Royal Bank Of Canada (RY) AI Stock Analysis

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Royal Bank Of Canada

(TSX:RY)

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Rating:70Outperform

Price Target:CAD 312.00▲(8.19% Upside)

Action:upgraded

Date:08/28/26

The score is driven primarily by strong financial performance (rising earnings, improving ROE, and robust cash generation) and a constructive earnings call with reiterated guidance and strong capital returns. These positives are partially offset by weaker near-term technical momentum (below key moving averages with negative MACD) and only moderate valuation support (P/E ~18.4 with a ~2.32% yield), alongside credit/expense headwinds highlighted on the call.

Positive Factors

Diversified earnings growthRBC’s broad exposure to personal, commercial, wealth and capital-markets services supports resilient earnings. Simultaneous growth across several franchises reduces reliance on any single market and strengthens the bank’s ability to compound through cycles.

Negative Factors

Rising impaired loans and concentrated credit riskHigher impaired loans indicate emerging stress in selected commercial and real-estate exposures. Concentration in Capital Markets and additional provisions could pressure earnings and capital if refinancing conditions worsen or losses spread to other sectors.

Royal Bank Of Canada (RY) vs. iShares MSCI Canada ETF (EWC)

Market Cap: CAD 280.52B
Dividend Yield: 2.36%
Average Volume (3M): 3.18M
Price to Earnings (P/E): 18.1
Beta (1Y): 0.65
Revenue Growth: 4.67%
EPS Growth: 19.97%
Country: Canada
Employees: 101,269
Sector: Financial
Sector Strength: 68
Industry: Banks - Diversified

Royal Bank Of Canada Business Overview & Revenue Model

Company Description

Royal Bank of Canada functions as a globally diversified financial services powerhouse. Its Personal & Commercial Banking arm extends a wide array of offerings to individual clients and small to medium-sized businesses. For retail customers, these in...

How the Company Makes Money

Royal Bank of Canada generates revenue primarily through a mix of net interest income and non-interest (fee-based and market-related) income across its business segments. (1) Net interest income (spread-based banking): RBC earns interest on loans and...

Royal Bank Of Canada Earnings Call Summary

Earnings Call Date:Aug 27, 2026(Q3-2026)|% Change Since:0.72%|Next Earnings Date:Dec 03, 2026

Earnings Call SentimentPositive

The call conveyed a broadly positive performance: record company-wide earnings, revenue, EPS and multiple segment records (Personal Banking, Commercial Banking, Capital Markets, Wealth Management). Strong deposit growth, capital generation (80 bps), healthy CET1 (13.5%), and active capital returns (dividends and $1.6B buyback) underpin shareholder value. Management highlighted strategic initiatives (AI monetization target and creation of a global transaction banking business) and continued organic growth momentum, particularly in high-return franchises. Offsetting items include localized credit stress (rise in impaired loans and an incremental $120M provision in Capital Markets), a 20% decline in insurance earnings, trading NII headwinds, modest NIM compression and elevated operating expenses leading to negative operating leverage in Canadian Banking this quarter. Overall, the positive operational and financial momentum and robust capital position materially outweigh the contained headwinds.

Positive Updates

Record Earnings, Revenue and EPS Growth

Reported record earnings of $6.0 billion, up 11% year-over-year; revenues grew 9% YoY. Diluted EPS $4.23 and adjusted diluted EPS $4.28, up 11% YoY. Adjusted operating leverage 2.4% and adjusted efficiency ratio 52%. Return on equity ~17.9% and book value per share up 10% YoY. Internal capital generation of 80 basis points in the quarter.

Negative Updates

Increase in Gross Impaired Loans, Concentrated in Capital Markets

Gross impaired loans increased $353 million QoQ (1 basis point), primarily due to a $466 million rise in Capital Markets impaired loans driven by real estate and related sectors. Wealth Management (predominantly City National Bank) impaired loans rose $114 million, largely tied to the utility sector.

Company Guidance

Management reiterated full‑year guidance: all‑bank net interest income excluding trading is up 7% year‑to‑date and on track for mid‑single‑digit growth, expense growth is ~5% YTD (consistent with mid‑single‑digit guidance), and the bank expects positive all‑bank operating leverage for the year with Canadian Banking delivering 1–2% operating leverage and Canadian Banking margins expected to be relatively stable next quarter. They guided the non‑TEB effective tax rate toward the high end of the 21–23% range, expect CET1 to trend toward the midpoint of 12.5–13.5% over time (after deploying ~85 bps of capital this quarter), will continue disciplined buybacks/dividends (5.6M shares repurchased for ≈$1.6B this quarter; total payout ratio 69%; medium‑term dividend target 40–50% payout), expect Moneris to add ~10 bps to CET1 in Q1‑2027, aim to generate $700M–$1B of enterprise value from AI by end‑FY2027, note U.S. efficiency ratio improved to 75% YTD (targeting low‑70s), and expect full‑year provisions on impaired loans to remain within prior guidance.

Royal Bank Of Canada Financial Statement Overview

Summary

Strong profitability and scale with improving ROE into TTM (net income rising to ~$22.7B TTM; ROE ~16.0% TTM) and strong absolute cash generation (TTM OCF ~$48.2B; FCF ~$45.8B). Offsets include elevated leverage typical of banks (debt-to-equity ~5.7x–6.6x in annual periods), FCF volatility (TTM FCF down ~35.7%), and noted data inconsistencies that reduce confidence in margin/leverage trend comparability.

Income Statement

82Very Positive

Balance Sheet

72Positive

Cash Flow

68Positive

Financial statement breakdown
Breakdown	TTM	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	142.86B	137.36B	134.49B	113.45B	66.83B	57.68B
Gross Profit	69.33B	62.17B	54.26B	49.12B	48.29B	50.29B
EBITDA	31.15B	28.73B	22.84B	21.04B	22.76B	23.22B
Net Income	22.75B	20.36B	16.23B	14.61B	15.79B	16.04B
Balance Sheet
Total Assets	2.50T	2.33T	2.17T	2.01T	1.92T	1.71T
Cash, Cash Equivalents and Short-Term Investments	64.14B	165.28B	167.13B	212.00B	240.60B	231.03B
Total Debt	417.80B	834.96B	779.52B	774.59B	699.12B	567.25B
Total Liabilities	2.35T	2.19T	2.04T	1.89T	1.81T	1.61T
Stockholders Equity	145.04B	139.09B	127.09B	117.66B	108.06B	98.67B
Cash Flow
Free Cash Flow	45.84B	52.98B	20.86B	23.35B	19.44B	58.86B
Operating Cash Flow	48.19B	55.22B	23.14B	26.08B	21.94B	61.04B
Investing Cash Flow	-80.49B	-68.57B	-20.89B	-28.27B	-57.05B	-57.35B
Financing Cash Flow	61.68B	-6.71B	-8.15B	-9.83B	-2.19B	-5.93B

Royal Bank Of Canada Technical Analysis

Technical Analysis SentimentPositive

Last Price288.37

Price Trends

50DMA282.35Positive

100DMA286.41Positive

200DMA262.70Positive

Market Momentum

MACD2.26Negative

RSI55.75Neutral

STOCH50.89Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RY, the sentiment is Positive. The current price of 288.37 is above the 20-day moving average (MA) of 285.16, above the 50-day MA of 282.35, and above the 200-day MA of 262.70, indicating a bullish trend. The MACD of 2.26 indicates Negative momentum. The RSI at 55.75 is Neutral, neither overbought nor oversold. The STOCH value of 50.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:RY.

Royal Bank Of Canada Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

TSE:RY against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSE:CM	71Outperform	CAD 150.29B	15.73	15.44%	2.59%	0.14%	26.17%
TSE:RY	70Outperform	CAD 401.27B	18.14	16.11%	2.36%	4.67%	19.97%
TSE:BNS	68Neutral	CAD 162.82B	17.08	11.41%	3.40%	-3.29%	43.84%
Sector *	68Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
TSE:NA	65Neutral	CAD 83.90B	17.79	14.36%	2.38%	7.97%	17.60%
TSE:BMO	64Neutral	CAD 171.42B	20.08	10.58%	2.74%	-1.74%	7.63%
TSE:TD	61Neutral	CAD 298.52B	18.85	12.83%	2.49%	-10.53%	-20.00%

* Financial Sector Average

Performance Comparison

TSE:RY and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
TSE:RY	Royal Bank Of Canada	288.37	86.78	43.05%
TSE:BMO	Bank Of Montreal	247.02	80.55	48.38%
TSE:BNS	Bank Of Nova Scotia	131.85	40.92	45.01%
TSE:CM	Canadian Imperial Bank Of Commerce	164.99	46.55	39.31%
TSE:TD	Toronto Dominion Bank	176.42	65.31	58.78%
TSE:NA	National Bank of Canada	215.43	57.92	36.77%

Royal Bank Of Canada Corporate Events

Business Operations and StrategyFinancial DisclosuresM&A Transactions

RBC, BMO to Sell Moneris to Francisco Partners in $2 Billion Deal

Positive

Aug 10, 2026

Royal Bank of Canada and BMO Financial Group have agreed to sell their jointly owned payments subsidiary Moneris Solutions Corporation to global technology investor Francisco Partners in a cash deal valued at about $2 billion, with RBC entitled to ha...

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Aug 28, 2026

Royal Bank Of Canada AI Stock Analysis