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Royal Bank of Canada RY

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Capital Markets, Wealth Remain Strong as Royal Bank of Canada Releases Reserves in Q3

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

Wide-moat-rated Royal Bank of Canada reported solid fiscal third-quarter earnings. Adjusted earnings per share were CAD 3, solid year-over-year growth compared with CAD 2.23 in the same period a year ago and higher than last quarter’s CAD 2.79. Provisioning continues to be a major driver of improved earnings, coming in at a net benefit of CAD 540 million this quarter, a multiyear low and materially lower than the CAD 2.8 billion charge the bank took in the second quarter of 2020. This aligns with our view that the Canadian banks will be fine from a credit perspective and that better results should be the norm going forward. We still expect the return of fee growth and much lower provisions to drive solid earnings growth for the rest of the year, while the lack of a boost from lower provisioning should make for tougher comparisons for the Canadian banks in 2022.

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Company Profile

Business Description

Royal Bank of Canada is one of the two largest banks in Canada. It is a diversified financial services company, offering personal and commercial banking, wealth-management services, insurance, corporate banking, and capital markets services. The bank is concentrated in Canada, with additional operations in the U.S. and other countries.

1 Place Ville-Marie, Corporate Secretary's Department
Montreal, QC, H3B 3A9, Canada
T +1 416 974-8395
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Jul 31, 2021
Fiscal Year End Oct 31, 2021
Stock Type
Employees 85,887