TORONTO – The head of Royal Bank of Canada says the domestic economy will likely pull through the latest round of ratcheted-up trade tensions between Canada and the U.S. thanks to a low effective tariff rate, healthy foreign investment and fresh trade deals.
Dave McKay said on the bank’s third-quarter earnings call Thursday that Canada’s economy has performed well after absorbing multiple shocks over the past 18 months.
The trade dispute between Canada and the U.S. escalated after U.S. President Donald Trump imposed 50 per cent tariffs on about $28 billion worth of Canadian products over the weekend. On Tuesday, Ottawa announced a suite of retaliatory tariffs on U.S. goods set to take effect Sept. 8, along with a new $7.5-billion tariff-relief package for businesses and workers.
“While Canada and the U.S. have yet to come to a longer-term solution, we note the average effective tariff rate remains low at approximately six per cent, with over 80 per cent of exports remaining duty-free,” McKay said.
He also outlined some opportunities he sees over the medium term that stem from the cross-border spat.
“Increased foreign direct investment and new trade relationships adds to our optimism. We believe we are well positioned to navigate near-term uncertainty while supporting our clients’ growth aspirations given the strength of our balance sheet and diversified business model,” McKay said.
RBC reported a third-quarter profit of $6.02 billion, up from $5.41 billion a year earlier, boosted by strength in wealth management, capital markets and commercial banking.
The bank said Thursday its profit amounted to $4.23 per diluted share for the quarter ended July 31, up from a profit of $3.75 per diluted share in the same quarter last year.
On an adjusted basis, RBC said it earned $4.28 per diluted share, up from an adjusted profit of $3.84 per diluted share a year earlier.
Revenue for the quarter amounted to $18.54 billion, up from $16.99 billion in the same quarter last year.
RBC’s provision for credit losses totalled $1.00 billion, up from $881 million a year earlier.
Analysts on average had expected a profit of $4.08 per share and $18.14 billion in revenue, according to LSEG Data & Analytics.
John Aiken, an analyst at Jefferies, said in a note to investors Thursday that the bank posted impressive loan growth and improved efficiency.
“Its valuation premium was once again justified by its impressive (return on equity),” he said.
RBC said its personal banking business earned $1.92 billion in its latest quarter, down from $1.94 billion in the same quarter last year, while its commercial banking business earned $936 million, up from $836 million a year ago.
The bank’s wealth management arm earned $1.44 billion in its most recent quarter, up from $1.10 billion in the same quarter last year.
The bank’s capital markets business earned $1.54 billion, up from $1.33 billion a year ago.
McKay said a favourable market backdrop helped boost the bank’s results.
“Taking a step back to look at the global landscape, market conditions have remained largely constructive, with megatrends continuing to shape critical sectors, including natural resources, power infrastructure, strategic defence, health care and the AI ecosystem,” he said.
“These trends support increased client activity for our capital markets and wealth management segments.”
RBC’s insurance business earned $197 million, down from $247 million in the third quarter last year.
This report by The Canadian Press was first published Aug. 27, 2026.
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