Royal Bank of Canada has delivered a powerful finish to its fiscal year, reporting fourth-quarter profits that surpassed market expectations, fueled by robust performance across most of its core business lines.
Strong Quarterly and Annual Results
For the three months ending October 31, RBC's net income reached $5.4 billion, marking a substantial 29% increase compared to the same period last year. This translated to earnings per share of $3.76.
When adjusted for one-time items, the profit picture was even stronger. The bank's adjusted net income for the quarter was $5.5 billion, a 25% year-over-year rise. This resulted in adjusted earnings per share of $3.85, comfortably exceeding the analyst consensus estimate of approximately $3.55 per share.
The positive quarter capped off an impressive fiscal year. For the full year ending October 31, RBC's net income totaled $20.4 billion, representing a significant 25% increase compared to the previous fiscal year. The bank's adjusted net income for the year was $20.9 billion, up 20%.
Segment Performance and Economic Indicators
The earnings growth was broad-based. RBC's personal and commercial banking segment saw net income rise 20% to $1.88 billion in the fourth quarter. The wealth management and capital markets divisions posted even stronger gains, with net income jumping 33% and 45%, respectively.
The lone exception was the insurance segment, where net income fell by $64 million, or 40%, to $98 million.
As the second of Canada's major banks to report, RBC's results offer a crucial snapshot of the economic landscape. Analysts pay close attention to provisions for credit losses (PCLs), which reflect money set aside for potentially souring loans. RBC's total PCLs were about $1 billion in the quarter, up 20% from a year ago and 14% from the previous quarter. This increase was attributed to higher provisions in commercial banking, capital markets, and personal banking.
Leadership Outlook and Revised Targets
In response to the strong performance, the bank has raised a key profitability target. RBC now aims for a return on equity of more than 17%, up from a previous target of more than 16%.
"In 2025, we advanced our position as one of the world's most trusted and successful financial institutions," stated RBC Chief Executive Officer Dave McKay. "Our relentless client focus is shaping everything we do."
The results underscore RBC's dominant position in the Canadian financial sector and provide valuable data points on consumer and business financial health as the economy navigates current challenges.
