RBC investors weigh growth plans as US trade feud worsens

Nivedita Balu

Wed, Mar 26, 2025, 7:11 AM 3 min read

By Nivedita Balu

TORONTO (Reuters) -When Royal Bank of Canada convenes its archetypal capitalist time successful 7 years connected Thursday, shareholders volition absorption connected growth, arsenic commercialized tensions worsen with its cardinal U.S. market.

The United States accounts for 26% of RBC's revenue, and CEO Dave McKay has often called it the bank's 2nd location market. "Where does Royal Bank grow?" asked Kevin Burkett, portfolio manager astatine Victoria, BC-based Burkett Asset Management. "If the tariff rhetoric coming from the U.S. is making that much complicated, however volition they present for investors successful presumption of that growth?"

RBC, the largest lender successful Canada and among the apical 10 successful North America, has focused connected its confederate neighbour successful caller years, beefing up its U.S. superior marketplace and wealthiness absorption businesses. It besides injected much than $3 cardinal to prevention its U.S. subsidiary City National, a California-based lender that caters to Hollywood clientele.

McKay has besides sought to marque RBC "simpler, faster and much innovative" by adding scale, reducing complexity and investing successful talent, according to memos to employees seen by Reuters.

The messages travel aft McKay carried retired RBC's landmark $10 cardinal acquisition of HSBC's Canadian operations, shook up elder enactment and divided the company's idiosyncratic and commercialized banking segments successful Canada.

The HSBC acquisition expanded RBC's size and marketplace share, giving it a much than C$80 cardinal vantage successful marketplace capitalization implicit Canada's adjacent biggest lender, TD Bank.

"How bash they level up?" Veritas Investment Research expert Shalabh Garg asked, noting that RBC has managed to debar "major landmines" that has plagued different Canadian banks including slower net maturation and regulatory woes. "On a planetary basis, I deliberation they tin bash tons more."

RBC has $2.1 trillion successful assets, putting it into a class of large North American lenders alongside JPMorgan Chase, which has much than $4 trillion, Garg said.

RBC trades 12.02 times its guardant earnings, beating TD's 10.82 times, Bank of Montreal's 11.48 times, Bank of Nova Scotia's 9.46 times and CIBC's 10.01 times, according to LSEG data.

Since RBC's past capitalist time successful June 2018, the banal has gained 66%. Shares of the different apical 5 Canadian banks person had mixed performances successful that time, ranging from a nonaccomplishment of 8% to a summation of 43%.

All 5 banks person invested successful the United States. Meanwhile, U.S. President Donald Trump has questioned the deficiency of U.S. banks successful Canada, gutted a user banking watchdog and changed immoderate migration policies for Canadians.