Royal Bank of Canada (RY)
Market Price (3/9/2026): $163.55 | Market Cap: $228.7 BilSector: Financials | Industry: Diversified Banks
Royal Bank of Canada (RY)
Market Price (3/9/2026): $163.55Market Cap: $228.7 BilSector: FinancialsIndustry: Diversified Banks
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 9.2%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 5.1%, FCF Yield is 26% | Key risksRY key risks include [1] significant exposure to the Canadian housing market through its residential mortgage portfolio. |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 91%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 88%, CFO LTM is 62 Bil, FCF LTM is 60 Bil | |
| Low stock price volatilityVol 12M is 17% | |
| Megatrend and thematic driversMegatrends include Fintech & Digital Payments, AI in Financial Services, and Sustainable Finance. Themes include Digital Payments, Show more. |
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 9.2%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 5.1%, FCF Yield is 26% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 91%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 88%, CFO LTM is 62 Bil, FCF LTM is 60 Bil |
| Low stock price volatilityVol 12M is 17% |
| Megatrend and thematic driversMegatrends include Fintech & Digital Payments, AI in Financial Services, and Sustainable Finance. Themes include Digital Payments, Show more. |
| Key risksRY key risks include [1] significant exposure to the Canadian housing market through its residential mortgage portfolio. |
Qualitative Assessment
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1. Royal Bank of Canada delivered strong financial performance with record earnings that exceeded analyst expectations for both the fourth quarter of fiscal 2025 and the first quarter of fiscal 2026.
For Q4 2025 (reported December 3, 2025), RBC reported record net income of $5.4 billion, a 29% increase from the prior year, with adjusted diluted EPS up 25%. This momentum continued into Q1 2026 (reported February 26, 2026), where the bank posted record net income of $5.8 billion, a 13% year-over-year increase, and adjusted diluted EPS of $4.08, surpassing the average analyst estimate of $3.85 by 5.97%.
2. Robust growth was observed across key business segments, particularly in Wealth Management and Capital Markets.
In Q1 2026, Wealth Management net income surged by 32% year-over-year to $1.3 billion, driven by market appreciation and net sales increasing fee-based client assets. Capital Markets also saw a 3% increase in net income to $1.48 billion, boosted by higher equity and fixed-income trading across regions. Personal Banking contributed significantly with a 17% rise in net income year-over-year in Q1 2026.
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Stock Movement Drivers
Fundamental Drivers
The 6.9% change in RY stock from 11/30/2025 to 3/8/2026 was primarily driven by a 5.2% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 11302025 | 3082026 | Change |
|---|---|---|---|
| Stock Price ($) | 153.00 | 163.52 | 6.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 64,399 | 67,735 | 5.2% |
| Net Income Margin (%) | 29.7% | 31.0% | 4.3% |
| P/E Multiple | 11.2 | 10.9 | -3.2% |
| Shares Outstanding (Mil) | 1,407 | 1,399 | 0.6% |
| Cumulative Contribution | 6.9% |
Market Drivers
11/30/2025 to 3/8/2026| Return | Correlation | |
|---|---|---|
| RY | 6.9% | |
| Market (SPY) | -1.6% | 51.3% |
| Sector (XLF) | -5.2% | 43.3% |
Fundamental Drivers
The 14.1% change in RY stock from 8/31/2025 to 3/8/2026 was primarily driven by a 5.2% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 8312025 | 3082026 | Change |
|---|---|---|---|
| Stock Price ($) | 143.26 | 163.52 | 14.1% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 64,399 | 67,735 | 5.2% |
| Net Income Margin (%) | 29.7% | 31.0% | 4.3% |
| P/E Multiple | 10.5 | 10.9 | 3.4% |
| Shares Outstanding (Mil) | 1,407 | 1,399 | 0.6% |
| Cumulative Contribution | 14.1% |
Market Drivers
8/31/2025 to 3/8/2026| Return | Correlation | |
|---|---|---|
| RY | 14.1% | |
| Market (SPY) | 4.5% | 52.6% |
| Sector (XLF) | -6.0% | 47.9% |
Fundamental Drivers
The 42.9% change in RY stock from 2/28/2025 to 3/8/2026 was primarily driven by a 19.6% change in the company's P/E Multiple.| (LTM values as of) | 2282025 | 3082026 | Change |
|---|---|---|---|
| Stock Price ($) | 114.43 | 163.52 | 42.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 60,451 | 67,735 | 12.0% |
| Net Income Margin (%) | 29.4% | 31.0% | 5.5% |
| P/E Multiple | 9.1 | 10.9 | 19.6% |
| Shares Outstanding (Mil) | 1,414 | 1,399 | 1.1% |
| Cumulative Contribution | 42.9% |
Market Drivers
2/28/2025 to 3/8/2026| Return | Correlation | |
|---|---|---|
| RY | 42.9% | |
| Market (SPY) | 14.2% | 61.5% |
| Sector (XLF) | -2.1% | 61.5% |
Fundamental Drivers
The 80.1% change in RY stock from 2/28/2023 to 3/8/2026 was primarily driven by a 38.6% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 2282023 | 3082026 | Change |
|---|---|---|---|
| Stock Price ($) | 90.82 | 163.52 | 80.1% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 48,864 | 67,735 | 38.6% |
| Net Income Margin (%) | 32.3% | 31.0% | -4.0% |
| P/E Multiple | 8.0 | 10.9 | 36.5% |
| Shares Outstanding (Mil) | 1,387 | 1,399 | -0.8% |
| Cumulative Contribution | 80.1% |
Market Drivers
2/28/2023 to 3/8/2026| Return | Correlation | |
|---|---|---|
| RY | 80.1% | |
| Market (SPY) | 76.0% | 56.8% |
| Sector (XLF) | 48.0% | 62.0% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| RY Return | 34% | -8% | 12% | 24% | 46% | -3% | 143% |
| Peers Return | 47% | -13% | 18% | 43% | 41% | -8% | 176% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | -0% | 82% |
Monthly Win Rates [3] | |||||||
| RY Win Rate | 67% | 42% | 50% | 50% | 75% | 33% | |
| Peers Win Rate | 70% | 43% | 53% | 65% | 72% | 20% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 33% | |
Max Drawdowns [4] | |||||||
| RY Max Drawdown | -0% | -17% | -13% | -5% | -9% | -3% | |
| Peers Max Drawdown | -1% | -27% | -14% | -5% | -17% | -8% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -1% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: JPM, BAC, WFC, MS, GS.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 3/6/2026 (YTD)
How Low Can It Go
| Event | RY | S&P 500 |
|---|---|---|
| 2022 Inflation Shock | ||
| % Loss | -34.2% | -25.4% |
| % Gain to Breakeven | 51.9% | 34.1% |
| Time to Breakeven | 306 days | 464 days |
| 2020 Covid Pandemic | ||
| % Loss | -40.0% | -33.9% |
| % Gain to Breakeven | 66.5% | 51.3% |
| Time to Breakeven | 246 days | 148 days |
| 2018 Correction | ||
| % Loss | -23.5% | -19.8% |
| % Gain to Breakeven | 30.7% | 24.7% |
| Time to Breakeven | 788 days | 120 days |
| 2008 Global Financial Crisis | ||
| % Loss | -65.1% | -56.8% |
| % Gain to Breakeven | 186.9% | 131.3% |
| Time to Breakeven | 393 days | 1,480 days |
Compare to JPM, BAC, WFC, MS, GS
In The Past
Royal Bank of Canada's stock fell -34.2% during the 2022 Inflation Shock from a high on 1/18/2022. A -34.2% loss requires a 51.9% gain to breakeven.
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About Royal Bank of Canada (RY)
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- Personal & Commercial Banking: Offers a wide range of financial solutions including chequing and savings accounts, credit cards, mortgages, personal loans, and business banking services for small and medium-sized enterprises.
- Wealth Management: Provides investment management, financial planning, trust and estate services, and private banking for high-net-worth and ultra-high-net-worth individuals and families.
- Capital Markets: Delivers investment banking, sales and trading, research, and corporate banking services to corporations, institutional investors, and governments globally.
- Insurance: Sells life, health, travel, home, and auto insurance products to individuals and businesses.
- Investor & Treasury Services: Offers asset servicing, custody, and payments solutions for institutional clients, along with treasury management and foreign exchange services.
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Royal Bank of Canada (RY) - Major Customers
Royal Bank of Canada (RBC) is a diversified financial services company that serves a broad spectrum of clients. While it has significant corporate and institutional clients, its primary customer base for banking services, in terms of sheer volume and direct retail interaction, consists of individuals and small to medium-sized businesses. Given this, its major customer categories are:
- Retail Banking Customers: This vast category includes individuals and families who utilize RBC for everyday banking needs, such as checking and savings accounts, credit cards, personal loans, mortgages, and basic investment products. RBC operates an extensive network of branches and digital platforms to serve this segment across Canada and in select international markets.
- Wealth Management Clients: This segment comprises high-net-worth individuals, families, and trusts seeking comprehensive financial planning, private banking, investment management, and estate and trust services. RBC's wealth management services cater to clients with more complex financial needs and investment portfolios.
- Small Business Owners and Entrepreneurs: While these are businesses, they are often served through RBC's personal and commercial banking divisions and are distinct from large corporations. This category includes individual proprietors and small teams who require business accounts, operating lines of credit, term loans, merchant services, and other financial solutions tailored to the needs of their small to medium-sized enterprises (SMEs).
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- Microsoft Corporation (MSFT)
- IBM (IBM)
- Alphabet Inc. (GOOGL)
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Dave McKay, President & Chief Executive Officer
Dave McKay became President and CEO of RBC in 2014, leading Canada's biggest bank. He joined RBC in 1983 as a co-op student in computer programming and progressed through various senior roles in retail and business banking, group risk management, and corporate banking. As CEO, he has led strategic acquisitions, including City National Corporation in the U.S., Brewin Dolphin in the U.K., and most recently HSBC Bank Canada, expanding RBC's global presence. His father was an entrepreneur and small business owner, which instilled in him an appreciation for business growth.
Katherine Gibson, Chief Financial Officer
Katherine Gibson was appointed Chief Financial Officer of RBC in September 2024, after serving as Interim CFO since April 2024. She joined RBC over two decades ago and has held a variety of senior positions within the CFO Group, including Senior Vice President, Enterprise Finance & Controller. Prior to her extensive career at RBC, Ms. Gibson spent six years with an international accounting firm, gaining experience in both Canada and Australia.
Maria Douvas, Chief Legal and Administrative Officer
Maria Douvas is the Chief Legal and Administrative Officer and a member of RBC's Group Executive. She joined RBC in 2016 and has held progressively senior positions, including Executive Vice President & General Counsel, U.S. General Counsel, and Global Head of Litigation. Before joining RBC, Ms. Douvas was a partner at a prominent international law firm and served as a federal prosecutor in the U.S. Attorney's Office for the Southern District of New York.
Graeme Hepworth, Chief Risk Officer
Graeme Hepworth has served as Chief Risk Officer of RBC since 2018, overseeing the strategic management of risk across the enterprise. He began his career at RBC in 1997 as an analyst in Group Risk Management. His career at the bank includes various senior roles such as Vice President for Group Risk Management's Portfolio Management team, Head of Market Risk for Capital Markets in the U.S., and Chief Risk Officer for Europe & Asia.
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The Royal Bank of Canada (RY) faces several key risks inherent to the financial services industry and its specific operations. Among the most significant are macroeconomic risks, encompassing credit and interest rate fluctuations, technological disruption and cybersecurity threats, and the evolving regulatory and legal environment.The most significant risk to Royal Bank of Canada stems from macroeconomic conditions, including credit risk and interest rate risk. As a major financial institution with substantial lending operations, RY is highly susceptible to shifts in the broader economy. Concerns such as the potential re-emergence of inflation and subsequent changes in monetary policy, like interest rate hikes to combat inflation, are considered major risks that could negatively impact banking revenues. The bank also has significant exposure to the Canadian housing market through residential mortgages, which, despite disciplined lending practices, carries inherent default risk and sensitivity to economic downturns. The bank's financial reports consistently highlight provisions for credit losses as a factor impacting earnings, underscoring the ongoing nature of credit risk.
A second key risk involves technological disruption and cybersecurity threats. The financial sector is continually challenged by the rapid pace of technological advancements and the emergence of fintech companies and large technology firms entering the financial services space. This can lead to increased competition and pressure on traditional banking profits. Simultaneously, the increasing sophistication of cyberattacks poses a significant operational and reputational risk, as financial institutions like RBC must constantly invest in and adapt their cybersecurity measures to protect customer data and maintain service integrity.
Finally, the regulatory and legal environment risk represents a critical concern for Royal Bank of Canada. Operating as a highly regulated entity, RY is subject to complex and evolving laws, regulations, and supervisory requirements across various jurisdictions. Changes in these regulations, increased compliance costs, or adverse legal outcomes can significantly impact the bank's business model, operational costs, and profitability. The bank's annual reports consistently list legal and regulatory environment risk as a principal risk, highlighting its ongoing importance.
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The intensifying competition from digital-first financial service providers (fintechs and neobanks), significantly amplified by the impending implementation of an open banking framework in Canada.
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The addressable markets for Royal Bank of Canada's (RY) main products and services can be identified as follows: * Personal and Commercial Banking * Retail Banking (Canada): The Canada Retail Banking Market is projected to grow from USD 1.32 trillion in 2025 to USD 1.95 trillion by 2031. * Commercial Banking (Canada): The market size of Commercial Banking in Canada is estimated at USD 490.3 billion in 2025. * Wealth Management * Canada: The financial wealth across Canada, representing money being invested in the market, is approximately USD 6.5 trillion, with projections to reach USD 10 trillion by 2030. * Global: The global wealth management market reached a value of nearly USD 1.8 trillion in 2023 and is expected to grow to USD 2.5 trillion in 2028. * Insurance * Canada: The Canadian insurance market's total premium pool is estimated to be USD 176 billion this year (2024) and is forecasted to be USD 185 billion in 2025. * Capital Markets * Global Equity Market: The global stock market has a total value of USD 127 trillion as of 2025. * Global Fixed Income Market: Global fixed income markets outstanding reached USD 145.1 trillion in 2024.AI Analysis | Feedback
The Royal Bank of Canada (RY) is expected to drive future revenue growth over the next two to three years through several key initiatives and market dynamics:
- Strategic Acquisition and Integration: The acquisition of HSBC Canada is a significant driver, contributing to earnings and revenue growth and generating substantial cost synergies. RBC is focused on cross-selling its personal banking products to clients acquired through this integration.
- Growth in Personal and Commercial Banking: Strong average volume growth in both personal and commercial banking, coupled with higher spreads in personal banking, is expected to increase net interest income (NII). The bank has raised its 2025 NII growth guidance, reflecting stronger-than-expected growth in non-maturity deposits and favorable spreads on mortgages and GICs.
- Expansion in Wealth Management: The Wealth Management segment is anticipated to continue its strong revenue growth, benefiting from higher market values, successful asset gathering, and increased client-driven transactional revenue. RBC Global Asset Management has demonstrated significant increases in assets under management.
- Robust Capital Markets Performance: Revenue growth in Capital Markets is driven by robust client engagement and a constructive market environment, leading to higher loan syndication revenue, increased lending balances and spreads, and higher debt origination, particularly in the United States. Increased equity and foreign exchange trading across most regions also contribute to this growth.
- Targeted Geographic and Market Expansion: Beyond the HSBC Canada acquisition, RBC aims to scale growth and unlock new revenue streams in key markets and geographies, including the United States. Its U.S. division, City National Bank, has shown momentum in net interest income due to deposit growth and improved cost control.
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Share Repurchases
- Royal Bank of Canada (RBC) announced a normal course issuer bid (NCIB) to repurchase up to 30 million common shares, effective from June 12, 2024, until June 11, 2025.
- This NCIB in 2024-2025 represented approximately 2.12% of the bank's outstanding common shares as of May 31, 2024.
- RBC also announced a new NCIB to purchase up to 35 million common shares, commencing June 12, 2025, and expiring June 11, 2026.
Outbound Investments
- RBC completed the acquisition of HSBC Bank Canada for C$13.5 billion, which was approved in December 2023 and officially closed on March 28, 2024.
- In 2022, RBC acquired Brewin Dolphin for $2.1 billion, expanding its market presence in the United Kingdom and Europe.
- RBC also acquired Mdbilling in October 2022, a company specializing in OHIP Billing Software and Services.
Capital Expenditures
- RBC's capital expenditures for the fiscal years ending October 2020 to 2024 averaged C$2.465 billion.
- Capital expenditures peaked in October 2023 at C$2.73 billion and reached a 5-year low of C$2.186 billion in October 2021.
- For the latest twelve months ending July 31, 2025, RBC reported capital expenditures of C$2.365 billion.
Latest Trefis Analyses
| Title | Date | |
|---|---|---|
| DASHBOARDS | ||
| With Royal Bank of Canada Stock Surging, Have You Considered The Downside? | 10/17/2025 | |
| Fundamental Metrics: ... | 06/19/2024 |
| Title | |
|---|---|
| ARTICLES |
Trade Ideas
Select ideas related to RY.
| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 02282026 | NDAQ | Nasdaq | Insider | Insider Buys 45DStrong Insider BuyingCompanies with multiple insider buys in the last 45 days | 0.0% | 0.0% | 0.0% |
| 02272026 | JEF | Jefferies Financial | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 0.0% | 0.0% | 0.0% |
| 02272026 | PAYO | Payoneer Global | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 0.0% | 0.0% | 0.0% |
| 02272026 | FOUR | Shift4 Payments | Dip Buy | DB | FCF Yield | Low D/EDip Buy with High Free Cash Flow YieldBuying dips for companies with significant free cash flow yield (FCF / Market Cap) and reasonable debt / market cap | 0.0% | 0.0% | 0.0% |
| 02202026 | COIN | Coinbase Global | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 2.6% | 2.6% | -6.5% |
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 161.90 |
| Mkt Cap | 251.5 |
| Rev LTM | 75,590 |
| Op Inc LTM | - |
| FCF LTM | -19,894 |
| FCF 3Y Avg | -5,907 |
| CFO LTM | -18,445 |
| CFO 3Y Avg | -4,278 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 8.3% |
| Rev Chg 3Y Avg | 8.6% |
| Rev Chg Q | 6.7% |
| QoQ Delta Rev Chg LTM | 1.7% |
| Op Mgn LTM | - |
| Op Mgn 3Y Avg | - |
| QoQ Delta Op Mgn LTM | - |
| CFO/Rev LTM | -24.9% |
| CFO/Rev 3Y Avg | -10.2% |
| FCF/Rev LTM | -27.1% |
| FCF/Rev 3Y Avg | -11.3% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 251.5 |
| P/S | 3.6 |
| P/EBIT | - |
| P/E | 12.8 |
| P/CFO | -5.5 |
| Total Yield | 7.9% |
| Dividend Yield | 0.0% |
| FCF Yield 3Y Avg | -0.5% |
| D/E | 1.2 |
| Net D/E | -0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | -11.0% |
| 3M Rtn | -8.2% |
| 6M Rtn | 6.2% |
| 12M Rtn | 29.9% |
| 3Y Rtn | 101.5% |
| 1M Excs Rtn | -8.2% |
| 3M Excs Rtn | -5.4% |
| 6M Excs Rtn | -0.2% |
| 12M Excs Rtn | 10.3% |
| 3Y Excs Rtn | 15.4% |
Segment Financials
Assets by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Capital Markets | 1,127,661 | 1,100,172 | 1,025,892 | 692,278 | 688,054 |
| Personal Banking | 555,029 | ||||
| Commercial Banking | 187,142 | ||||
| Wealth Management | 184,503 | 179,227 | 206,466 | 148,990 | 129,706 |
| Corporate Support | 87,959 | 66,956 | 60,119 | 52,574 | 45,161 |
| Insurance | 29,288 | 24,130 | 21,918 | 22,724 | 21,253 |
| Personal & Commercial Banking | 636,046 | 602,824 | 549,702 | 509,679 | |
| Investor & Treasury Services | 240,055 | 230,695 | |||
| Total | 2,171,582 | 2,006,531 | 1,917,219 | 1,706,323 | 1,624,548 |
Price Behavior
| Market Price | $163.52 | |
| Market Cap ($ Bil) | 229.5 | |
| First Trading Date | 10/16/1995 | |
| Distance from 52W High | -6.8% | |
| 50 Days | 200 Days | |
| DMA Price | $169.20 | $146.78 |
| DMA Trend | up | up |
| Distance from DMA | -3.4% | 11.4% |
| 3M | 1YR | |
| Volatility | 15.6% | 17.1% |
| Downside Capture | 84.76 | 62.29 |
| Upside Capture | 104.17 | 91.09 |
| Correlation (SPY) | 52.7% | 61.2% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 0.98 | 0.68 | 0.76 | 0.62 | 0.57 | 0.65 |
| Up Beta | 0.34 | 0.37 | 0.02 | 0.36 | 0.46 | 0.56 |
| Down Beta | 0.73 | 0.33 | 0.47 | 0.43 | 0.43 | 0.53 |
| Up Capture | 140% | 85% | 142% | 93% | 90% | 55% |
| Bmk +ve Days | 9 | 20 | 31 | 70 | 142 | 431 |
| Stock +ve Days | 11 | 20 | 35 | 72 | 145 | 410 |
| Down Capture | 107% | 101% | 83% | 67% | 73% | 90% |
| Bmk -ve Days | 12 | 21 | 30 | 54 | 109 | 320 |
| Stock -ve Days | 10 | 21 | 26 | 52 | 106 | 341 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with RY | |
|---|---|---|---|---|
| RY | 46.9% | 17.1% | 2.08 | - |
| Sector ETF (XLF) | 1.8% | 19.4% | -0.03 | 60.0% |
| Equity (SPY) | 16.4% | 19.2% | 0.66 | 61.4% |
| Gold (GLD) | 77.1% | 26.1% | 2.17 | 13.1% |
| Commodities (DBC) | 19.6% | 17.1% | 0.89 | 21.2% |
| Real Estate (VNQ) | 3.1% | 16.6% | 0.01 | 50.3% |
| Bitcoin (BTCUSD) | -24.9% | 45.6% | -0.49 | 32.0% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with RY | |
|---|---|---|---|---|
| RY | 17.8% | 17.8% | 0.82 | - |
| Sector ETF (XLF) | 10.5% | 18.7% | 0.44 | 68.5% |
| Equity (SPY) | 13.0% | 17.0% | 0.60 | 62.2% |
| Gold (GLD) | 24.2% | 17.2% | 1.14 | 16.3% |
| Commodities (DBC) | 11.9% | 19.0% | 0.51 | 24.1% |
| Real Estate (VNQ) | 5.0% | 18.8% | 0.17 | 55.4% |
| Bitcoin (BTCUSD) | 6.5% | 56.8% | 0.34 | 24.3% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with RY | |
|---|---|---|---|---|
| RY | 16.8% | 19.8% | 0.75 | - |
| Sector ETF (XLF) | 13.4% | 22.2% | 0.56 | 74.6% |
| Equity (SPY) | 15.0% | 17.9% | 0.72 | 69.8% |
| Gold (GLD) | 15.1% | 15.6% | 0.80 | 8.0% |
| Commodities (DBC) | 9.0% | 17.6% | 0.43 | 34.9% |
| Real Estate (VNQ) | 6.1% | 20.7% | 0.26 | 60.3% |
| Bitcoin (BTCUSD) | 65.9% | 66.8% | 1.05 | 18.0% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| SUMMARY STATS | |||
| # Positive | 0 | 0 | 0 |
| # Negative | 0 | 0 | 0 |
| Median Positive | |||
| Median Negative | |||
| Max Positive | |||
| Max Negative | |||
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 04/30/2021 | 05/27/2021 | 6-K |
| 01/31/2021 | 02/24/2021 | 6-K |
| 10/31/2020 | 12/02/2020 | 40-F |
| 07/31/2020 | 08/26/2020 | 6-K |
| 04/30/2020 | 05/27/2020 | 6-K |
| 10/31/2019 | 12/04/2019 | 40-F |
| 07/31/2019 | 08/21/2019 | 6-K |
| 04/30/2019 | 05/23/2019 | 6-K |
| 01/31/2019 | 02/22/2019 | 6-K |
| 10/31/2018 | 11/28/2018 | 40-F |
| 07/31/2018 | 08/22/2018 | 6-K |
| 04/30/2018 | 05/24/2018 | 6-K |
| 01/31/2018 | 02/23/2018 | 6-K |
| 10/31/2017 | 11/29/2017 | 40-F |
| 07/31/2017 | 08/23/2017 | 6-K |
| 04/30/2017 | 05/25/2017 | 6-K |
RY Trade Sentinel
OVERWEIGHT (Score 9-10)
CONVICTION RATIONALE
The investment thesis presents a highly attractive, probability-adjusted risk/reward. The potential upside from a structural, company-specific catalyst (HSBC acquisition) significantly outweighs the downside from a well-understood cyclical headwind (credit normalization). The moat is widening, justifying a high probability of the bull case materializing, making this a high-conviction opportunity.
STOCK ARCHETYPE
Cyclical / CommodityAs a universal bank, Royal Bank of Canada's core business of lending is intrinsically tied to the macroeconomic cycle, including interest rates, loan demand, and credit quality. Therefore, valuing it based on normalized, mid-cycle earnings power rather than peak/trough metrics is the most appropriate approach.
INVESTMENT THESIS
The primary driver for outperformance is the successful integration of the recently acquired HSBC Canada assets, which adds 780,000 customers and provides a clear path to market share gains and revenue synergies in a mature domestic market. This is supplemented by a strategic mix-shift towards the higher-margin, less capital-intensive Wealth Management business, where RBC already holds a dominant 32% market share.
- The completed acquisition of HSBC Canada provides a clear, near-term catalyst for revenue and market share growth.
- Management has signaled confidence by raising its ROE target to 17%+ for fiscal 2026.
- The business is experiencing a positive mix shift towards higher-margin Wealth Management and Capital Markets fee income.
- RBC Wealth Management is the largest player in Canada with a 32% market share.
PRIMARY RISK
The most significant friction to the thesis is a cyclical deterioration in credit quality, driven by a slowing macroeconomic environment. Rising consumer insolvencies and stress in commercial loan portfolios are forcing the bank to increase its Provision for Credit Losses (PCL), which acts as a direct headwind to earnings growth.
- Provision for Credit Losses (PCL) on impaired loans ratio increased to 37 bps for the full year 2025, a year-over-year increase of 9 bps.
- The PCL on loans ratio for Q4 2025 was 39 bps, an increase of 4 bps from the previous quarter, indicating an accelerating trend.
- Canadian consumer insolvencies rose 20.5% in January 2025 compared to the previous month.
| KPI | Threshold | Rationale |
|---|---|---|
| Provision for Credit Losses (PCL) on Impaired Loans Ratio | > 45 bps | The primary risk indicator. A sustained breach of this threshold would signal that credit deterioration is worse than anticipated, threatening consensus earnings estimates and triggering a potential de-rating. |
| Net Interest Margin (NIM) | Sequential decline > 3 bps | A core driver of profitability. A sequential decline of this magnitude would suggest pressure on loan pricing or rising funding costs, weakening the bank's core earnings power. |
| Wealth Management Assets Under Administration (AUA) Growth | < 6% YoY | A key leading indicator for the 'Alpha Driver'. Growth below this rate would indicate that the high-margin mix-shift story is weakening, making the growth thesis more reliant on the slower-growing traditional banking segment. |
Credit Normalization vs. Strategic Growth
BULL VIEW
The HSBC acquisition provides a step-change in market share and synergies, while a mix-shift to wealth management boosts margins and overall ROE to 17%+.
CORE TENSION
Can earnings growth from the HSBC acquisition and wealth management outpace the drag from rising Provision for Credit Losses (PCL) in a slowing economy?
PREVAILING SENTIMENT
The PCL on loans ratio rose to 39 bps in Q4 2025, a 4 bps sequential increase, showing the credit deterioration trend is accelerating and challenging the bull case.
BEAR VIEW
Accelerating consumer insolvencies and commercial loan stress will force PCLs above 45 bps, causing earnings misses and multiple compression.
| Timeline | Event & Metric To Watch |
|---|---|
February 26, 2026 | Q1 2026 Earnings Call Watch: Provision for Credit Losses (PCL) on loans ratio. The key debate hinges on whether this exceeds the 45 bps bear-case threshold. |
H1 2026 | OSFI Regulatory Updates on CRE & Basel III Watch: Disclosures on impaired loans in the Commercial Real Estate (CRE) portfolio and any negative change to the CET1 ratio guidance. |
Monthly | Statistics Canada Consumer Insolvency Report Watch: Month-over-month percentage change in Canadian consumer insolvencies. A continued double-digit increase confirms consumer strain. |
| Date | Event | Stock Impact |
|---|---|---|
8/27/2025 | Q3 2025 Earnings Release Details: Reported record net income of $5.4B, with EPS of $3.75 beating estimates by $0.42. Strong performance was driven by Capital Markets and Personal Banking. PCLs increased to $881M. | Surged +5.50% $135.68 -> $143.16 |
9/9/2025 | Barclays Global Financial Services Conference Details: RBC presented at the Barclays conference, discussing its strategy and outlook. The market reaction was minimal. | Muted (-0.43%) $142.51 -> $141.90 |
12/3/2025 | Q4 2025 Earnings Release Details: Reported record Q4 profit of $5.4B, beating estimates with EPS of $3.85. Increased dividend by 6%. PCLs rose to over $1B, but strong capital markets and wealth results drove a positive reaction. | Modest 1.46% gain $153.33 -> $155.57 |
1/6/2026 | RBC Capital Markets Canadian Bank CEO Conference Details: RBC participated in its own CEO conference, providing an outlook for the banking sector. The stock experienced a slight pullback following the event. | Slight -1.55% pullback $171.88 -> $169.21 |
1/27/2026 | Capital Notes Issue & Scholarship Program Details: RBC announced a US$1.0 billion NVCC AT1 capital notes issue and a new $1.5 million annual scholarship program to address Canada's skills gap. Market reaction was muted. | Changed Little (0.91%) $167.32 -> $168.84 |
1/29/2026 | Strategic Partnership with REALTOR.ca Details: RBC announced a partnership with REALTOR.ca to integrate financial literacy resources into the homebuying process, aiming to capture clients earlier. The stock saw a modest gain. | Modest 1.32% gain $166.58 -> $168.78 |
Position Sizing
4%-6%
NORMAL
Volatility is stable and low relative to the market. While sentiment is Neutral due to credit cycle risk and visibility is medium, the fair valuation and resilient moat justify a standard allocation.
Diversification Alternatives
TD
SECTOROffers a higher dividend yield and greater exposure to the U.S. market, providing geographic diversification away from the concentrated Canadian economy. Recent buybacks are substantial.
BMO
SECTORStrong 2025 earnings growth was driven by diversification in Wealth Management and Capital Markets. The bank has a robust CET1 ratio, suggesting surplus capital for buybacks.
Royal Bank of Canada is transforming from a dominant Canadian financial institution into a diversified North American banking and wealth management leader through strategic acquisitions and U.S. market expansion.
Read all news through the lens of RBC's North American expansion and diversification, specifically focusing on the successful integration of HSBC Canada and the operational turnaround of City National Bank.
Positive updates on HSBC Canada integration progress and accelerated revenue synergies, mid-single-digit mortgage growth and mid- to high-single-digit commercial loan growth in Canada, and clear evidence of improved profitability or resolved regulatory challenges at City National Bank.
Significant deterioration in Canadian credit quality (e.g., rising loan loss provisions impacting Net Interest Income by more than C$500 million), new regulatory fines or setbacks for City National Bank, or material delays/cost overruns in the HSBC Canada integration.
General macroeconomic forecasts for the Canadian economy without specific, quantified impacts on RBC's loan book or credit quality are noise. Standard analyst rating changes that do not introduce new fundamental information beyond what is already known are also noise.
Repricing Catalyst
The successful integration of the acquired HSBC Canada business, expected to deliver revenue synergies and add significant scale to Canadian operations (HSBC Canada had ~C$1.2 billion in assets acquired). Additionally, a turnaround in the profitability and regulatory standing of the U.S.-based subsidiary, City National Bank, which could improve its contribution to net income by hundreds of millions of dollars annually.
Canadian Personal & Commercial Banking
$19.3B TTM (40% of Total) · % MarginWhat It Is
Retail banking products including chequing accounts, savings accounts, credit cards, mortgages, personal loans; commercial loans and lines of credit for small and medium businesses; business deposits and payment solutions.
Who Pays & How
Over 15 million Canadian clients, including individuals and businesses, pay interest on loans (mortgages, commercial loans) and various service fees for accounts and transactions. Switching costs are moderate due to the inconvenience of transferring automated payments, direct deposits, and established credit histories.
Competition
Global Wealth Management
$12.0B TTM (25% of Total) · % MarginWhat It Is
Investment management, financial planning, trust and estate services, private banking for high-net-worth and ultra-high-net-worth clients globally. This includes managing AUM of C$794 billion.
Who Pays & How
Affluent individuals, families, and institutional clients globally pay recurring fees based on assets under management (AUM) or assets under administration (AUA). Switching costs are higher due to the deep integration of financial planning, trusted advisor relationships, and the complexity of moving consolidated portfolios and services.
Competition
Global Capital Markets
$12.0B TTM (25% of Total) · % MarginWhat It Is
Investment banking services (M&A advisory, equity and debt underwriting), sales and trading across various asset classes (equities, fixed income, foreign exchange, commodities), and research.
Who Pays & How
Corporate clients, institutional investors, and governments globally pay transaction fees for underwriting and advisory services, and generate trading commissions. Clients choose RBC for its execution capabilities, market access, and research, particularly as the #1 investment bank in Canada.
Competition
U.S. Banking (City National Bank)
$4.8B TTM (10% of Total) · % MarginWhat It Is
Commercial banking, private and wealth management services for high-net-worth individuals and businesses in the United States, through its subsidiary City National Bank.
Who Pays & How
U.S. commercial and affluent clients pay interest on loans, and fees for banking and wealth management services. Clients value local expertise and personalized service. Switching costs are moderate for banking, higher for integrated wealth management relationships.
Competition
External Quote Links
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| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
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