Royal Bank of Canada (TSX: RY) closed fiscal 2025 with a revenue-led earnings surge, but the year also delivered a clear message that credit is getting more expensive again.
In Q4, total revenue rose to $17.2 billion from $15.1 billion while provisions for credit losses increased to $1.0 billion from $840 million. Under the topline, non-interest expense climbed to $9.4 billion from $9.0 billion, which kept operating jaws positive but not effortless.
Pre-tax income still expanded sharply as income before taxes increased to $6.8 billion from $5.2 billion. That strength translated into net income of $5.4 billion versus $4.2 billion, with diluted EPS of $3.76 versus $2.91.
Below the headline, taxes rose faster than profit. Income taxes were $1.39 billion versus $993 million, up 40% YoY, and the effective tax rate was disclosed at 20.4% for the quarter. Reported ROE improved to 16.8% from 14.3%, a gain of roughly 250 bps.
By segment in Q4, Capital Markets carried the loudest weight, with net income up to $1.43 billion from $985 million. Wealth Management rose to $1.28 billion from $969 million, while Personal Banking increased to $1.89 billion from $1.58 billion. Commercial Banking was steadier at $810 million versus $774 million, and Insurance slipped to $98 million from $162 million.
Total PCL rose $167 million, with PCL on impaired loans up $344 million, while PCL on performing loans fell $194 million. Gross impaired loans as a percentage of loans and acceptances increased to 0.83% from 0.59%.
On non-GAAPs, Q4 adjusted net income was $5.6 billion, with adjusted diluted EPS of $3.85 and adjusted ROE of 17.2%. Pre-provision, pre-tax earnings were $7.84 billion versus $6.06 billion.
CET1 was 13.5%, up 30 bps YoY, while the average LCR was 127% (surplus about $97 billion) versus 129% prior quarter, and NSFR was 112% (surplus about $127 billion) versus 114% prior quarter, both pressured by loan growth and balance sheet mix changes.
For the full year, revenue increased to $66.6 billion from $57.3 billion. Total PCL climbed to $4.36 billion from $3.23 billion, while non-interest expense rose to $36.6 billion from $34.3 billion. Net income reached $20.4 billion versus $16.2 billion, and diluted EPS rose to $14.07 from $11.25.
Adjusted full-year net income was $20.9 billion, with adjusted diluted EPS of $14.43. Full-year ROE improved to 16.3% from 14.4%, while adjusted ROE rose to 16.7% from 15.5%.
RBC returned $11.3 billion via common dividends and share buybacks and also declared a new quarterly dividend of $1.64, up $0.10.
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