Wrapup 3: Canada's RBC, TD, CIBC top bank profit estimates

Royal Bank of Canada

27/08/2026 12:52

(Updates shares, adds investor comment in paragraph 6)
    * All six major Canadian lenders topped analysts' estimates
this quarter
    * Capital markets gained from strong dealmaking, revived
North American IPOs
    * Executive says tariff impacts remain fluid despite reserve
build

    By Nivedita Balu and Arasu Kannagi Basil
    Aug 27 (Reuters) - Royal Bank of Canada  RY.TO , TD Bank
 TD.TO  and CIBC  CM.TO  beat quarterly profit estimates on
Thursday as the Canadian lenders largely benefited from strong
earnings in their capital markets segments.
The results wrap up the third-quarter earnings season for
Canada's largest banks, with all six lenders beating Bay Street
profit estimates despite geopolitical uncertainty and the
fallout from the trade dispute between Canada and the U.S., a
key market for some of the country's major banks.
    The banks have strengthened their balance sheets over the
past two years by building capital, robust earnings and sizable
reserves against potential credit losses, leaving them better
positioned to withstand economic and trade-related uncertainty.
The banks have expanded beyond Canada and built fee-based
businesses such as wealth management and investment banking,
helping diversify revenue streams.
    "These results reflect three forces working together:
diversified business model, strong client activity, and a
favorable market backdrop," RBC CEO Dave McKay told analysts.
    Still, RBC shares were down 2%.
    "The results were better than expected (for RBC). But if you
go segment by segment, they were a little bit light in their
largest segment, which is Canadian personal banking," said Brian
Madden, chief ​investment officer at First Avenue Investment
Counsel. Madden said rich valuations prompted his firm to trim
its positions in RBC, TD and BMO  BMO.TO  this month.
    TD's shares were marginally up, while CIBC was down 3.5%. 
    WELL POSITIONED 
    Trade tensions intensified this month after negotiations
aimed at reaching a bilateral trade agreement collapsed. The
United States imposed tariffs on certain Canadian goods and
Canada responded with duties on U.S. steel and aluminum.
    "I feel very comfortable with the reserve we have ... the
situation is still quite fluid; we have to look at the specifics
of the tariffs, how long it lasts, the detail of (the
government) responses," TD Bank's CFO Kelvin Tran said in an
interview.
    "That's something that we're monitoring very carefully."
    CIBC said the most tariff-sensitive businesses it lends to
represent less than 1% of the bank's total loan portfolio. RBC
said it was optimistic about increased foreign direct investment
and Canada's new trade relationships.
     
    CAPITAL MARKETS GROWTH 
    Capital markets businesses have benefited from strong deal
flow, higher trading income fueled by volatile markets, and a
revival in IPO markets in the U.S. and Canada.
    RBC, the only Canadian bank in the underwriting syndicate
for SpaceX's blockbuster initial public offering, said capital
markets net income rose 16% to C$1.54 billion ($1.11 billion). 
    The results were also boosted by a 32% rise in profit at its
wealth management segment.
    At CIBC, capital markets income rose 34%, boosted by lower
loan loss provisions. 
    TD said its wholesale banking segment, which includes
capital markets and corporate and investment banking services,
recorded an 87% increase in net income. Its U.S. segment
recorded a 41% increase in net income. The bank said it plans to
open 100 new branches in the region by 2028.
     
    JUSTIFIED PREMIUM
    The Canadian banks are trading at an average of about 15
times forward earnings, the most expensive they have been since
2010, and their stocks have outperformed the broader Toronto
Stock Exchange.
    "Its (RBC) valuation premium was once again justified by its
impressive return on equity (ROE)," Jefferies analyst John Aiken
said, citing the bank's 17.9% ROE, which beat the lender's own
target. "To close out third-quarter earnings, TD produced the
strongest beat of the quarter," Aiken said. 
    CIBC's adjusted net income of C$2.73 per share was 20
Canadian cents above analysts’ estimates, according to LSEG
data.
    RBC earned C$4.28 per share, also beating the estimate of
C$4.08. At TD, adjusted earnings of C$2.77 per share were well
above the average analysts' estimate of C$2.47.
     
    ($1 = 1.3883 Canadian dollars)

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(Reporting by Nivedita Balu in Toronto, Pritam Biswas, Pragyan
Kalita and Arasu Kannagi Basil in Bengaluru; Editing by Shailesh
Kuber, Jan Harvey, Deepa Babington, Rod Nickel)
((Nivedita.Balu@thomsonreuters.com ; +1-343-401-6776))