Canada’s major banks wrapped up a robust first quarter of fiscal 2026, with Royal Bank, TD Bank, CIBC, and National Bank substantially beating earnings expectations. The collective strength marks a continuation of the sector’s recovery, though analysts are raising yellow flags about stretched valuations as share prices approach historical highs.
Royal Bank reported first-quarter profit of $5.79 billion, up 13% year-over-year, with adjusted earnings per share climbing 13% to $4.08. The bank’s Common Equity Tier 1 ratio improved to 13.7% from 13.2%, reinforcing its capital position as the largest bank in Canada. RBC’s diversified revenue streams across wealth management, capital markets, and U.S. operations supported the beat, though the stock trades at premium multiples relative to peers.
TD Bank posted adjusted net income of $4.2 billion, representing 16% growth, with earnings per share rising 12% to $2.44. The bank’s Canadian Personal and Commercial Banking segment hit record revenue, while U.S. Banking adjusted net income jumped 20% to $1.0 billion. Despite the strong performance, TD’s valuation has surged nearly 60% over the past year, leading some portfolio managers to adopt a hold stance until wealth management and insurance segments demonstrate stronger contributions.
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Bank of Montreal emerged as a standout, earning a buy rating from analysts after demonstrating cleaner credit trends and stronger U.S. performance. BMO’s loan-loss provisions showed meaningful improvement on the American side of operations, where the bank generates a significant portion of revenue.
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This geographic diversification is viewed as a competitive advantage as domestic Canadian lending faces headwinds from elevated household debt and housing market softness. With the Big Six navigating record earnings against rich valuations, investors are balancing near-term momentum with longer-term growth sustainability.
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