RBC reported record third-quarter earnings, although the results also indicate increasing pressure in its mortgage portfolio.
The bank reported adjusted net income of $5.5 billion for the quarter ended July 31. Net income was reported to have risen 21% to $5.4 billion, while diluted earnings per share increased to $3.84 from $3.26 a year ago.
“The results show that Royal Bank of Canada’s long-term focus on its clients and our commitment to bold growth ambitions put forward in recent investors’ day,” said CEO Dave McKay.
RBC Q3 revenue is clear at a glance
- Adjusted Revenue: $5.5B (+23% QOQ; +17% YoY)
- Adjusted EPS: $3.84
- Credit loss regulations: US$881 million (-38% QOQ; +34% YoY)
- Residential Mortgage: $418B (+1% QOQ; +3% YOY)
- Mortgage crime (over 90 days): 0.31% (+1 bp qoq; +7 bps yoy)
- Canadian banking industry Nimes: 2.61% (+6 bps qoq; +24 bps yoy)
- CET1 ratio: 13.2% (plane QOQ)
Mortgage growth is steady, but damage increases
As the bank’s residential mortgage balance reached $418 billion, a 3% increase from the same period last year, while the home equity was $38 billion, net income in individual banks rose 22% to $1.9 billion. Net interest margin expanded to 2.61%, an increase of 24 basis points year-on-year.
The bank increased its mortgage default rate to 31 basis points from 29 basis points in the last quarter and 24 basis points a year ago.
Crime rates are particularly high in the country’s largest housing market. In the GTA, mortgage shares over 90 days due rose from 27 basis points a year ago to 42 basis points in the third quarter. In the larger Vancouver, interest rates rose from 20 basis points to 27 basis points during the same period.
In the quarter, the credit loss regulations increased to $881 million, up from $659 million a year ago, reflecting higher damage to personal and commercial banking operations. In the mortgage, the allowance for credit losses accounts for 0.16% of the balance, compared with 0.15% in the first quarter and 0.13% a year ago.
RBC also had a common equity ratio of 13.2%, unchanged from the second quarter and well above the regulatory minimum. It also returned $3.1 billion to shareholders through dividends and buybacks.
Portfolio quality and housing prospects
Even with the increase in damage, most borrowers still own a large amount of equity at home. The average loan-to-value ratio for uninsured mortgages in the quarter was 70%, while the total portfolio was much lower at 58%. Royal Bank of Canada’s mortgage books (80%) are not insured.
Fixed-rate loans account for about two-thirds of the bank’s residential mortgage balance, while variable-rate mortgages account for one-third of the remaining, while remaining amortization is 19 years, down from 21 years a year ago.
The RCMP’s basic forecast assumes that house prices will rise by 0.8% over the next 12 months and will grow at a rate of 3.5% per year over the next two to five years.
Visited once today, visited once today
Bank earnings big bank Dave McKay quarterly earnings RBC RBC earnings RBC earnings RB
Last modified: August 27, 2025
