Aug 27, 2026 earnings call — Record earnings and growth initiatives
Reported record earnings of $6 billion, up 11% year-over-year.
Revenue $13.2B (est $13.0B) · EPS $3.07 (est $2.89)
Key quotes
"We deployed 85 basis points of capital in the quarter to grow our business, pay dividends and buy back our stock."
"We have an ambition to build a global transaction banking business with an end-to-end offering that allows us to service our business and wholesale clients as they operate seamlessly across borders in a world with evolving trade connections."
"We are also accelerating the execution around our AI ambitions as we build towards generating $700 million to $1 billion in enterprise value by the end of fiscal 2027."
Analyst Q&A 7
AI build-out effects on lending and deposits
Q (Ebrahim Poonawala · BofA): The analyst asked if the AI CapEx cycle will boost Royal's revenue beyond IPOs and debt work, and how it might affect lending, deposits, and wealth. He also asked where Royal can win with the new global transaction banking (GTB) business.
A: Management said the AI build-out touches many sectors where the bank already has strength and scale. They said this creates large financing needs they can support with lending, then connect that lending to deposits, cash management, investment banking, trading and wealth. Management also said they created GTB to integrate technology, serve global clients, and cross-sell existing relationships.
"So if I step back from that or unpack that a little bit, obviously, the AI build-out is impacting a variety of sectors from technology to data centers, to power, to energy, to critical minerals." — Derek Neldner
Wealth margins and future investment
Q (John Aiken · Jefferies): The analyst asked whether Wealth Management will need a new step-up in investment to sustain growth, or if scale will keep raising pretax margins. He noted recent AUM growth and operating leverage.
A: Management said the Canadian Wealth franchise already has a large scale advantage and that asset growth is giving real scale benefits. They said they have been investing steadily in technology but do not expect a required step-up in investment, and that AI work will be funded inside the current budget to boost adviser productivity and back-office efficiency.
"We do not expect to have a required sort of step-up in that investment." — Neil McLaughlin
GTB rollout timing and success metrics
Q (Stephen Boland · Raymond James): The analyst asked how the GTB plan will be implemented, the timeline, and what metrics will show it is working beyond loan or deposit growth.
A: Management said existing businesses are strong and they will bring them together without disrupting momentum. They said there will be organizational changes and they will work through that over the next 60 to 90 days, with a seamless transition for clients and teams, and that new KPIs will be published over time to track GTB progress.
"We'll be working through that over the next 60 to 90 days." — Derek Neldner
Capital markets ROE and M&A approach
Q (Gabriel Dechaine · National Bank Financial): The analyst asked when capital markets ROE might improve after balance sheet growth, and what would qualify as a tuck-in or a larger acquisition today.
A: Management said capital markets ROE has expanded materially since 2019 and they are operating ahead of past targets, with continued focus on improving revenue per risk. On M&A, they said their priority is organic growth and buybacks; they will pursue deals only if they create clear shareholder value and can be integrated to add scale in key U.S. areas like Commercial Banking and Wealth.
"If you look back and you normalize that, we've seen very significant expansion of the capital markets ROE really going back to 2019, 2020." — Derek Neldner
NII performance and PPA headwind
Q (Mario Mendonca · TD): The analyst asked why Royal's net interest income growth lags peers despite strong deposits, and how big the PPA (purchase price allocation) headwind is and when it laps.
A: Management said all-bank NIM is affected by Capital Markets items but underlying net interest income is growing at 7% driven by loan and deposit volume in Commercial and Personal Banking. They said the PPA was about $100 million headwind per quarter, translating to about a 4 basis point headwind, and that they will lap this headwind in Q2 next year.
"So the PPA was about $100 million headwind per quarter, and that translates into about a 4 basis point headwind." — Katherine Gibson (CFO)
Loan growth and HSBC client retention
Q (Paul Holden · CIBC): The analyst asked why Royal's commercial loan growth has lagged some peers and whether HSBC client retention has met expectations after integration.
A: Management said loan growth for the quarter was 1.2%, double the prior quarter, with strong exit momentum and July the best month in a year; pipelines are strong with improving portfolio quality and pockets of growth in agriculture, health care, public sector and Ontario real estate. They also said HSBC client retention is well below modeled attrition and is strong, with depth of relationship improving month-over-month.
"So our loan growth for the quarter was 1.2%, as Katherine highlighted." — Sean Amato-Gauci
CET1 ratio path and CNB growth options
Q (Mehmed Rizvanovic · Scotiabank): The analyst asked if Royal could target roughly 12% CET1 in 2 to 3 years and whether City National Bank (CNB) growth will be organic or include acquisitions.
A: Management said they are being prudent given geopolitical uncertainty but expect to reduce the 13.5% level toward the mid of the 12.5% to 13.5% range and potentially lower over time through organic growth or buybacks. On CNB, they said the near-term focus is organic growth—adding teams, products and regions—while remaining open to acquisitions only if they create shareholder value and can be integrated efficiently.
"So I would say, yes, we would not have an adverse reaction to bringing it down consistently through the deployment of capital to somewhere near those ranges given the recent DSB pullback by OSFI." — David McKay (CEO)