RBC Surges on Strong Earnings and a Confident Outlook
So, let’s talk about what just happened with Royal Bank of Canada, because the numbers they posted for the fourth quarter are definitely getting attention. RBC reported a major jump in profit — a full 29% higher than the same period last year. That pushed their quarterly profit to $5.4 billion, which works out to $3.76 per share. And when adjusted for certain items, the earnings came in at $3.85 per share. Analysts were expecting $3.55, so RBC didn’t just beat expectations — it cleared them comfortably.
A big part of this momentum came from strength in two major areas: capital markets and wealth management. Capital markets profit rose an impressive 45% to $1.4 billion. That was driven by higher revenue in global markets, strong corporate and investment banking activity, and a boost in equities trading along with more merger and acquisition activity across regions. RBC’s U.S. division played a major role here, contributing more than half of that segment’s revenue.
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Wealth management also delivered a strong showing, generating $1.3 billion in profit — up 33% from last year. Higher fee-based client assets and strong sales helped push that growth. Personal banking wasn’t far behind, with profit climbing 20% to $1.9 billion, largely supported by higher net interest income as spreads and volumes in the Canadian business increased. Even commercial banking saw gains, with net income rising 5% to $810 million.
With results like these, RBC felt confident enough to raise its quarterly dividend by 10 cents, bringing it to $1.64 per share. And the bank didn’t stop there — it also increased its return-on-equity target to 17% or more, after already surpassing the 16% goal set earlier in the year. Some analysts are calling that new target conservative, suggesting there could be even more upside, including for the stock itself.
Total revenue rose 14% in the quarter to $17.2 billion, although expenses climbed as well, up 4% to $9.4 billion. RBC said higher expenses were due partly to foreign exchange and increases in market-driven share-based compensation.
One area where the bank showed caution was loan-loss provisions. RBC set aside $1 billion for potential credit losses, based on models that account for economic forecasts. That’s noticeably higher than the $640 million set aside in the same quarter last year — a sign that even with strong performance, the bank isn’t ignoring broader economic uncertainty.
Overall, RBC’s earnings week performance landed solidly ahead of expectations, helping maintain confidence in Canada’s biggest bank as it looks toward 2026 with an emphasis on financial strength, stability, and continued growth.
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