RBC raises provisions again amid renewed tariff uncertainty

Core Viewpoint - The Royal Bank of Canada (RBC) is facing renewed challenges from U.S. tariffs, despite beating earnings expectations for the quarter ending January 31, with increased provisions for credit losses reflecting ongoing economic uncertainty [1][2][7]. Financial Performance - RBC's earnings per share reached CA$4.03, surpassing analysts' consensus estimate of CA$3.81, while net income rose to CA$5.78 billion, exceeding estimates of CA$5.33 billion [5]. - Provisions for credit losses were raised to CA$1.09 billion, a 4% increase year over year, with total allowances for credit losses rising to CA$7.77 billion, up 12% year over year [1][5]. Economic Outlook - RBC maintains a cautiously optimistic view on the Canadian economy, although it acknowledges the uncertainty stemming from U.S. trade policy and geopolitical tensions [2][3]. - The bank has prepared for various scenarios, including a potential severe North American recession due to escalating global trade wars [3]. Sector-Specific Insights - The impact of tariffs on the Canadian economy varies by sector, with strong profitability and improving productivity reported for many corporate clients, while those in tariff-impacted sectors face challenges [4]. - RBC's U.S. operations contributed positively, with revenue from U.S. wealth management rising to US$1.93 billion, a 12% increase from the previous year [6]. City National Bank Performance - City National Bank, acquired by RBC in 2015, reported a net income of US$143 million in the first quarter of 2026, more than doubling year over year, indicating a recovery in its financial performance [6][8].