Royal Bank of Canada's Capital Market Business Has Momentum in Fiscal 2026

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives more than 60% of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding and cross-selling its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come. RBC has increased its medium-term return on equity target to 17%-plus from 16%-plus, which is in line with our normalized ROE forecast of 18.1% for the bank.