RBC Reports ROE Near 18% as AI, Growth Drive Returns

Royal Bank of Canada (RBC) outlined its financial performance at Scotiabank’s 27th Annual Financials Summit in September 2026, emphasizing progress toward profitability targets and operational efficiencies. The bank reported a return on equity (ROE) of north of 18% in Q3 2026, up from 17% over the prior 12 months and a 2024 high of 15.5%. This marks a steady upward trajectory, with CEO Dave McKay noting the bank exceeded its 2024 target of 17% ROE, reinforcing its commitment to sustained growth beyond the initial benchmark. RBC’s common equity tier 1 (CET1) ratio remained stable at 13.5%, reflecting robust capital adequacy amid sector uncertainties, particularly in tariff-exposed industries. The bank’s stock traded at a price-to-earnings (P/E) ratio of 17.96, underscoring investor confidence in its long-term value proposition. Lending growth exceeded CAD 80 billion across consumer, commercial, and corporate segments, though growth in commercial banking slowed to 3%–3.5% due to broader economic uncertainty. Commercial deposits rose CAD 19 billion year over year in Q3, while efficiency gains—particularly in consumer and commercial banking—reduced costs by CAD 0.10 per dollar of revenue, a competitive edge over peers with efficiency ratios around 45%. RBC also reported a 10% increase in book value per share over the trailing four quarters, or 12% before share buybacks, which accounted for about 2% of outstanding shares. In a strategic pivot, RBC highlighted CAD 1 billion in projected AI-related cost savings post-implementation, positioning artificial intelligence as the primary driver of shareholder returns over mergers and acquisitions. The bank’s U.S. subsidiary, City National, delivered CAD 230 million in earnings—nearly matching its 2016 acquisition price—with 8% growth on both sides of its balance sheet. McKay emphasized RBC’s focus on AI-driven transformation over large-scale M&A, citing it as the core lever for outperformance. The CEO also underscored the bank’s competitive advantage in cost efficiency and ROE, while maintaining a CET1 ratio of 13.5% to preserve capital buffers amid tariff-related risks, particularly in sectors like manufacturing and agriculture.