Wrapup 1: RBC and Canada's other biggest lenders beat profit estimates as economy resists tariff impact

Royal Bank of Canada

26/02/2026 13:36

Adds CEO comments, details from conference call, investor comments in paragraphs 4, 8-10, 16

Canadian banks surpass profit expectations

Strong fee-based income boosts wealth management, capital markets

RBC, TD, CIBC report significant growth in domestic banking segments

By Nivedita Balu and Utkarsh Shetti

Feb 26 (Reuters) - Canada's six biggest banks exceeded profit forecasts this week in results boosted by wealth management and fee-based income, underlining the resilience of the country's economy to the impact of U.S. tariffs and broader policy uncertainty.

On Thursday, Royal Bank of Canada , TD Bank  and CIBC  beat analysts' profit estimates, as did BMO Financial BMO.TO and National Bank NA.TO on Wednesday and Bank of Nova Scotia BNS.TO earlier this week.

Prime Minister Mark Carney's diversification of trade ties has helped the economy to perform better than expected in the first quarter ended January 31, in turn giving the banks a boost.

"We are seeing strong profitability and improving productivity for many of our corporate clients," RBC CEO Dave McKay said. However, some commercial clients and tariff-impacted sectors were facing challenges, he added.

In recent months, tension between the U.S. and Canada has increased, primarily over trade. The United States-Mexico-Canada Agreement, a continental trade pact that has shielded much of Canada's exports from U.S. tariffs, is set for review by a July 1 deadline.

"There's still some uncertainty in the market, but what we're seeing is that consumers are continuing to show resilience and they are feeling a little bit better," TD Chief Financial Officer Kelvin Tran told Reuters in an interview. "(Those uncertainties) are something that the market is adjusting and adapting to."

BANKS LOOK TO INFRASTRUCTURE PROJECTS

Canada's banks have a large U.S. exposure, with some referring to the country as a second home market that has provided opportunities to expand their retail networks and build their capital market businesses. While uncertainty persists, the banks have relied on their strong capital to buy back shares for growth.

RBC's McKay said he sees organic growth as Canada executes larger-scale projects that Carney's government has proposed in its recent budget.

"Whether it's deployment of our defense industry spend, the energy infrastructure we need, the Arctic infrastructure, the minerals infrastructure, all these multiple-use capabilities that the prime minister and the government have talked about, it's going to require a significant amount of domestic and foreign capital," McKay said.

STRONG FEE INCOME OFFSETS UNCERTAINTY

Canadian lenders have relied more on fee-based, higher-margin wealth businesses and expanding their advisory network to capture clients relatively sheltered from weakened business and consumer confidence. At RBC, Canada's biggest bank by market capitalisation, higher fees boosted earnings at its wealth management unit by 32%.

The upbeat earnings put the banks on track to reach their targets for mid-term return on equity, a profit metric that demonstrates how effectively a bank generates profits from its shareholders' investments.

     "Blockbuster would probably be a good way to describe (the results) ... Everything's firing for them. What it tells you, not just about the Canadian economy, but the North American economy, is that things are still on pretty stable footing overall," said Josh Sheluk, portfolio manager at Verecan Capital Management.

RBC, TD and CIBC all reported growth at domestic retail banking segments of 17%, 12% and 25%, respectively, largely benefiting from higher net interest income, or earnings on loans minus deposit costs.

Net income in RBC's capital markets segment increased 3%, while it rose 42% at CIBC. TD's wholesale banking segment recorded a 65% rise in adjusted net income.

RBC's earnings of C$4.08 per share surpassed analysts' average estimate of C$3.85, according to LSEG data. TD's EPS of C$2.44 beat the estimate of C$2.26. CIBC's EPS of C$2.76 was well above the estimate of C$2.40.

($1 = 1.3676 Canadian dollars)

(Reporting by Utkarsh Shetti, Ateev Bhandari and Arasu Kannagi Basil in Bengaluru, Nivedita Balu in Toronto; Editing by Shilpi Majumdar, Barbara Lewis and Paul Simao)

((UtkarshUmesh.Shetti@thomsonreuters.com;))