Royal Bank of Canada Q2 Earnings Improve Y/Y on Higher Revenues

Royal Bank of Canada’s RY second-quarter fiscal 2025 (ended April 30) adjusted net income available to common shareholders was C$4.41 billion ($3.10 billion), up 6.9% from the prior-year quarter.

Results reflected the impacts of the specified items relating to the HSBC Canada transaction and integration costs, along with the amortization of acquisition-related intangibles. RY’s quarterly results were aided by higher revenues, and marginal growth in loans and deposit balances. However, an increase in expenses and provisions were major headwinds. Probably because of the negatives, RY shares have lost 1.8% since the release of its results.

RY’s Revenues Improve & Expenses Rise

Total revenues were C$15.67 billion ($11.03 billion), up 10.7% year over year.

Net interest income was C$8.06 billion ($5.67 billion), growing 21.6% from the prior-year quarter. Non-interest income was C$7.62 billion ($5.36 billion), up 1.1% year over year.

Non-interest expenses were C$8.73 billion ($6.14 billion), up 5.1% from the prior-year quarter.

The company’s provision for credit losses was C$1.42 billion ($999.1 million), soaring 54.8% year over year.

RY Reports Strong Balance Sheet Position

As of April 30, 2025, Royal Bank of Canada’s total loans were C$1.01 trillion ($730.8 billion), up marginally from the prior quarter. Deposits totaled C$1.45 trillion ($1.05 trillion), rising marginally from the previous quarter end. Total assets were C$2.24 trillion ($1.62 trillion), up 2.3% from the previous quarter.

Royal Bank of Canada’s Capital Ratios Improve

As of April 30, 2025, the company’s Tier 1 capital ratio was 14.7%, up from the prior-year quarter’s 14.1%. The total capital ratio was 16.5%, up from 16.1% in the prior-year quarter.

The Common Equity Tier 1 ratio was 13.2%, up from 12.8% in the prior-year quarter.

Our View for RY Stock

Solid loan balances and a diversified product mix will likely keep driving Royal Bank of Canada’s financials. However, higher provisions on the uncertain economic outlook remains a near-term concern.

Royal Bank Of Canada Price, Consensus and EPS Surprise

 

Royal Bank Of Canada price-consensus-eps-surprise-chart | Royal Bank Of Canada Quote

Currently, Royal Bank of Canada carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Foreign Banks

HSBC Holdings HSBC reported a first-quarter 2025 (ended March 31) pre-tax profit of $9.48 billion, which declined 25% from the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

HSBC’s results were affected by a year-over-year fall in revenues, higher expected credit losses and other credit impairment charges, partially offset by a fall in expenses.

Deutsche Bank DB reported first-quarter 2025 earnings attributable to its shareholders of €1.78 billion ($2.01 billion), up 39.2% year over year.

DB’s results were aided by a rise in revenues and lower expenses. However, higher provision for credit losses was a spoilsport.

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This article originally published on Zacks Investment Research (zacks.com).

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