Royal Bank of Canada (RY) Q4 2024 earnings summary

Executive summary

• Net income for 2024 reached $16.2B, up 11% year-over-year; adjusted net income was $17.4B, up 10% year-over-year, with Q4 adjusted earnings of $4.4B, up 18% year-over-year.

• Diluted EPS was $11.25 for 2024, up 9% year-over-year; Q4 adjusted diluted EPS was CAD 3.07, up 16% year-over-year.

• HSBC Canada acquisition contributed $453M to net income and $995M to pre-provision, pre-tax earnings, with 55% of targeted $740M cost synergies achieved.

• Record Q4 Capital Markets revenue and robust client asset growth in Wealth Management; over 600,000 new clients added in Canadian banking.

• CET1 ratio at 13.2%, supporting a 4% dividend increase and ongoing share buybacks.

Financial highlights

• Total revenue for 2024 was $57.3B, up from $51.5B in 2023; Q4 revenue rose 19% year-over-year to $15.1B.

• Net interest income up 17% year-over-year, driven by HSBC Canada and higher volumes/spreads.

• Non-interest expenses increased 12% year-over-year, mainly due to higher variable compensation and HBCA integration.

• Q4 provisions for credit losses on impaired loans remained stable at 26 bps; PCL on loans ratio for 2024 was 0.35%.

• Return on equity (ROE) for 2024 was 14.4%, adjusted ROE was 15.5%.

Outlook and guidance

• Medium-term objectives: 7%+ diluted EPS growth, 16%+ ROE, 40–50% dividend payout ratio.

• 2025 guidance: net interest income (ex-trading) to grow mid to high single digits; core expense growth in mid single digits.

• Credit losses forecasted to rise to mid-30s bps in 2025, peaking in the second half.

• Adjusted non-TEB tax rate expected at 20%-22% in 2025.

• Management expressed confidence entering 2025, citing a strong balance sheet and diversified revenue growth.