Most Canadian bank stocks have outperformed the broader market by a wide margin over the last year as declining interest rates raised expectations that the demand for consumer and business loans will improve.
When it comes to banking, Royal Bank of Canada (TSX:RY) remains investors’ top choice. As Canada’s largest financial institution, it combines innovation with a continued commitment to growth, making it a strong player in the Canadian banking industry. In addition, its excellent track record of rewarding investors with increasing dividends year after year makes it even more attractive for income investors.
In this article, we’ll take a closer look at Royal Bank’s recent financial performance, its growth initiatives, and fundamental outlook for 2025 and find out why it could continue to shine this year.
Royal Bank stock
Currently trading at $174.11 per share, RY stock has a market cap of $246.3 billion and offers an attractive annualized dividend yield of 3.4%. Over the past year, it has delivered a 30.5% gain, outperforming broader market benchmarks. By comparison, the TSX Composite Index has risen 21% in the last 12 months. RY stock’s strong performance reflects not only a solid financial base but also the trust investors have in Canada’s largest bank.
Solid growth, even amid challenges
Royal Bank’s financial performance in its fiscal year 2024 (ended in October) showcased its resilience and adaptability. During the year, the bank’s net profit climbed by 11% YoY (year over year to $16.2 billion, while adjusted net profit saw a 10% rise from a year ago to $17.4 billion. Despite a challenging macroeconomic environment, the bank managed to expand its adjusted net profit margin to 29.8% in fiscal 2024 from 20.2% in fiscal 2023.
Similarly, its financial growth in the latest fiscal year was fueled by robust performances across key segments, with personal banking delivering a 16% YoY jump in net profit due to strong deposit and loan growth. On the wealth management side, its earnings surged by 27% from a year ago with the help of higher fee-based client assets. At the same time, Royal Bank continued to manage risks well by maintaining a strong capital position and controlling loan loss provisions.
Focus on long-term growth
Royal Bank’s recent acquisition of HSBC Bank Canada in March 2024 could be a big boost to its long-term growth strategy. This move not only strengthened its foothold in the Canadian market but also added $453 million in net profit during the fiscal year 2024. Also, RBC’s investments in technology to enhance digital banking platforms and expand data-driven solutions clearly show its long-term approach.
More importantly, RY stock’s diversified revenue streams, from personal banking to insurance and capital markets, provide stability even in an uncertain economic environment.
Why RY stock is a must-watch in 2025
With its focus on innovation, strategic acquisitions, and a solid track record of delivering returns, Royal Bank of Canada continues to be a top stock to watch for 2025. Whether you’re looking for steady dividend income, long-term capital appreciation, or both, this Canadian banking giant ticks all the right boxes. This is one of the key reasons why any decline in its share price in the near term could be an opportunity for long-term investors to buy it at a bargain.
