Education
About Us
Working with TipRanks
Follow Us
Royal Bank Of Canada (TSE:RY)
TSX:RY
Top Page
Royal Bank Of Canada
(TSX:RY)
Rating:76Outperform
Price Target:
C$213.00
â–²(11.72% Upside)
Positive Factors
Dividend Increase
The bank raised its quarterly dividend by approximately 4% to $1.54 per share, which is a positive signal for investors.
Share Buyback Program
Royal Bank of Canada is set to engage in a significant share buyback program, planning to repurchase upwards of 35 million shares.
Wealth Management Performance
Wealth Management income was 10% higher year over year, with higher client assets surpassing forecasts.
Negative Factors
Earnings Miss
Royal Bank of Canada's Q2 results featured a slight earnings miss, with operating EPS missing consensus forecasts by 1%.
Investment Banking Revenue Decline
Geopolitical uncertainty has led to a 7% year-over-year revenue decline in Q2 in the investment banking division.
Provisions for Credit Losses
The bank reported higher Provisions for Credit Losses, impacting the Commercial Banking and Capital Markets performance negatively.
Royal Bank Of Canada (RY) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$267.12B
Dividend Yield3.11%
Average Volume (3M)4.12M
Price to Earnings (P/E)15.0
Beta (1Y)0.85
Revenue Growth6.03%
EPS Growth15.60%
CountryCA
Employees94,624
SectorFinancial
Sector Strength72
IndustryBanks - Diversified
Share Statistics
EPS (TTM)3.12
Shares Outstanding1,410,276,700
10 Day Avg. Volume2,584,787
30 Day Avg. Volume4,121,410
Financial Highlights & Ratios
PEG Ratio2.08
Price to Book (P/B)1.87
Price to Sales (P/S)4.14
P/FCF Ratio11.42
Enterprise Value/Market Cap1.96
Enterprise Value/Revenue5.38
Enterprise Value/Gross Profit8.80
Enterprise Value/Ebitda19.21
Forecast
1Y Price Target
$191.50Price Target Upside0.44% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Royal Bank Of Canada Business Overview & Revenue Model
Company DescriptionRoyal Bank of Canada (RY) is one of the largest financial institutions in Canada and a leading global bank. It operates through various segments including Personal & Commercial Banking, Wealth Management, Insurance, Investor & Treasury Services, and Capital Markets. RBC provides a wide range of financial services, including personal banking, business banking, investment services, asset management, and insurance products, serving millions of clients across Canada and internationally.
How the Company Makes MoneyRoyal Bank of Canada's revenue model is primarily based on interest income, fee-based income, and trading revenues. The majority of its revenue comes from Personal & Commercial Banking, which earns interest from loans and mortgages, as well as fees from various banking transactions. Wealth Management contributes significantly through asset management fees and commissions from financial products. Insurance operations generate premiums and investment income, while Capital Markets focuses on trading, investment banking, and advisory services. Additionally, RBC's Investor & Treasury Services provides custody and administration services, which further contribute to its revenue. Strategic partnerships and a strong digital banking presence also enhance its earnings potential.
Royal Bank Of Canada Earnings Call Summary
Earnings Call Date:May 29, 2025
(Q2-2025)
| % Change Since: 7.66%|
Next Earnings Date:Aug 27, 2025
Earnings Call Sentiment Neutral
RBC demonstrated strong earnings and revenue growth, supported by strategic acquisitions and robust performance in Wealth Management and Capital Markets. However, increased provisions for credit losses and uncertainties related to trade policies and economic conditions present challenges. The sentiment is balanced with notable achievements and cautious outlook given the macroeconomic environment.Q2-2025 Updates
Positive Updates
Strong Earnings Performance
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. Pre-provision pre-tax earnings were nearly $7 billion, with adjusted pre-tax pre-provision growth up 16% year-over-year.
Robust Revenue Growth
Revenue growth was 11% year-over-year, driven by strong volume growth in Personal and Commercial Banking, higher spreads in Personal Banking, and robust fee-based revenue growth in Wealth Management.
Dividend Increase
RBC announced a $0.06 or 4% increase in its quarterly dividend, indicating confidence in future performance.
Capital Markets Success
Capital Markets reported strong pre-provision pre-tax earnings of $1.4 billion, with Global Markets revenue up 23% year-over-year, driven by increased client activity.
Wealth Management Growth
Assets under management in RBC Global Asset Management increased by 11% to $694 billion, with strong net sales across asset classes.
Negative Updates
Increased Allowance for Credit Losses
The allowance for credit loss ratio increased to 74 basis points due to a prudent reserve build, reflecting heightened economic uncertainty and increasing weightings to downside scenarios.
Provisions on Performing Loans
RBC took a total of $568 million in provisions on performing loans, reflecting unfavorable changes to macroeconomic conditions and increased uncertainty.
Challenges in Commercial Banking
Loan demand was notably softer in sectors such as automotive, consumer discretionary, and transportation, with a cautious business sentiment impacting growth expectations.
Potential Delay in Peak Credit Losses
The impact of tariffs and trade uncertainty may push peak Stage 3 credit losses into fiscal 2026, indicating ongoing challenges in credit quality.
Company Guidance
In RBC's 2025 Second Quarter Results Conference Call, the bank reported earnings of $4.4 billion, with adjusted earnings reaching $4.5 billion, which included $260 million from the acquisition of HSBC Bank Canada. The bank achieved strong pre-provision pre-tax earnings of nearly $7 billion, marking a 16% increase from the previous year, despite a $568 million reserve build. Revenue grew by 11% year-over-year, supported by robust growth in Personal and Commercial Banking, Wealth Management, and Capital Markets. The loan-to-deposit ratio improved to 97%, and the common equity tier 1 ratio stood at 13.2%, with excess capital of approximately $5 billion. The bank announced a $0.06 increase in its quarterly dividend and plans to repurchase up to 35 million common shares. A cautious approach to risk management was emphasized, with an allowance for credit loss ratio rising to 74 basis points due to increased weightings to downside scenarios amidst economic uncertainty. Despite not projecting a recession in Canada or the U.S., the bank noted dampened confidence and client activity in certain sectors but expressed optimism about navigating the uncertain macro environment.Royal Bank Of Canada Financial Statement Overview
Summary
Royal Bank of Canada exhibits strong financial performance with high profitability margins, efficient cash flow management, and a stable balance sheet. Despite a relatively high leverage typical for the banking sector, the bank's robust revenue growth and strong returns on equity indicate effective financial management.Income Statement
The Royal Bank of Canada demonstrates strong financial performance with high gross and net profit margins. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 61.13%, and the net profit margin is 18.67%. The revenue shows a steady growth trend, with a notable increase of 69.64% from the previous period. The bank also maintains robust EBIT and EBITDA margins, indicating efficient operations and profitability.85
Very Positive
Balance Sheet
The balance sheet reflects a healthy financial position with a reasonable debt-to-equity ratio of 5.90, suggesting manageable leverage. The return on equity is strong at 13.75%, highlighting efficient asset utilization. The equity ratio stands at 5.91%, which is typical for large banks with significant liabilities. Overall, the balance sheet supports continued financial stability.78
Positive
Cash Flow
Royal Bank of Canada's cash flow is robust, with a significant free cash flow growth rate of 198.85% over the previous year, indicating strong cash generation. The operating cash flow to net income ratio is 3.56, demonstrating efficient cash conversion. The free cash flow to net income ratio is 3.42, further affirming the bank's strong cash flow management.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 97.55B | 57.49B | 53.66B | 48.77B | 49.54B | 47.10B |
| Gross Profit | 59.65B | 57.49B | 56.26B | 48.77B | 49.54B | 47.10B |
| EBITDA | 27.32B | 27.28B | 21.45B | 22.63B | 23.06B | 16.92B |
| Net Income | 18.22B | 16.23B | 14.86B | 15.79B | 16.04B | 11.43B |
Balance Sheet | ||||||
| Total Assets | 2.24T | 2.17T | 2.00T | 1.92T | 1.71T | 1.62T |
| Cash, Cash Equivalents and Short-Term Investments | 410.65B | 167.13B | 212.00B | 240.60B | 231.03B | 297.64B |
| Total Debt | 781.27B | 474.20B | 439.35B | 425.18B | 305.05B | 9.87B |
| Total Liabilities | 2.11T | 2.04T | 1.89T | 1.81T | 1.61T | 1.54T |
| Stockholders Equity | 132.45B | 127.09B | 117.66B | 108.06B | 98.67B | 86.66B |
Cash Flow | ||||||
| Free Cash Flow | 78.84B | 20.86B | 23.35B | 19.44B | 58.86B | 136.19B |
| Operating Cash Flow | 81.39B | 23.14B | 26.08B | 21.94B | 61.04B | 138.82B |
| Investing Cash Flow | -88.75B | -20.89B | -28.27B | -57.05B | -57.35B | -39.56B |
| Financing Cash Flow | -7.99B | -8.15B | -9.83B | -2.19B | -5.93B | -7.75B |
Royal Bank Of Canada Technical Analysis
Positive
190.65
Price Trends
179.89
Positive
172.84
Positive
170.14
Positive
Market Momentum
3.08
Negative
79.09
Negative
93.05
Negative
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 190.65 is above the 20-day moving average (MA) of 184.00, above the 50-day MA of 179.89, and above the 200-day MA of 170.14, indicating a bullish trend. The MACD of 3.08 indicates Negative momentum. The RSI at 79.09 is Negative, neither overbought nor oversold. The STOCH value of 93.05 is Negative, 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 (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $94.91B | 12.73 | 13.19% | 3.76% | 5.38% | 21.68% | |
81 Outperform | $179.46B | 10.61 | 14.27% | 4.05% | 13.12% | 61.99% | |
78 Outperform | $59.10B | 14.23 | 13.42% | 3.01% | 13.80% | 9.06% | |
78 Outperform | $113.02B | 14.53 | 9.88% | 4.38% | 6.98% | 32.63% | |
76 Outperform | $267.12B | 15.05 | 14.17% | 3.11% | 6.03% | 15.60% | |
71 Outperform | $97.86B | 15.86 | 8.00% | 6.85% | 0.44% | -18.29% | |
68 Neutral | $17.86B | 12.02 | 10.33% | 3.75% | 9.68% | 0.49% |
* Financial Sector Average
Performance Comparison
TSE:RY
Royal Bank Of Canada
190.65
39.86
26.44%
TSE:NA
National Bank of Canada
151.55
35.11
30.16%
TSE:BMO
Bank Of Montreal
158.68
44.25
38.67%
TSE:TD
Toronto Dominion Bank
102.88
26.87
35.35%
TSE:CM
Canadian Bank of Commerce
101.22
30.72
43.58%
TSE:BNS
Bank Of Nova Scotia
79.70
17.85
28.85%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.