RBC Posts Strong Q2 Numbers but Could Trouble Be Coming Later This Year?

Royal Bank of Canada (TSX:RY) (NYSE:RY) posted its second-quarter results last week, which came in strong but also hinted at some possible challenges ahead.

The numbers were fueled in part by its $13.5 billion acquisition of HSBC Canada, which added meaningful scale and boosted bottom-line results. Adjusted earnings climbed to $4.53 billion, comfortably ahead of last year’s $4.2 billion adjusted profits. The HSBC integration, which is already contributing $258 million in net income, validates the bank’s largest-ever deal as a driver of both growth and efficiency.

RBC’s wealth management segment delivered a solid performance, with an 11% jump in profits tied to increased fee-based client assets. The steady growth in advisory and asset management fees reflects investor confidence in RBC’s services, despite broader economic headwinds. CEO Dave McKay pointed to the bank’s robust capital foundation and prudent risk practices as key drivers of the quarter’s strong performance.

However, rising loan loss provisions hint at growing economic caution. RBC set aside $1.42 billion for potential credit losses—up more than 50% from a year earlier—as the bank prepares for a softer lending landscape. While this move reflects conservative risk management, it also underscores concern over consumer credit quality and possible fallout from trade volatility.

Shares of RBC are flat this year, and while that doesn’t sound great, it does highlight the bank stock’s overall stability. This can be an excellent investment to simply buy and forget about and put into a tax-free savings account. And with a high yield of 3.6%, you’ll get plenty of dividend income along the way.