Big Six banks report profits up, dividends raised despite economic volatility

Canada's Big Six banks posted stronger profits in the second quarter than analysts expected, with five of them raising their quarterly dividends. Yet executives acknowledged significant economic headwinds that could shift their outlooks.

Royal Bank, TD, Scotiabank, BMO, and National Bank all increased dividend payments. RBC reported a 25 percent profit increase compared with a year earlier, earning $5.51 billion, or $3.85 per diluted share, for the quarter ended April 30. The bank declared a quarterly dividend of $1.76 per share, up from $1.64.

All of the Big Six cut the funds they set aside for bad loans compared with last year, signalling confidence in their credit portfolios. RBC set aside $912 million versus $1.42 billion a year prior. Scotiabank allocated $1.22 billion down from $1.40 billion, while TD set aside $1.00 billion versus $1.34 billion.

But beneath the optimism lies caution. RBC Chief Executive Dave McKay said the bank is navigating a "period of volatility" driven by multiple factors: the U.S.-Iran war pushing oil and inflation higher, elevated unemployment in Canada, and ongoing uncertainty over CUSMA renegotiation. Despite these concerns, McKay noted the Canadian consumer is still spending and saving, and he expects GDP growth of 1.5 to 1.6 percent over the next four quarters.

The banks' resilience reflects structural strengths, but executives signalled they're watching trade tensions and geopolitical risk closely.