results.
