(updates on performance across business units from paragraph 10)
Royal Bank of Canada (RY.TO, RY) reported Thursday second-quarter earnings that exceeded expectations, reflecting higher results in Wealth Management, Personal Banking, Commercial Banking, Capital Markets and Insurance, partially offset by lower results in Corporate Support, while it lifted its dividend and announced plays to repurchase common shares.
For Q2, RBC reported adjusted net income $5.6 billion, up 23% year-on-year. Its adjusted diluted earnings per share surged 25% to $3.90. The consensus FactSet forecast was for $3.80.
The bank posted reported net income of $5.5 billion, up 25% on an annual basis, for the quarter ended April 30. Diluted EPS was $3.85, up 27% over the same period.
Revenue rose to $17,453 million from $15,672 million a year earlier, beating FactSet analysts' estimate of $17,315.5 million.
The bank said its capital position remains "robust", with a CET1 ratio of 13.5%, supporting solid volume growth and $4.0 billion of capital returned to our shareholders, including $1.7 billion of share buybacks and $2.3 billion of common share dividends.
It reported total PCL of $912 million decreased $512 million or 36% from a year ago, primarily due to lower provisions in Commercial Banking and Personal Banking. The PCL on loans ratio of 35 bps decreased 23 bps. The PCL on impaired loans ratio of 34 bps decreased 1 bp.
Return on equity, a measure of profitability and efficiency, widened to 17.2% from 14.2% in the same period last year.
Its board of directors also declared a quarterly common share dividend of $1.76 per share reflecting an increase of $0.12 or 7%. The bank also announced its intention, subject to the approval of the Toronto Stock Exchange and the Office of the Superintendent of Financial Institutions, to commence anormal course issuer bid and to repurchase for cancellation up to 45 million of our common shares, representing approximately 3% of the bank's outstanding common shares as at May 15, 2026.
"In a world that's constantly changing and becoming more complex, our commitment to delivering trusted advice and helping clients navigate risk continues to produce exceptional outcomes. 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. Looking ahead, we remain focused on building the bank of the future and evolving with the needs of those we serve," said Dave McKay, CEO of the bank.
On operations, RBC reported a net income of $1,870 million in Personal Banking business, up $268 million or 17% from a year ago. It was boosted by higher net interest income reflecting average volume growth of 2% and higher spreads, which included an unfavourable impact from lower accretion of fair value adjustments related to the acquisition of HSBC Bank Canada. Lower PCL, as the same quarter last year reflected higher provisions on performing loans primarily due to the impacts of trade disruptions (including tariffs), as well as higher fee-based client assets reflecting market appreciation and net sales also contributed to the increase.
In Commercial Banking, it reported net income of $854 million that rose $257 million or 43% from a year ago, primarily driven by lower PCL, as the same quarter last year reflected higher provisions on performing loans primarily due to the impacts of trade disruptions (including tariffs) and the current quarter reflected lower provisions on impaired loans.
RBC reported a net income of $1,185 million in Wealth Management unit that increased $256 million or 28% from a year ago, primarily due to higher fee-based client assets reflecting market appreciation and net sales, which also drove higher variable compensation.
In Insurance, net income stood at $218 million, an increase of $7 million or 3% due to higher insurance investment result reflecting lower capital funding costs. Capital Markets' net income was $1,484 million, a jump of $282 million or 23% from a year ago, mainly due to higher revenue in Global Markets and Corporate & Investment Banking. These factors were partially offset by higher taxes reflecting changes in earnings mix and higher compensation on increased results, the bank said.
In Corporate Support, net loss was $102 million for the current quarter, primarily due to legal provisions and residual unallocated costs.
Shares closed down $0.69 at $261.64 in Toronto on Wednesday.