Fourth Quarter Earnings Performance: RBC reported fourth quarter earnings of $4.2 billion, with adjusted earnings up 18% year-over-year to $4.4 billion, despite a $318 million contribution from the acquisition of HSBC Canada. This performance showcases strong client activity and market appreciation across business segments, leading to all-bank operating leverage of 7%.
Capital Position and Shareholder Returns: RBC ended the fiscal year with a Common Equity Tier 1 (CET1) ratio of 13.2%, reflecting $5 billion of excess capital above the 12.5% requirement. A dividend increase of $0.06 or 4% was announced, indicating a commitment to returning capital to shareholders. The bank is cautious on stock buybacks amid market volatility but indicated a willingness to use them opportunistically.
Macroeconomic Outlook and Credit Losses: The bank anticipates ongoing challenges in the Canadian economy, highlighted by weaker consumer spending and rising unemployment. There is an expectation for increased credit losses due to a higher interest rate environment, with projections indicating a credit loss ratio in the mid-30s basis points for 2025, peaking in the second half of the year.