We would consider RY buyable in the $195 range and a target price in the $210 range. Results were strong. EPS of $3.84 beat estimates of $3.25; revenue of $16.98B beat estimates of $16.08B. Royal Bank of Canada aims to build on a strong fiscal 3Q, but remains cautious on the economic outlook. The bank expects midteens gains in nontrading net interest income, backed by a favorable deposit mix that helps margin. Combined with core expense growth in the midteens, driven higher by variable compensation, RBC is well positioned for positive operating leverage this year. Capital Markets is constructive but variable, as deals could tick up, while Wealth is a domestic and international growth area. RBC targets 16% or higher ROE in 2026 and beyond, after reaching 16.5% year to date. Provisions are expected to stay elevated, particularly in commercial, while consumer trends may stabilize. The full-year impaired provision ratio could track at the higher end of mid-30-bps guidance, but around peak. All in, everything looks fine here, but the economy does look to be a risk factor.
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