ROYAL BANK OF CANADA REPORTS THIRD QUARTER 2025 RESULTS
ROYAL BANK OF CANADA REPORTS THIRD QUARTER 2025 RESULTS |
| [27-August-2025] |
TORONTO, Aug. 27, 2025 /CNW/ - Royal Bank of Canada5 (TSX: RY) (NYSE: RY) today reported record net income of $5.4 billion for the quarter ended July 31, 2025, up $928 million or 21% from the prior year. Diluted EPS was $3.75, up 21% over the same period, reflecting growth across each of our business segments. Adjusted net income3 and adjusted diluted EPS3 of $5.5 billion and $3.84 were up 17% and 18%, respectively, from the prior year.
"This quarter's record results demonstrate RBC's relentless, long-term focus on our clients and our commitment to delivering on the bold growth ambitions we laid out at our recent Investor Day. We saw strong growth across each of our business segments reflecting the strength of our diversified business model, solid capital position, investments in technology and talent, and disciplined approach to risk and expense management. Thanks to the incredible efforts of Team RBC, we're creating value and driving premium performance through the cycle, as we work to stay ahead of our clients' expectations in a rapidly changing economy and world." – Dave McKay, President and Chief Executive Officer of Royal Bank of Canada Record pre-provision, pre-tax earnings3 of $7.8 billion were up $1.7 billion or 29% from last year, mainly due to higher revenue in Capital Markets driven by strength across Corporate & Investment Banking and Global Markets and higher net interest income in Personal Banking and Commercial Banking reflecting strong average volume growth and higher spreads in Personal Banking. Higher fee-based revenue in Wealth Management reflecting market appreciation and net sales also contributed to the increase. These factors were partially offset by higher variable compensation commensurate with increased results, and continued investments in talent and technology across our businesses. Our consolidated results reflect an increase in total PCL of $222 million from a year ago, mainly reflecting higher provisions in Capital Markets, Commercial Banking and Personal Banking, partly offset by releases in Wealth Management in the current quarter. The PCL on loans ratio of 35 bps increased 8 bps from the prior year. Compared to last quarter, net income was up 23% reflecting growth across each of our business segments. Adjusted net income3 was up 22% over the same period. Pre-provision, pre-tax earnings3 were up $0.8 billion or 12% as higher revenues more than offset expense growth. The PCL on loans ratio of 35 bps decreased 23 bps from the prior quarter as last quarter was driven by higher provisions on performing loans reflecting the potential impacts of trade disruptions (including tariffs). The PCL on impaired loans ratio1 was 36 bps, up 1 bp from the prior quarter, while the PCL on performing loans ratio1 was (1) bp, down 24 bps from the prior quarter. Our capital position remains robust, with a CET1 ratio2 of 13.2%, supporting solid volume growth and $3.1 billion of capital returned to our shareholders through common share dividends and share buybacks.
Personal Banking Net income of $1,938 million increased $352 million or 22% from a year ago, largely driven by higher net interest income reflecting higher spreads and average volume growth of 3% in Personal Banking – Canada. Higher non-interest income also contributed to the increase. Non-interest expenses remained relatively flat, which included the realization of synergies related to the acquisition of HSBC Bank Canada (HSBC Canada). Compared to last quarter, net income increased $336 million or 21%, mainly due to lower PCL as last quarter reflected higher provisions on performing loans due to the potential impacts of trade disruptions (including tariffs). Higher net interest income reflecting the impact of three more days in the current quarter, average volume growth and higher spreads in Personal Banking – Canada also contributed to the increase. Commercial Banking Net income of $836 million increased $19 million or 2% from a year ago as growth in total revenue was partially offset by higher PCL. Non-interest expenses remained relatively flat, which included the realization of synergies related to the acquisition of HSBC Canada (HSBC Canada transaction). Compared to last quarter, net income increased $239 million or 40%, largely attributable to lower PCL as last quarter reflected higher provisions on performing loans due to the potential impacts of trade disruptions (including tariffs). Higher net interest income, primarily reflecting the impact of three more days in the current quarter, as well as higher spreads also contributed to the increase. Wealth Management Net income of $1,096 million increased $147 million or 15% from a year ago, mainly due to higher fee-based client assets reflecting market appreciation and net sales, which also drove higher variable compensation. Compared to last quarter, net income increased $167 million or 18%, mainly due to higher fee-based revenue driven by higher fee-based client assets reflecting market appreciation and net sales, as well as three more days in the quarter. The current quarter also reflected releases of provisions driven by performing loans in U.S. Wealth Management (including City National Bank), as compared to provisions taken last quarter. Higher net interest income reflecting higher spreads and three more days in the quarter also contributed to the increase. These factors were partially offset by higher variable compensation. Insurance Net income of $247 million increased $77 million or 45% from a year ago, primarily due to higher insurance service result driven by improved life insurance claims experience. Higher insurance investment result, largely due to lower capital funding costs, also contributed to the increase. Compared to last quarter, net income increased $36 million or 17%, largely due to higher insurance service result driven by improved life insurance claims experience. This was partially offset by less favourable investment-related experience.
Capital Markets Net income of $1,328 million increased $156 million or 13% from a year ago, primarily due to higher revenue in Global Markets and Corporate & Investment Banking. These factors were partially offset by higher PCL, higher compensation on increased results, as well as a higher effective income tax rate reflecting the impact of Pillar Two legislation and changes in earnings mix. Compared to last quarter, net income increased $126 million or 10%, mainly due to higher fixed income trading revenue primarily in the U.S. and higher debt and equity origination across most regions. These factors were partially offset by lower equity trading revenue across most regions and higher compensation on increased results. Corporate Support Net loss was $31 million for the current quarter, primarily due to residual unallocated costs, including severance, partially offset by asset/liability management activities. Net loss was $151 million in the prior quarter, primarily due to residual unallocated items, including severance. Net loss was $208 million in the same quarter last year, primarily due to the after-tax impact of the HSBC Canada transaction and integration costs of $125 million, which is treated as a specified item. Unallocated costs also contributed to the net loss. Capital, Liquidity and Credit Quality Capital – As at July 31, 2025, our CET1 ratio8 of 13.2% was unchanged from last quarter, reflecting net internal capital generation that was offset by RWA growth, share repurchases, the impact of a U.S. rating downgrade and risk parameter changes. Liquidity – For the quarter ended July 31, 2025, the average LCR9 was 129%, which translates into a surplus of approximately $103 billion, compared to 131% and a surplus of approximately $107 billion in the prior quarter. Average LCR9 decreased from the prior quarter, primarily due to loan growth, partially offset by lower funding requirements on securities and securities financing transactions and growth in deposits and funding. NSFR10 as at July 31, 2025 was 114%, which translates into a surplus of approximately $137 billion, compared to 116% and a surplus of approximately $154 billion in the prior quarter. NSFR10 decreased compared to the previous quarter, primarily due to loan growth and higher funding requirements on securities and securities financing transactions. Credit Quality Q3 2025 vs. Q3 2024 PCL on performing loans was $(28) million, compared to $42 million a year ago, driven by favourable changes to our macroeconomic forecast, partially offset by unfavourable changes in credit quality and portfolio growth in the current quarter. PCL on impaired loans of $913 million increased $290 million or 47%, primarily due to higher provisions in Capital Markets, Commercial Banking and Personal Banking. Q3 2025 vs. Q2 2025 PCL on performing loans was $(28) million, compared to $568 million last quarter, reflecting releases in the current quarter, driven by favourable changes to our macroeconomic forecast, partially offset by unfavourable changes in credit quality and portfolio growth, as compared to provisions taken last quarter, reflecting the potential impacts of trade disruptions (including tariffs). PCL on impaired loans increased $61 million or 7%, primarily due to higher provisions in Capital Markets, partially offset by recoveries in Wealth Management in the current quarter, as compared to provisions taken last quarter.
Key Performance and Non-GAAP Measures Performance measures Non-GAAP measures The following discussion describes the non-GAAP measures and ratios we use in evaluating our operating results. Pre-provision, pre-tax earnings
Adjusted results and ratios Our results for the three months ended April 30, 2025 and July 31, 2024 and nine months ended July 31, 2025 and July 31, 2024 were adjusted for the following specified item:
Our results for the nine months ended July 31, 2024 were also adjusted for the following specified item:
Adjusted ratios, including adjusted EPS (basic and diluted), adjusted ROE and adjusted efficiency ratio, which are derived from adjusted results, are useful to readers because they may enhance comparability in assessing profitability on a per-share basis, how efficiently profits are generated from average common equity and how efficiently costs are managed relative to revenues. Adjusted results and ratios can also help inform and support strategic choices and capital allocation decisions. The following table provides a reconciliation of our reported results to our adjusted results and illustrates the calculation of adjusted measures presented. The adjusted results and ratios presented below are non-GAAP measures or ratios. Consolidated results, reported and adjusted
Additional information about ROE and other key performance and non-GAAP measures and ratios can be found under the Key performance and non-GAAP measures section of our Q3 2025 Report to Shareholders. CAUTION REGARDING FORWARD-LOOKING STATEMENTS By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, that our financial performance, environmental & social or other objectives, vision and strategic goals will not be achieved, and that our actual results may differ materially from such predictions, forecasts, projections, expectations or conclusions. We caution readers not to place undue reliance on our forward-looking statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors – many of which are beyond our control and the effects of which can be difficult to predict – include, but are not limited to: credit, market, liquidity and funding, insurance, operational, compliance (which could lead to us being subject to various legal and regulatory proceedings, the potential outcome of which could include regulatory restrictions, penalties and fines), strategic, reputation, legal and regulatory environment, competitive and systemic risks, risks associated with escalating trade tensions, including protectionist trade policies such as the imposition of tariffs, and other risks discussed in the risk sections of our 2024 Annual Report and the Risk management section of our Q3 2025 Report to Shareholders, including business and economic conditions in the geographic regions in which we operate, Canadian housing and household indebtedness, information technology, cyber and third-party risks, geopolitical uncertainty, environmental and social risk, digital disruption and innovation, privacy and data related risks, regulatory changes, culture and conduct risks, the effects of changes in government fiscal, monetary and other policies, tax risk and transparency, and our ability to anticipate and successfully manage risks arising from all of the foregoing factors. Additional factors that could cause actual results to differ materially from the expectations in such forward-looking statements can be found in the risk sections of our 2024 Annual Report and the Risk management section of our Q3 2025 Report to Shareholders, as may be updated by subsequent quarterly reports. We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events, as well as the inherent uncertainty of forward-looking statements. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the Economic, market and regulatory review and outlook section and for each business segment under the Strategic priorities and Outlook headings in our 2024 Annual Report, as updated by the Economic, market and regulatory review and outlook section of our Q3 2025 Report to Shareholders. Such sections may be updated by subsequent quarterly reports. Any forward-looking statements contained in this document represent the views of management only as of the date hereof, and except as required by law, we do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf. Additional information about these and other factors can be found in the risk sections of our 2024 Annual Report and the Risk management section of our Q3 2025 Report to Shareholders, as may be updated by subsequent quarterly reports. Information contained in or otherwise accessible through the websites mentioned does not form part of this document. All references in this document to websites are inactive textual references and are for your information only. ACCESS TO QUARTERLY RESULTS MATERIALS Quarterly conference call and webcast presentation Management's comments on results will be posted on our website shortly following the call. A recording will be available by 5:00 p.m. (EST) from August 27, 2025 until October 31, 2025 at rbc.com/investorrelations/quarterly-financial-statements.html or by telephone (905-694-9451 or 800-408-3053, passcode 6738504#). Media Relations Contacts Investor Relations Contacts ABOUT RBC We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/peopleandplanet. ® Registered Trademarks of Royal Bank of Canada. SOURCE Royal Bank of Canada | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Codes: Toronto:RY,NYSE:RY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cultivating Smart Saving Habits
