SKN | Royal Bank of Canada Posts Record Q1 Earnings as Capital Strength Remains Robust

Key Takeaways

• Royal Bank of Canada reported record quarterly earnings of $5.8 billion, with adjusted earnings of $5.9 billion.
• Pre-provision pretax earnings rose 14% year over year to nearly $8.5 billion.
• Return on equity reached 17.6%, with a strong CET1 ratio of 13.7%.
• Wealth Management and Capital Markets delivered record revenue and operating leverage.
• Mortgage and commercial loan growth remain moderated by economic uncertainty.

RBC delivered record earnings in Q1 2026, highlighting broad-based strength across its diversified platform. Pre-provision pretax earnings increased 14% from the prior year, reflecting strong operating momentum and disciplined cost management.

A return on equity of 17.6% underscores the bank’s ability to convert revenue growth into shareholder returns, while the 13.7% CET1 capital ratio provides balance sheet flexibility.

Wealth Management and RBC Capital Markets both achieved record revenue and pre-provision pretax earnings, reinforcing the benefits of diversification across fee-based and market-driven businesses.

Capital Deployment and Strategic Focus

Management emphasized disciplined capital allocation. Organic growth remains the primary priority, supported by strategic share repurchases and selective acquisition opportunities that meet strict return thresholds.

CEO David McKay also pointed to infrastructure financing and cross-border growth opportunities as areas of strategic expansion.

The bank’s diversified model continues to enable investment in talent, technology, and risk management without stretching capital.

Mortgage and Loan Growth Moderation

Despite strong earnings, certain growth areas remain subdued. Mortgage growth was modest, reflecting affordability pressures, softer immigration flows, and broader economic caution.

Commercial loan growth is expected to remain at the lower end of mid- to high-single-digit guidance due to trade uncertainty and geopolitical headwinds.

Provisions for credit losses are anticipated to remain elevated in select regions, particularly Ontario, although overall credit quality remains stable.

Capital Markets Competitive Edge

RBC executives highlighted the competitive advantage of their global footprint and product breadth within capital markets. The ability to serve clients across geographies and asset classes provides revenue durability and lower volatility relative to more concentrated peers.

Scale advantages also support consistent investment in technology and risk controls.

HSBC Acquisition Impact and NIM Outlook

The purchase price accounting accretion from the HSBC acquisition is rolling off, creating a modest 4-basis-point impact on net interest margin.

However, management expects stable NIM performance supported by improved deposit mix and stronger mutual fund flows.

Outlook

RBC enters fiscal 2026 with record profitability, strong capital ratios, and diversified earnings streams.

Near-term headwinds in mortgage growth and elevated PCLs are balanced by strength in wealth management, capital markets, and disciplined capital deployment.

If economic conditions stabilize and loan growth gradually improves, RBC appears well positioned to sustain above-peer returns on equity while maintaining capital resilience.

For confidential discussions regarding Canadian bank capital strategy, cross-border earnings sensitivity modeling, and high-quality financial sector portfolio positioning, our senior advisory team is available for discreet consultation tailored to institutional and cross-border mandates.