Royal Bank of Canada (RBC) is actively expanding its presence in the U.S. financial markets, which it refers to as its "second home market." RBC Capital Markets currently generates half of its revenue in the U.S. and has recently added 205 people in the country over the past seven months, including 23 managing directors.
The expansion strategy involves increasing hiring across Canada, the U.S., and Europe, with a particular focus on U.S. investment banking sectors such as technology, healthcare, industrials, and financial institutions. RBC is also growing its U.S. trading businesses, encompassing equities, credit, and macro operations like foreign exchange, rates, and commodities. The division's net income has roughly doubled, attributed to a robust market environment and aggressive investments in recruiting, technology, and a new U.S. cash-management business slated for 2024.
In Q3 2026, RBC reported a record net income of $6.0 billion, an 11% increase year-over-year. Capital Markets contributed significantly to this, with net income of $1,544 million, up 16% from the prior year. This growth was driven by higher revenue in Corporate & Investment Banking due to increased equity and debt origination and M&A activity, as well as higher revenue in Global Markets from equity trading. RBC Capital Markets also played a role in the SpaceX IPO and Alphabet Inc.'s equity capital raise, and was a co-leader in record-setting maple bond issues for Alphabet and Amazon.com Inc.
RBC is also embracing AI to enhance productivity, particularly in research and investment banking. While CEO Derek Neldner believes AI will not replace junior bankers, he expects it to make teams more productive, potentially slowing the rate of hiring but not stopping growth. The bank is piloting AI tools for meeting preparation, pitch drafts, and Excel modeling, and leveraging its proprietary AI platform, Aiden, to analyze client data for structured products and investment strategies in trading.
Bank of Nova Scotia analyst Mike Rizvanovic noted in March that RBC’s capital-markets unit, with its broad business mix, helps maintain low revenue volatility, making it a defensive stock during potential market slowdowns.
