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Royal Bank Of Canada (TSE:RY)
TSX:RY
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Royal Bank Of Canada
(TSX:RY)
Rating:81Outperform
Price Target:
C$199.00
â–²(13.94%Upside)
Positive Factors
Dividends and Buybacks
Raised its quarterly dividend by approximately 4% to $1.54/share and announced a 35mm/~2% NCIB.
Loan Growth
Royal Bank of Canada put up a solid quarter with NIM benefitting from a favorable product mix while loan growth was supported by strength in commercial banking.
Wealth Management Performance
Wealth Management income was 10% higher year over year and bettered forecasts with higher client assets.
Negative Factors
Credit Loss Provisions
Commercial Banking and Capital Markets missed expectations due to higher Provisions for Credit Losses (PCLs).
Earnings Performance
Operating EPS of $3.12 missed consensus forecasts of $3.16 by 1% as the bank chose to not exclude non-recurring EPS drag from results.
Geopolitical Uncertainty
Geopolitical uncertainty has mired investment banking activity this year, contributing to a 7% year-over-year revenue decline in Q2 in C&IB.
Royal Bank Of Canada (RY) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$246.19B
Dividend Yield3.26%
Average Volume (3M)4.68M
Price to Earnings (P/E)13.9
Beta (1Y)0.88
Revenue Growth6.03%
EPS Growth15.60%
CountryCA
Employees94,624
SectorFinancial
Sector Strength81
IndustryBanks - Diversified
Share Statistics
EPS (TTM)3.12
Shares Outstanding1,410,276,700
10 Day Avg. Volume3,853,838
30 Day Avg. Volume4,682,100
Financial Highlights & Ratios
PEG Ratio1.44
Price to Book (P/B)1.78
Price to Sales (P/S)0.00
P/FCF Ratio4.12
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$192.21Price Target Upside10.05% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
Royal Bank Of Canada Business Overview & Revenue Model
Company DescriptionRoyal Bank of Canada (RY) is one of the largest financial institutions in North America, offering a diverse range of financial services. Headquartered in Toronto, Canada, the bank provides personal and commercial banking, wealth management, insurance, investor services, and capital markets products and services on a global scale. It serves millions of clients through a network of branches, automated teller machines, and digital platforms, making it a pivotal player in the financial services sector.
How the Company Makes MoneyRoyal Bank of Canada generates revenue through various streams, primarily segmented into personal and commercial banking, wealth management, insurance, investor and treasury services, and capital markets. Personal and commercial banking remains a significant source of income, comprising fees from traditional banking services, loans, mortgages, and credit cards. The wealth management division contributes through advisory services, asset management, and brokerage fees. The insurance segment provides income through premiums from life, health, and property insurance products. Investor and treasury services generate revenue through custodial, fund administration, and transaction processing services. Capital markets division earns by facilitating trading, investment banking, and advisory services. The bank's earnings are also bolstered by its strategic partnerships and investments in technology to enhance digital banking capabilities and customer experience.
Royal Bank Of Canada Earnings Call Summary
Earnings Call Date:May 29, 2025
(Q2-2025)
| % Change Since: -2.21%|
Next Earnings Date:Aug 27, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and strategic achievements, such as robust revenue growth and a strong capital position. However, challenges were noted in the form of increased credit loss provisions and a volatile macroeconomic environment. Despite these lowlights, the overall sentiment remains optimistic due to the bank's strategic positioning and financial strength.Q2-2025 Updates
Positive Updates
Strong Earnings Performance
Reported second quarter earnings of $4.4 billion with adjusted earnings of $4.5 billion, including $260 million from the acquisition of HSBC Bank Canada.
Revenue Growth
Revenue growth of 11% year-over-year was driven by strong volume growth in Personal and Commercial Banking, and robust fee-based revenue growth in Wealth Management.
Capital Position
Common equity tier 1 ratio of 13.2%, translating to excess capital of approximately $5 billion, and a $0.06 or 4% increase in quarterly dividend.
Wealth Management Success
Reported 11% growth in assets under administration in Canada and 9% in the U.S., with RBC Global Asset Management's assets under management increasing by 11%.
Capital Markets Performance
Pre-provision pre-tax earnings of $1.4 billion or a record $3.1 billion in the first half of the year, driven by strong Global Markets revenue.
Negative Updates
Allowance for Credit Losses
Allowance for credit loss ratio increased to 74 basis points due to a prudent reserve build amidst heightened economic uncertainty.
Volatile Macro Environment
Changes in U.S. and international trade policies have resulted in a volatile and uncertain operating environment, affecting client confidence and sentiment.
Impaired Loans Increase
Gross impaired loans of $8.9 billion increased by $1.1 billion from last quarter, primarily driven by Commercial Banking and Capital Markets.
Company Guidance
During the RBC's 2025 Second Quarter Results Conference Call, significant guidance was provided regarding the bank's financial performance and strategic direction. RBC reported second quarter earnings of $4.4 billion, with adjusted earnings of $4.5 billion, including $260 million from the acquisition of HSBC Bank Canada. The bank achieved pre-provision pre-tax earnings of nearly $7 billion, marking a 16% growth from the previous year. Revenue grew by 11% year-over-year, driven by strong volume growth in Personal and Commercial Banking and higher spreads in Personal Banking. RBC's common equity tier 1 ratio stood at 13.2%, translating to $5 billion of excess capital. Additionally, the bank announced a quarterly dividend increase of $0.06, or 4%, and plans to repurchase up to 35 million common shares. The allowance for credit loss ratio increased to 74 basis points due to a prudent reserve build amidst economic uncertainty. The bank's diversified business model, robust capital position, and focus on risk management were highlighted as strengths in navigating the uncertain macroeconomic environment.Royal Bank Of Canada Financial Statement Overview
Summary
Royal Bank of Canada demonstrates strong financial performance with consistent revenue growth, high profitability margins, and robust cash flow generation. The balance sheet shows a stable financial position with moderate leverage typical for the banking industry. The overall financial health is very strong, though careful management of leverage is important.Income Statement
Royal Bank of Canada demonstrates strong financial performance with consistent revenue growth, evident from a TTM (Trailing-Twelve-Months) revenue increase to $60.45B from $57.49B in the previous year. The bank maintains robust profitability metrics, including a high gross profit margin of 100% and a solid net profit margin of approximately 29.4%. Although there was a slight decline in EBIT margin to 30.8% in TTM, the EBITDA margin remains healthy at 34.6%. These metrics indicate a highly efficient and profitable operation with well-managed expenses.88
Very Positive
Balance Sheet
The balance sheet of Royal Bank of Canada is robust, showcasing a stable financial position with an equity ratio of 6.1%, reflecting a healthy level of equity relative to total assets. The debt-to-equity ratio stands at 3.7, indicating moderate leverage which is typical in the banking industry. The return on equity (ROE) is strong at 13.3%, suggesting effective use of equity capital to generate profits. The bank's balance sheet is solidly positioned, although the leverage could be a risk factor if not well-managed.83
Very Positive
Cash Flow
The cash flow situation for Royal Bank of Canada is excellent, with a significant operating cash flow of $59.89B in TTM, highlighting strong cash-generating capabilities. The free cash flow growth rate is impressive at 175% year-over-year, demonstrating substantial improvement. The operating cash flow to net income ratio is favorable at 3.37, and the free cash flow to net income ratio is also strong at 3.23, indicating effective conversion of income into cash. This strong cash flow performance supports the bank's ability to invest in growth and manage debt obligations comfortably.90
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 60.45B | 57.49B | 53.66B | 48.77B | 49.54B | 47.10B | Gross Profit |
| 60.45B | 57.49B | 56.26B | 48.77B | 49.54B | 47.10B | EBIT |
| 24.70B | 24.30B | 27.18B | 38.15B | 20.62B | 14.38B | EBITDA |
| 27.78B | 27.28B | 21.45B | 22.63B | 23.06B | 16.92B | Net Income Common Stockholders |
| 17.78B | 16.23B | 14.86B | 15.79B | 16.04B | 11.43B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 403.81B | 167.13B | 212.00B | 240.60B | 231.03B | 297.64B | Total Assets |
| 2.19T | 2.17T | 2.00T | 1.92T | 1.71T | 1.62T | Total Debt |
| 492.66B | 474.20B | 439.35B | 425.18B | 305.05B | 9.87B | Net Debt |
| 373.54B | 351.46B | 306.28B | 244.77B | 111.56B | -148.03B | Total Liabilities |
| 2.06T | 2.04T | 1.89T | 1.81T | 1.61T | 1.54T | Stockholders Equity |
| 133.17B | 127.09B | 117.66B | 108.06B | 98.67B | 86.66B |
| Cash Flow | Free Cash Flow | ||||
| 57.41B | 20.86B | 23.35B | 19.44B | 58.86B | 136.19B | Operating Cash Flow |
| 59.88B | 23.14B | 26.08B | 21.94B | 61.04B | 138.82B | Investing Cash Flow |
| -53.16B | -20.89B | -28.27B | -57.05B | -57.35B | -39.56B | Financing Cash Flow |
| -35.97B | -8.15B | -9.83B | -2.19B | -5.93B | -7.75B |
Royal Bank Of Canada Technical Analysis
Positive
174.66
Price Trends
166.59
Positive
166.81
Positive
166.88
Positive
Market Momentum
2.07
Positive
57.87
Neutral
37.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RY, the sentiment is Positive. The current price of 174.66 is above the 20-day moving average (MA) of 174.40, above the 50-day MA of 166.59, and above the 200-day MA of 166.88, indicating a bullish trend. The MACD of 2.07 indicates Positive momentum. The RSI at 57.87 is Neutral, neither overbought nor oversold. The STOCH value of 37.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:RY.
Royal Bank Of Canada Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $246.19B | 13.87 | 14.17% | 3.26% | 6.03% | 15.60% | |
79 Outperform | $168.78B | 9.98 | 14.27% | 4.22% | 13.12% | 61.99% | |
78 Outperform | $52.36B | 12.62 | 13.42% | 3.28% | 17.13% | 14.73% | |
77 Outperform | $88.04B | 11.80 | 13.19% | 3.90% | 5.38% | 21.68% | |
72 Outperform | $107.08B | 13.76 | 9.88% | 4.16% | 6.98% | 32.63% | |
71 Outperform | $91.96B | 14.90 | 8.00% | 5.64% | 3.72% | -17.99% | |
64 Neutral | $12.86B | 9.79 | 7.78% | 16985.65% | 12.28% | -7.82% |
* Financial Sector Average
Performance Comparison
TSE:RY
Royal Bank Of Canada
174.66
33.50
23.73%
TSE:NA
National Bank of Canada
134.88
21.52
18.98%
TSE:BMO
Bank Of Montreal
147.91
37.12
33.50%
TSE:TD
Toronto Dominion Bank
95.92
23.81
33.01%
TSE:CM
Canadian Bank of Commerce
94.03
29.99
46.84%
TSE:BNS
Bank Of Nova Scotia
73.99
13.91
23.15%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.