Royal Bank of Canada(RY) - 2025 Q2 - Quarterly Report

Business Overview - Royal Bank of Canada reported a diversified business model with over 19 million clients across Canada, the U.S., and 27 other countries[23]. - The company emphasizes a purpose-driven, principles-led approach to delivering leading performance, supported by over 97,000 employees[23]. - The company completed the HSBC Canada transaction on March 28, 2024, which has been consolidated into its financial results[25]. - The HSBC Canada transaction completed on March 28, 2024, has significantly impacted results, balances, and ratios for all reported periods[1]. Financial Performance - Total revenue for the three months ended April 30, 2025, was $15,672 million, a decrease of 6.4% from $16,739 million in the same period last year[25]. - Net income for the three months ended April 30, 2025, was $4,390 million, down 14.5% from $5,131 million in the same period last year[25]. - Earnings per share (EPS) – basic was $3.03 for the three months ended April 30, 2025, compared to $3.54 in the same period last year, a decrease of 14.4%[25]. - Total revenue for Q2 2025 was $15,672 million, up $1,518 million or 11% from Q2 2024, driven by higher net interest income and the inclusion of HSBC Canada revenue[56]. - Net income for Q2 2025 was $4,390 million, up $199 million or 14% year-over-year, with $93 million attributed to the inclusion of HSBC Canada results[108]. - Net income for the six months ended April 30, 2025, was $9,521 million, an increase of $1,989 million or 26% compared to the same period last year[50]. Credit Losses and Provisions - Provision for credit losses (PCL) increased to $1,424 million for the three months ended April 30, 2025, compared to $1,050 million in the previous year, reflecting a rise of 35.6%[25]. - Total PCL increased by $504 million or 55% from a year ago, primarily due to higher provisions in Commercial Banking and Personal Banking[71]. - PCL (Provision for Credit Losses) increased by $190 million or 41%, primarily due to higher provisions on performing loans in Canadian portfolios[111]. - PCL increased by $214 million or 23%, mainly due to higher provisions on impaired loans in Canadian personal and credit card portfolios[117]. Segment Performance - Personal Banking segment reported a net income of $1,573 million with an ROE of 23.1% for Q2 2025[97]. - Commercial Banking segment net income was $578 million with an ROE of 12.1% for Q2 2025[97]. - Wealth Management segment achieved a net income of $906 million with an ROE of 14.6% for Q2 2025[97]. - Insurance segment reported a net income of $209 million with an ROE of 42.0% for Q2 2025[97]. Revenue and Income Trends - Non-interest income for the six months ended April 30, 2025, was $16,407 million, reflecting a significant increase from $14,684 million in the same period last year[55]. - Net interest income increased by $1,433 million or 22% year-over-year, with $377 million attributed to HSBC Canada and a 16% increase from average volume growth in Personal Banking and Commercial Banking[57]. - Total revenue for the six months ended increased by $920 million or 28%, with $578 million from HSBC Canada revenue[127]. - Canadian Wealth Management revenue increased by $292 million or 21%, attributed to higher fee-based client assets and net interest income[133]. Taxation - The effective income tax rate increased to 20.4%, up 60 bps, influenced by changes in earnings mix and new legislation[86]. - Income tax expense increased by $688 million or 39% compared to Q2 2024, with adjusted income tax expense rising by $568 million or 29%[89]. Market and Economic Conditions - Euro area GDP rose by 0.3% in Q1 2025, following a 0.2% increase in Q4 2024, with expectations of slow but positive growth for the remainder of the year[34]. - The International Monetary Fund (IMF) projected global growth of 2.8% for 2025, down 0.5% from its January forecast, indicating significant global economic uncertainty[38]. - The U.S. dollar has depreciated by approximately 5% since mid-January 2025, based on the trade-weighted U.S. dollar index[35]. Risk Factors - Forward-looking statements in the Q2 2025 Report include financial performance objectives and strategic goals, subject to various risks and uncertainties[17]. - The report highlights the importance of considering risk factors that could cause actual results to differ materially from expectations[20]. - The company cautions against placing undue reliance on forward-looking statements due to inherent risks and uncertainties[20]. - Additional information regarding the company's financial performance and risk factors can be found in the 2024 Annual Report and the Q2 2025 Report to Shareholders[22]. Regulatory and Compliance - Regulatory developments are being monitored to ensure compliance and mitigate adverse business impacts, as outlined in the 2024 Annual Report[37].