By Robb M. Stewart
Royal Bank of Canada is bumping up its payout to shareholders with an increased dividend and plans to continue buying back shares after logging a jump in earnings in the latest quarter that was driven by its global markets and wealth management operations.
The bank, the country's biggest by market value and one of the largest in North America by assets, said it will lifts its quarterly dividend by 7.3% and seek stock exchange approval to repurchase the equivalent of up to 3.2% of its outstanding shares over a one-year period.
The lift in shareholder returns echoes moves by Canada's other big lenders following a bumper quarter of earnings, helped by a drop from a year earlier in provisions for loan-losses and supported by capital buffers that sit well above regulatory minimums.
Royal Bank's second-quarter net income increased to 5.51 billion Canadian dollars (US$3.98 billion), or C$3.85 a share, from C$4.39 billion, or C$3.02, a year earlier.
Excluding certain items the bank says obscure underlying performance trends, per-share earnings came in at C$3.90 for the three months to April 30, topping the C$3.80 consensus forecast of analysts polled by FactSet.
Total revenue rose 11% to C$17.45 billion, where analysts were expecting about C$17.3 billion. The Toronto-based bank's provision for credit losses fell to C$912 million from C$1.09 billion the quarter before and C$1.42 billion last year.
Royal Bank's return on equity, a measure of profitability and efficiency, widened 3 percentage points on last year to 17.2%, though it dipped 0.4 point from the prior quarter.
The performance for the quarter was underpinned by solid growth across the bank's diversified businesses and balance sheet strength, President and Chief Executive Dave McKay said.
McKay said the bank declared a quarterly dividend of C$1.76 a share, a increase of $0.12. It also plans to launch a normal course issuer bid to repurchase for cancellation up to 45 million of the bank's shares.
The country's six largest banks, aside from Canadian Imperial Bank of Commerce which reviews its payout on a different cycle, upped its dividend for the coming quarter. CIBC plans to buy back up to 30 million of its shares, about 3.3% of the outstanding number.
The banks have modestly reined in global economic growth expectations as the Iran war has curtailed oil supplies and added fresh risk to the outlook, the U.S. and Canada are expected to see growth this year.
Household spending in Canada has remained relatively resilient, belying a rise in the unemployment rate and the hit to the economy from U.S. tariffs and uncertainty over trade policy. The central bank has left its policy interest rate unchanged four times in a row, though it remains wary of how the trade relationship as well as the spike in energy prices with the conflict in the Middle East may play out.
Royal Bank said the global outlook remains highly dependent on the evolution of U.S. trade policy as well as the magnitude and duration of energy price increases and supply disruptions due to the Iran war, which is expected to lift consumer energy costs but also boost revenues for oil producing nations including Canada.
Royal Bank's underlying earnings were buoyed by higher revenue in its capital markets arm, driven by rising global markets and its corporate and investment banking operations. It also saw higher fee-based revenue in its wealth management business, which is said reflected market appreciation and net sales. It logged higher net interest income in personal banking and commercial banking, helped by volume growth and higher spreads.
Royal Bank's capital position remained strong, with a common equity Tier 1 ratio of 13.5%, down slightly but still above the at least 11.5% of risk-weighted assets that Canada's banking regulator requires the big lenders to maintain.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
May 28, 2026 06:55 ET (10:55 GMT)
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