The Royal Bank of Canada (RBC) is maintaining a cautious approach as global trade uncertainty continues, even though the broader economy shows signs of stability. According to Chief Risk Officer Graeme Hepworth, the bank expects to keep its provisions for potential loan defaults at elevated levels over the coming quarters.
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“Given the ongoing uncertainty this quarter, we’ve sustained our conservative stance, keeping our downside risk scenarios weighted similarly to last quarter,” Hepworth told analysts during a call reviewing RBC’s third-quarter financial results.
For the quarter, RBC recorded $881 million in provisions for credit losses (PCL), a notable increase from $659 million during the same period last year.
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Hepworth indicated that impaired loans and overall PCL levels are likely to remain elevated for the foreseeable future—consistent with the trends seen in the first three quarters of the year. However, he noted that these could be partially offset by improvements in credit performance, leading to potential releases of previously set aside allowances.
The bank’s outlook is tied closely to a range of external factors, including the duration of tariffs imposed by U.S. President Donald Trump, potential fiscal stimulus efforts, labor market trends, interest rate movements, and real estate market performance.
“We remain proactive in managing risk through all stages of the economic cycle and are well capitalized to navigate a wide array of macroeconomic and geopolitical scenarios,” Hepworth added.
Despite these headwinds, RBC posted a strong third-quarter performance. The bank reported a profit of $5.4 billion—up from $4.5 billion a year ago—with earnings of $3.75 per diluted share, compared to $3.09 in the same 2024 quarter.
On an adjusted basis, RBC earned $3.84 per share, significantly outperforming analysts’ expectations of $3.32, according to LSEG Data & Analytics.
Total revenue rose to $16.99 billion, compared to $14.63 billion a year earlier. Investors responded positively, sending RBC shares up nearly six per cent to $201.68 on the Toronto Stock Exchange.
The bank’s commercial banking arm also saw gains, reporting a net income of $836 million—a two per cent increase, or $19 million more than in the same quarter last year.
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