Royal Bank of Canada (TSX:RY) reported an 11% rise in second-quarter profit on Thursday, bolstered by its acquisition of HSBC’s Canadian operations and continued strength in its wealth management segment.
Net income rose to C$4.4 billion ($3.22 billion) for the quarter ended April 30, up from C$4 billion a year earlier. Adjusted earnings came in at C$3.12 per share, compared with C$2.92 a year ago.
Analysts, however, had expected stronger results.
The C$13.5 billion purchase of HSBC Canada, the biggest acquisition in RBC’s history, contributed C$258 million to quarterly earnings and expanded the bank’s domestic footprint.
“We saw the strength of our diversified business model reflected across our largest segments in Q2, underpinned by our robust capital position, balance sheet strength and prudent, through-the-cycle approach to risk management,” CEO Dave McKay said in a statement.
Earnings growth in personal and commercial banking, insurance and wealth management helped offset a decline in capital markets revenue.
Wealth management profit rose 11%, driven by higher fee-based client assets, as markets recovered and investor sentiment improved.
Still, the bank set aside more funds to cover potential loan defaults amid a weakening economic backdrop. Provisions for credit losses jumped to C$1.42 billion, up from C$920 million a year earlier.
Canadian lenders, including RBC, are bracing for potential credit deterioration as global trade tensions and US tariffs raise concerns about economic growth and consumer resilience.
RBC's Toronto-listed shares were down around 3.4% on Thursday morning, while its US counterparts had lost 3.1%.