Royal Bank of Canada Smashes Q4 Expectations With 29% Profit Surge

The Royal Bank of Canada (RBC) has reported an impressive financial performance for its fourth quarter, exceeding market expectations and underscoring renewed strength across several core business units. The bank posted a 29% year-over-year increase in profit, driven primarily by strong results in its capital markets and wealth management divisions.

For the quarter ending October 31, RBC recorded a profit of $5.4 billion, equivalent to $3.76 per share. Adjusted earnings reached $3.85 per share, beating analysts’ consensus estimates of $3.55 according to S&P Capital IQ. Revenue climbed 14% to $17.2 billion, reflecting broad-based business growth.

RBC CEO Dave McKay emphasized the strategic importance of financial stability and performance:
“Our financial strength supports our credit ratings and enables us to pursue disciplined growth aligned with client needs.”

In line with its positive results, RBC announced a 10-cent increase to its quarterly dividend, bringing the payout to $1.64 per share. The bank also raised its return on equity (ROE) target to 17% or higher, surpassing its previous benchmark of 16% set during its March investor day.

Capital Markets and Wealth Management Lead Gains

RBC’s capital markets division delivered a standout performance with a 45% jump in profit to $1.4 billion, supported by higher trading revenues, mergers and acquisitions activity, and strong performance in its U.S. business — which generated more than half of the division’s total revenue.

The wealth management segment saw profit rise by 33% to $1.3 billion, bolstered by higher client assets and better advisory sales. Meanwhile, personal and commercial banking also contributed solid growth, with personal banking profit increasing 20% to $1.9 billion, driven by higher net interest margins and loan volume.

Industry Context and Analyst Response

RBC is the second major Canadian bank to report fourth-quarter results after National Bank, with the Bank of Nova Scotia also recently surpassing analyst expectations. Other major banks including TD Bank, Bank of Montreal, and CIBC are set to release results later this week.

Analyst Mike Rizvanovic of Bank of Nova Scotia noted that RBC’s updated ROE goal is “conservative,” adding that the bank’s strong numbers could signal further share price upside.

Provisions for Credit Losses Rise

Despite strong earnings, RBC increased its provisions for credit losses to $1 billion, up from $640 million a year earlier, reflecting broader economic caution and the bank’s proactive risk management approach. The amount includes $984 million set aside for expected loan defaults.

As the fiscal year closes, RBC’s solid fourth-quarter performance reinforces its position as one of Canada’s most resilient financial institutions during a period of global economic uncertainty.