Strong earnings power a higher payout for shareholders
Royal Bank of Canada reported a record fourth quarter, prompting its board to raise the quarterly common share dividend to $1.64, a six per cent increase. The payment is scheduled for February 24, 2026, to shareholders of record as of January 26. Preferred share dividends for Series BO, BT and BU were also declared.
Quarterly profit climbed to $5.43 billion, up from $4.22 billion a year earlier. Annual profit reached $20.4 billion, an increase of 25 per cent, supported by broad-based performance and the successful integration of HSBC Canada.
Raising profitability targets amid economic uncertainty
RBC raised its return on equity target to above 17%, outpacing peers. CEO Dave McKay acknowledged ongoing economic and trade headwinds, yet expressed cautious optimism about Canada’s resilience.
He noted that while export-related risks persist, Canada’s shift toward a service-focused economy and low effective tariff rates help soften the impact. However, McKay warned of a “K-shaped” recovery, where lower-income consumers face affordability challenges while wealthier households continue spending and investing.
Growth concentrated in wealth and capital markets
Capital markets earnings surged to $1.43 billion, up from $985 million, while wealth management generated $1.28 billion, up from $969 million. These gains more than offset continued pressure on personal lending.
Rising unemployment and mortgage payment increases contributed to elevated provisions for credit losses of $1.01 billion, compared with $840 million a year earlier. Chief risk officer Graeme Hepworth said consumer impairments are rising in Ontario and the Greater Toronto Area, and expects losses to remain elevated through 2026.
Expansion plans: AI and international growth
RBC is leaning further into artificial intelligence, with 30,000 employees already using generative AI tools. McKay said technology improvements support the higher ROE goal and strengthen competitiveness.
International growth remains another priority. RBC is exploring opportunities in the Middle East and continuing to build on strong momentum in Asia, aiming to expand its global wealth and capital markets footprint.
Adjusted earnings per share came in at $3.85, ahead of analyst expectations of $3.53. Revenue increased to $17.21 billion from $15.07 billion last year.
