Royal Bank of Canada (RY) Q1 2025 earnings summary

Executive summary

• Record Q1 2025 net income of $5.1 billion, up 43% year-over-year, with diluted EPS up 42% to $3.54 and adjusted EPS up 27% to $3.62, driven by growth across all business segments and the inclusion of HSBC Canada.

• Return on equity reached 16.8% (adjusted 17.2%), with pre-provision, pre-tax earnings up 45% year-over-year to $7.5 billion.

• HSBC Canada contributed $214 million to net income and $451 million to pre-provision, pre-tax earnings, with $524 million in annualized run-rate cost synergies realized (70% of $740 million target).

• Strong capital position with CET1 ratio at 13.2%, supporting volume growth and $2.4 billion returned to shareholders via dividends and buybacks.

• Double-digit revenue and earnings growth across all segments, supported by diversified net interest income and fee-based revenue.

Financial highlights

• Total revenue increased 24% year-over-year to $16.7 billion, with net interest income up 26% and non-interest income up 23%.

• Non-interest expenses rose 11% year-over-year, mainly due to higher variable compensation, staff costs, and HSBC Canada integration.

• Provision for credit losses (PCL) was $1.05 billion, up 29% year-over-year, with increases across all segments.

• Efficiency ratio improved to 55.3% from 61.7% a year ago; all-bank efficiency ratio at 38.2%.

• Repurchased 1.9 million shares for $338 million during the quarter.

Outlook and guidance

• Management expects continued strong performance, supported by investments in technology and talent, and prudent risk management.

• Remain on track to achieve $740 million in targeted cost synergies from HSBC Canada by F2026, with further distribution and product support synergies expected in F2025.

• Increased 2025 net interest income growth guidance to high single-digit to low double-digit range, reflecting strong Q1 deposit growth and spreads.

• Expect positive operating leverage for the year, with core expense growth at the upper end of mid-single-digit guidance.

• Economic outlook anticipates further Bank of Canada rate cuts in 2025, with modest Canadian GDP growth and resilient but slower U.S. growth.