Royal Bank of Canada has capped off an exceptional fiscal year with a remarkable fourth-quarter performance, posting a 29% year-over-year increase in profits and becoming the first Canadian bank to surpass $20 billion in annual earnings.
Strong Q4 Performance
The country’s largest bank reported fourth-quarter profits of $5.4 billion, or $3.76 per share, for the three months ending October 31. On an adjusted basis, earnings reached $3.85 per share, comfortably beating analyst expectations of $3.55 per share.
This strong performance prompted RBC to increase its return on equity target from 16% to 17% or higher, signaling confidence in its ability to generate even stronger returns for shareholders. The bank also rewarded investors with a dividend increase of 10 cents, bringing the quarterly payout to $1.64 per share.
What Drove the Results?
Several business segments contributed to RBC’s impressive quarter:
Capital Markets: This division was a standout performer, with profits surging 45% to $1.4 billion. The gains were fueled by robust activity in equities trading and a busy merger and acquisition environment across all regions where RBC operates.
Personal Banking: Profit in this core segment climbed 20% to $1.9 billion, demonstrating strong fundamentals in RBC’s retail operations.
Commercial Banking: This segment also showed healthy growth, contributing to the bank’s overall strong performance.
Historic Milestone
For the full fiscal year 2025, RBC achieved a historic milestone by becoming the first Canadian bank to earn more than $20 billion in a single fiscal year, with record earnings reaching $20.4 billion. This achievement underscores the bank’s market leadership and ability to capitalize on favorable market conditions.
Looking Ahead
The increased profitability target signals RBC’s optimism about future performance. With strong momentum in capital markets, solid retail banking fundamentals, and a diversified business model, the bank appears well-positioned to meet its ambitious new goals.
RBC’s results also set a high bar for other Canadian banks reporting earnings this week, highlighting the competitive dynamics in Canada’s banking sector.
The strong performance reflects not only favorable market conditions but also RBC’s strategic positioning across multiple business lines, from personal banking to wealth management and capital markets operations.
