Royal Bank of Canada Earnings Lifted by Wealth Management, Personal Banking, Markets Growth

By Robb M. Stewart

Royal Bank of Canada's earnings rose in the first quarter of its fiscal year despite an elevated credit-loss provision, as the lender notched growth in its wealth management, personal banking, and capital markets operations.

The bank--the country's biggest by market value and one of the largest in North America by assets--recorded first-quarter net income of 5.79 billion Canadian dollars (US$4.23 billion), or C$4.03 a share. That was up from C$5.13 billion, or C$3.54, a year earlier.

Excluding certain items, adjusted per-share earnings rose to C$4.08 for the three months to Jan. 31, topping the C$3.85 expected by analysts polled by FactSet.

Total revenue rose 7.3% to C$17.96 billion, where analysts were expecting C$17.5 billion.

The Toronto-based bank's provision for credit losses increased C$40 million on year to C$1.09 billion, and was C$83 million higher than a quarter earlier. The result was above the C$1.06 billion analysts were looking for the bank to set aside against the risk of loan losses. The increase on a year period was thanks mainly to higher provisions in capital markets and personal banking, which the bank said was partly offset by lower provisions in wealth management and commercial banking.

Household spending in Canada has remained relatively resilient despite an elevated unemployment rate and the hit to parts of the economy from the Trump administration's approach to trade policy and use of tariffs. Still, the housing market has softened in recent months and economists have warned of possible stresses on households as homeowners renew mortgages at higher interest rates. Business spending also has been relatively subdued, particularly in industries exposed to the shift toward protectionist trade policies by the U.S., Canada's biggest trading partner.

Royal Bank in a letter to shareholders said it expects economic growth to remain positive across most advanced economies despite heightened international trade uncertainties. Canada's economy has shown signs of improvement in recent months and the jobless rate has edged lower, and the bank forecasts modest growth in the first half of the year after what was likely a flat final quarter of 2025.

The bank, like many of its peers, projects the Bank of Canada will leave its policy interest rate steady through 2026 and it isn't anticipating tariffs imposed by the U.S. on Canadian goods to rise further, though the existing trade pact between Canada, the U.S. and Mexico is up for renegotiation this year. Currently, most Canadian exports to the U.S. are exempt from President Trump's tariffs under the trade deal.

Royal Bank's return on equity, a measure of profitability closely watched by analysts, expanded by 0.8 percentage point on last year to 17.6%.

The lender said its personal-banking businesses were buoyed by strong revenue growth and operating leverage in the quarter, with net interest income and non-interest income both rising. Loan growth in Canada averaged about 2% for the period, and Royal Bank said it had higher fee-based client assets with the rise in markets.

The bank's commercial-banking business was underpinned by volume growth and a lower credit-loss provision, while wealth-management revenue was supported by what the bank said was strong growth in fee-based client assets. Capital markets unit revenue was up about 7% on a year earlier, with higher equity trading income across most regions and a rise in fixed-income trading revenue, though corporate and investment banking revenue was flat.

Royal Bank's capital position strengthened slightly, with a common equity Tier 1 ratio of 13.7%, up 0.5 percentage point from the same quarter last year. That remains well above the at least 11.5% of risk-weighted assets that Canada's banking regulator requires from the big lenders.

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

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February 26, 2026 07:08 ET (12:08 GMT)