RBC’s Second-Quarter Profit Beats Estimates as Credit-Loss Provisions Unexpectedly Fall
Royal Bank of Canada is one of the country’s largest banks. Its provisions for credit losses represent funds set aside for potential bad debts and are a key gauge of borrowers’ repayment capacity and broader economic risk. Changes in provisions are under particular scrutiny as tariff policies and geopolitical conflicts intensify uncertainty over the global economy.
RBC’s latest second-quarter results showed that provisions for credit losses fell about 35% to C$912 million from C$1.4 billion a year earlier, defying market concerns about rising credit risk. Earnings per share reached C$3.85, also above analysts’ estimate of C$3.71, indicating that both profitability and asset quality were better than expected.
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The history behind this eventRBC Raises Credit-Loss Provisions on US Tariff Uncertainty
Royal Bank of Canada, the country’s largest bank by assets, uses provisions for credit losses to reflect its estimate of borrowers’ future default risk, with the charges directly reducing current-period profit. US tariffs and geopolitical tensions could weaken business activity, employment and borrowers’ ability to repay, making changes in the reserves an important gauge of economic risk in Canada.
RBC said on February 26, 2026, that provisions for credit losses totaled C$1.09 billion in its fiscal first quarter ended January 31, up 8% from the previous quarter and 4% from a year earlier. Provisions on impaired loans totaled C$1.068 billion. The bank’s chief risk officer said the economy remained resilient, but uncertainty over trade policy and geopolitics required a prudent approach to reserves.
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