Royal Bank of Canada Posts Record Profits and Increases Payouts Despite Market Volatility
Toronto, Saturday, 28 February 2026.
On February 26, 2026, the Royal Bank of Canada (RBC) defied economic softness to deliver a record-breaking first quarter. The bank reported a net income of $5.8 billion, marking a significant 13% increase from the previous year, driven largely by exceptional performances in wealth management and personal banking. This financial strength allowed RBC to aggressively return capital to shareholders, executing $1 billion in share buybacks and raising its quarterly dividend. While the bank faces potential headwinds from trade disruptions and a slowing Canadian economy, its robust 17.6% return on equity suggests a resilient business model. For investors, this signals that RBC’s diversified strategy is effectively navigating market volatility while maintaining a focus on long-term growth.
Surpassing Market Expectations
For the fiscal quarter ended January 31, 2026, RBC delivered financial results that exceeded analyst forecasts. The bank reported record net income of $5.8 billion, representing a 13% increase from the prior year [2]. Diluted earnings per share (EPS) rose to $4.03, a 14% year-over-year increase, while adjusted diluted EPS came in at $4.08, surpassing the average analyst estimate of $3.85 [2][3]. Total revenue for the quarter climbed to $18 billion, up from $16.7 billion in the same period last year, demonstrating the bank’s ability to expand its top line even amidst a complex economic landscape [3]. This performance was underpinned by an adjusted return on equity (ROE) of 17.8%, reflecting a 60 basis point increase from the previous year [2].
Wealth Management Leads Sector Growth
A detailed breakdown of the bank’s portfolio reveals that the Wealth Management division was a primary driver of this quarter’s success. The segment generated net income of $1.3 billion, a significant increase of roughly 32.653% from the $980 million reported a year ago [3]. This growth was fueled by higher fee-based client assets, which benefited from market appreciation and net sales [3]. Personal Banking also posted record results, earning approximately $2 billion in the quarter, up from $1.7 billion the previous year, while Commercial Banking saw its net income rise to $863 million [3][4]. Conversely, the Insurance segment faced headwinds, with net income decreasing by 22% to $213 million [4]. Capital Markets continued to perform steadily, earning $1.48 billion, a modest increase from $1.43 billion the prior year [3].
Navigating Economic Headwinds and Credit Risks
Despite the record-breaking profits, RBC continues to fortify its defenses against potential economic volatility. The bank’s provision for credit losses (PCL) for the quarter edged up to $1.09 billion, an increase of $40 million compared to the previous year [2][3]. This cautious approach aligns with management’s recognition of a softening Canadian economy, particularly in Ontario, where elevated employment levels are creating regional weakness [4]. Furthermore, in the second quarter of 2025, RBC introduced a trade disruption scenario into its IFRS 9 framework to capture risks associated with higher tariffs and potential North American recessionary pressures [4]. Executives expect 2026 to be characterized by relatively elevated credit losses as mortgage payments increase and trade uncertainties persist [4].
Capital Strength and Shareholder Returns
RBC’s balance sheet remains robust, providing the flexibility to reward shareholders while maintaining regulatory stability. The bank’s Common Equity Tier 1 (CET1) ratio stood at 13.7% as of January 31, 2026, an increase of 20 basis points from the previous quarter and well above regulatory requirements [2][5]. Leveraging this capital strength, RBC returned $3.3 billion to shareholders during the quarter, including $2.3 billion in common share dividends and $1.0 billion through the repurchase of approximately 4.2 million shares [2][4]. Looking forward, the board has declared a quarterly common dividend of $1.64 per share, payable in May 2026, as the bank targets a yearly revenue growth rate of roughly 4.4% through 2028 to meet its long-term valuation objectives [1].