By Christine Dobby
(Bloomberg) — Royal Bank of Canada beat estimates on strong results in its capital-markets and wealth-management divisions, capping off a year of brisk trading activity, and set higher targets for returns on shareholders’ capital.
Canada’s biggest lender earned $3.85 a share on an adjusted basis in its fiscal fourth quarter, according to a statement Wednesday, beating analysts’ average estimate of $3.54.
RBC became the first Canadian bank to earn more than $20 billion in a single fiscal year.
Net income at Royal Bank’s capital-markets business totalled $1.43 billion in the three months through October, higher than the $1.12 billion average forecast of three analysts in a Bloomberg survey. Deal-making has ramped up in the U.S., which accounts for more than half of Royal Bank’s capital-markets revenues.
“RBC is an all-weather bank,” Chief Executive Officer Dave McKay said in the company’s annual report, adding that the firm proved that “by delivering exceptional financial results across our businesses during a year of significant macroeconomic uncertainty and market volatility.”
In wealth management, which includes Los Angeles-based subsidiary City National Bank, net income was $1.28 billion, more than the $1.02 billion average estimate.
Royal Bank reported record earnings of $20.4 billion in fiscal 2025, with return on equity hitting 16.3%. In a strategic update, RBC changed its medium-term ROE target, setting it at 17% or better, which comes after several quarters of the bank outstripping the 16%-or-better goal it set at an investor day in March.
Credit provisions
In the quarter, the bank set aside slightly more than $1 billion in provisions for credit losses, more than the $988 million expected by analysts.
Following the high-profile bankruptcies of auto lender Tricolor Holdings and car-parts supplier First Brands Group, U.S. banks reported a series of credit issues in their quarterly results in October. Some analysts had warned Royal Bank could be hit by similar outsize provisions related to commercial accounts.
Royal Bank has delivered solid results for most of the year, apart from a surprise in the fiscal second quarter, when it set aside more money than expected for performing loans. It later released some of those provisions as the credit picture brightened.
The lender announced a 6% increase to its quarterly dividend Wednesday, boosting it by 10 cents to $1.64 a share, payable Feb. 24.
Royal Bank’s results in its market-sensitive divisions “comfortably offset a modest miss across other business lines,” said Bank of Nova Scotia analyst Mike Rizvanovic, adding that while credit provisions were slightly elevated, they remained manageable.
“Overall, the strong beat, a dividend increase and a lift to ROE guidance should be more than sufficient to garner market support,” Jefferies analyst John Aiken wrote in a report to clients.
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Last modified: December 3, 2025
