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- **Record Performance**: Q4 earnings of CAD 5.4B, up 25% YoY, with dividend hike and CAD 1B buybacks.
- **ROE Ambition**: Medium-term target raised to 17%+, fueled by AI (30,000+ employees using generative AI) and U.S. transaction banking growth.
- **Resilience & Risk**: Elevated credit allowances (71bp PCL) amid trade uncertainty, but cautious optimism on Canada's service-driven recovery.
- **AI & Efficiency**: Targeting CAD 700M+ AI-driven value by 2027, with 1%-2% operating leverage in 2026.
- **U.S. Momentum**: City National net income +28% YoY, onboarding 180 clients for RBC Clear.

**【CEO Summary Section】**
- Reported record Q4 earnings of CAD 5.4 billion, with adjusted earnings of CAD 5.5 billion, marking a record year.
- Increased dividend by 6% to CAD 1.05 per share and returned CAD 1 billion through share buybacks.
- Raised medium-term ROE target to 17%+ from 16%+, driven by AI investments and operational efficiency.
- Emphasized cautious optimism on Canada's economic resilience amid trade uncertainties, with focus on service sector growth.
- Highlighted strategic initiatives: HSBC Bank Canada integration (exceeding CAD 740M cost synergies), AI-driven productivity (30,000+ employees using generative AI), and U.S. transaction banking expansion (RBC Clear onboarding 180 clients, $23B deposits).

**【CFO Financial Commentary】**
- Q4 diluted EPS: CAD 3.76 (GAAP) / CAD 3.85 (adjusted), up 25% YoY.
- Net interest income growth: 13% YoY (excluding trading), driven by higher margins in personal and commercial banking.
- Core expense growth: 5% YoY, due to variable compensation and tech investments.
- 2026 outlook: Mid-single-digit NIM growth (benefiting from mortgage spread repricing), 1%-2% operating leverage, and CAD 117M+ HSBC-related accretion.
- Capital return: 59% payout ratio (dividends + buybacks), targeting 40%-50% medium-term.

**【Q&A Highlights】**
- **ROE Target**: 17%+ achievable via organic growth and AI efficiency, with potential to exceed if CUSMA resolved positively.
- **Credit Outlook**: Elevated allowances (71bp PCL ratio) to navigate U.S.-Canada trade uncertainty; 2026 PCL expected stable at 35-39bp.
- **AI Impact**: 30,000+ employees using generative AI, targeting CAD 700M+ enterprise value by 2027.
- **U.S. Strategy**: City National net income up 28% YoY, with focus on transaction banking and cross-border solutions.
- **Mortgage Mix**: Shift from GICs to markets (mutual fund sales +50% YoY), driving NIM expansion.
- **Risks**: CUSMA resolution critical for business investment; cautious on commercial real estate and condo sector.


Royal Bank of Canada (RY) Q4 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

RY

RY fundamentals

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