Royal Bank of Canada (RY) Earnings Call Transcript & Summary

Okay. Good morning, everybody. My name is Darko Mihelic for anyone who hasn't met me yet. I am the research analyst here in Toronto. I cover the large-cap Canadian bank space, and I'd like to formally welcome you all to the 2026 RBC Canadian Bank CEO Conference. See a lot of familiar faces in the crowds, wonderful to have you here. Similar to prior years, the presentations today will be in a fireside chat format. Please note that today's schedule and each speaker's biography are available on the website. This allows me to skip past flowery introductions and get right to the meet of the heart -- the heart of the matter. Like previous years, there is an opportunity for the audience Q&A. It's through the Slido app. And I do intend to end each session a bit early so that I can ask the most popular questions voted by you, the audience. If you would like to submit questions during any of the sessions, please scan the QR code on your table to log into Slido with the password. Once you are in Slido, you can choose the room that corresponds with each session to ask your questions. The Canadian economy wasn't particularly strong last year, but it was far from a recession. And while there was some concern regarding USMCA negotiations, which will may happen this year, maybe towards summer. It's clear that Canada wasn't overly burdened with the existing tariffs in 2025. And the country is slowly adjusting to tariffs and other economic challenges. We may have even adjusted to geopolitical uncertainty or at least become a little numb to it. Fundamentally, credit losses stabilized in 2025. And the outlook provided by the Canadian banks is essentially for stable PCLs in 2026 and maybe declining into 2027. Capital markets, while volatile, were constructive. So while loan growth was low, it probably gets better over time, not worse. Interest rates are at a good level for the economy and for lending and other bank products. Banks have been investing. They're becoming more productive. And maybe even the crusade for higher capital requirements seems like it's also finally ended. But the bar is set high for the Canadian banks. Every time I have discussions with investors, they throw valuation at me. For context, in 2024, when I came up here and I gave my opening speech, the big 6 Canadian banks had an average forward P/E ratio of 9.9%, just under 10. Last year, the forward P/E ratio was 11.9%. Today, as I sit here and my associates updated this for me last night, the big 6 median P/E ratio is 14x forward PE. You might ask about relative P/E. Banks currently trade at 83% of the TSX, P/E. The 10-year average has been 70%. Canadian banks trade at a half multiple turn higher than the U.S. banks. And the 10-year average has been a 0.7 multiple discount. Against the Canadian life insurers, the Canadian banks are a full 2.3 multiple points higher than the life insurers. There's a little bit IFRS 17 magic in there, but the 10-year average is 0.7. What's interesting is when I have this debate with clients and investors on valuation and P/Es, it shifts a little bit when you look at price to book. Against the TSX, the banks have a discount of 21% on a price-to-book basis, a 10-year average of 15%. They're actually discounted a bit more on a book basis versus the TSX. Against the U.S. banks, the price to book is 16% higher, but the 10-year average is 34% higher. So we're essentially looking at a bit of a tough spot from a valuation perspective. And as I say, that raises the bar quite high for the Canadian banks. But ROEs have been improving. And every company that I cover has been upping their ROE targets. So some of the discussion today is going to way into ROE and returns and what we're going to do with capital. And unlike prior years where I might get up here and ask about a theme or 2, there isn't going to be any of that today. Today, I'm going to be very bank-specific because in today's world with high valuations and high expectations, I think what we really want to know is where do you want to place your bets because the whole group is up here, you really want to be focusing on which banks are producing the highest returns with the lowest risk. So I won't be asking about AI. I won't be asking about private credit or any other themes that are out there because I don't think we get substantive answers anyway. And I really want to dive into bank-specific returns and what the banks intend to do with all of their excess capital. But before I do that, I really want to make one last ask of the audience here is please chime in with your questions. I can't think of everything when I'm up here. And it's really, really helpful to see a bunch of questions that have been up voted that I get to throw at the CEO. So with that, I'm going to officially kick off the conference and ask Dave McKay from RBC to step up to the stage. Good morning Dave.

Thanks. How are you doing?

Good. How are you? Okay. So here, I was saying I was going to not talk about themes and speak about bank-specific stuff. But the very first person I have up here is Dave McKay. And so therefore, I feel somewhat compelled that to sort of maybe set the stage for the outlook, I really wanted to ask you about your macro outlook and maybe sort of set the stage for everybody here on how you're looking at the macro environment for banking and specifically for Canadian banks?

I think to your opening comments, so we'll have to dig out of that a little bit. How do we earn into the valuation, I guess, is what you're trying to say. We feel really good about things. I think this is the first time in my tenure, we've seen a general risk on theme from foreign investors on Canada. They've always worried about mortgages and the mortgage industry and corrections there, and it was hard to bring that capital in, and we're certainly seeing that risk on capital. Part of it is the growth opportunities in the country and infrastructure investment that we're going to make, whether it's energy infrastructure, mining and minerals infrastructure, transportation and kind of rebuilding a more diversified economy going forward, $60 billion of defense spend, $115 billion of infrastructure. So when you think of about kind of that the macro backdrop 3 to 10 years out, we have an opportunity to get some really big things done for the first time in a decade. And I think that is exciting investors that certainly excites us as we talk about deploying capital and RWA into long-term growth opportunities. So I think there is a thematic tailwind that you probably should talk about because I haven't felt it in 10 years, and I'm excited about that. Now the operating backdrop, and I'll start with Canada into the U.S., is I still think resilient and constructive. If you look at the Canadian consumer, yes, they're carrying leverage, but they're not buying homes the way they used to. So we're seeing very little activity in presale, almost no activity in presale. So construction financing is not there. That's a big part of the Canadian economy. That's been slow. Yet the consumer has taken that disposable income and they're consuming with it. They're consuming services. They're consuming some goods, more at the high end, certainly has helped create jobs and stabilize unemployment in the country. And therefore, that consumer spend redirected from debt servicing, increased debt servicing and housing, lower rates have helped as well. That cash flow we're seeing through our payments businesses are flowing into the Canadian economy, creating jobs that you've seen, helping offset some of the sectoral impact from tariffs and some of the other kind of headwinds of the Canadian economy that you alluded to in your opening comments. So I think that resilience of the Canadian consumer has really helped in that cash flow. We've always worried about how much disposable income goes into mortgage servicing at the end of the day. So to see a bit of a pause to see some of those tax, sort of those interest rate cuts go into consumption has helped the Canadian economy and helped the consumer. Unemployment is still very, very low from a longer-term perspective. And we feel good about that. So you've seen that. So you saw good credit card growth. You saw very strong deposit growth. You saw probably the top 40% of Canadians by disposable income and investing in equity markets and propelling markets. And all that was a catalyst for a very constructive environment, particularly for ROI where we have the money -- the leading money in franchise, whether it's into deposits, deposits into investments and back again, that circular money flow is so critical we saw that deposit flow more than any other franchise, I think, really flow into investments where we earn a higher return on our activity. So all that was very constructive and based on a resilient consumer. You've seen a resilient commercial banking. You saw us drive high single-digit growth in commercial lending. You saw us drive high commercial deposit growth. You've got some sectoral impacts that are regional in nature, steel in Ontario, and you know the key sectors, and that has struggled. But to your point, the majority of our trade with the U.S. is still under CUSMA, and that activity has continued. And therefore, we've had some sectoral differences. But overall, we're seeing good activity across our mid-corporates and our commercials with stable credit loss to your point. And then we've had very constructive advisory markets, particularly in the United States and Canada around more IPOs, more equity raise capital raise around debt capital markets, more advisory and strategic M&A, sponsor-based deals and that activity built through the year, particularly to year-end and continues into 2026 quite strongly. So very constructive advisory markets and capital raising markets. And then volatile -- volatility levels were fairly high, vols were high, and therefore, our trading businesses did well, whether it was credit trading, obviously, macro trading, FX was strong. And therefore, we saw very strong results out of our markets businesses. All that led to an ability to offset slow mortgages, offset a few challenges here and there a bit higher credit that we had to earn through year-over-year. All that was a constructive backdrop in Canada and similar in the United States, the U.S. consumer unemployment is still low. Disposable incomes are strong. They're not buying houses either. Therefore, their consumption levels were high. So you saw strong consumer activity carrying the U.S. economy. Still fairly tepid commercial lending growth, but then very strong senior markets growth in the United States. And Europe had a revival. You just saw more markets activity than we've seen there in a while and a bit of a mix depending on what segment you're looking at in the wealth space. So the macro environment has been really resilient. With great opportunities for long-term investment to continue to build sustainable growth, which I think gets everybody excited. There's a new tone in the country, and there's kind of this view among all leaders that now is the time to get stuff done, and we've got to get these projects approved, funded and in place. And I think given the geopolitical world that we live in, the impetus, particularly for Canada to get these things done is really, really strong. You feel everyone pulling in the same direction for the first time. So overall, I would say it's constructive, and that bore out in the results, particularly for our franchise where we have such a strong deposit franchise and funding franchise, as you know, we place a lot of that deposit funding into tractors. That creates a stabilized income for a number of years going forward. And I think that really helps us continue to deliver the type of growth that we've delivered. So net-net, while there were challenges for sure, resilience and positioning for the future, I think, the stronger themes for the year. And I think markets have rallied around that and are pretty excited about the opportunities going forward as we are at RBC.

And so what this ended up doing, I mean, you had very strong results last year. You had an Investor Day, you came out with an ROE target for now hinting that it's going to go higher. And so although this topic was really covered heavily on the fourth quarter conference call, I still feel compelled to go back to it a little bit.

It's a long transcript.

It was. There was a lot of -- so I wanted to maybe let's -- we've got time now. We can maybe dissect this a little bit. And so what I thought we can do is let's think about the ROE in the following way. And let's start with the denominator. Where you could be buying back stock, you could be shrinking the denominator towards a higher ROE. You had mentioned that you wanted to operate between 12.5% and 13.5% common equity Tier 1 ratio with anything above 13.5% going to buybacks. So how do you decide on that range? And really, what do you want to do with the denominator to push the ROE higher? Should we expect that at some point, you'll go all the way to 12.5% and push the ROE higher through that method? Or maybe I'll just leave it open-ended and just leave it there for you to talk about the denominator.

Certainly, we spent a fair bit of time on the Q4 call kind of going through the balance you have to do between the efficient use of capital and growth at the end of the day. And you run a range of scenarios and how -- what is the best way to create and optimize the shareholder value of your firm. And for us, it's balancing that growth at a market-leading ROE and 17% plus, plus is a big part of that and that we will constantly try to exceed that. But we felt that as kind of the mid-range target allowed us to both create market-leading growth and profit growth and revenue growth at the more efficient capital deployment returns. And for us, we have scenarios where we can run it at 18-plus percent, but then we would sacrifice growth to do that, and we found that the best balance between the 2. So you're trying to balance you're above market, you're above target ROEs versus your below target ROEs. I've got businesses outside of Canada that are operating and we will continue to operate below that 17% target. But I'm looking at the growth opportunities of the businesses that are Canada that deliver a premium ROE and you're looking at that balance and trying to optimize the growth in all those marketplaces. And City National continues to grow and improves, it's going to be ROE enhancing, but it's been a bit of a drag on ROEs going forward. So there certainly is as we continue to reposition the ROE at City National, we're quite excited about that. So you're looking at that balance. So the first thing you have to do is you're always looking to optimize your growth curve at your target ROE. And I think that allows us to do both. The second thing you're trying to do is you're trying to make sure you have a prudent reserve against volatility and uncertainty going forward. And sometimes you'll run the bank a little higher if you're sensing you're going into an economic cycle, there's extreme geopolitical volatility that could impact results and outcomes. So you'll bounce around in that range. So when we stress test our balance sheet and stress test against different scenarios out there, we always make sure that we have sufficient capital to cover off the scenarios that we need to. And therefore, you'll bounce around in that range a little bit. So we came up with the range that guide you that we're not going to allow our CET1 ratio to grow unbounded at the end of the day and that we will continue to prune to prune and that we can operate in that range of 12.5% to 13.5% and achieve all those objectives. And that shows the earnings power. And if there was a strategic inorganic opportunity that came forward, the other thing you have to remember is we got such strong quarter in, quarter out organic capital growth that we're producing, like we can produce 80 basis points net of dividends given our current earnings stream. And therefore, if there's something strategic, we can allow that capital to accumulate very quickly and that allows us to do a cash deal. So part of the strategy that is also what is your capital generation ability each quarter and how much flexibility does that give you and we're producing such strong earnings and consistent earnings that you can rely on your ability to build capital in the short term and therefore, don't have to carry as much of it on your balance sheet at the same time. So it's all those dimensions, honestly, that you look at risk mitigation, growth, capital efficiency, flexibility to deploy and grow capital quickly, if there's an acquisition that comes along. All that flexibility allows us to range bound that and give investors an idea of how we're going to manage our balance sheet from an efficiency perspective going forward because the #1 question I get, how high are you going to let the CET1 ratio run. At the end of the day, given that 80 basis points that you're building pretty consistently and really felt it was important that we all get on the same page is how we want to manage the balance sheet. So it's great to have that strategic flexibility. It's unique, and we take it very seriously how we use capital.

So that's an interesting discussion on all of those different factors that sort of have to wait into the -- conceptually how you get to the 17% ROE. But it doesn't -- I think one of the interesting things that I noticed at your Investor Day is buried in one of the slides Royal has a targeted ROA, return on assets. It's 100 basis points. For those of you who read our research, we put out a chart book and in the chart book, we show you return on assets and historical return on assets, and Royal has never been at 100 basis points, got close a couple of times, but never actually hit 100 basis points. Last year, we were at 85, maybe 87, if you adjust for a few things. So clearly, the high ROE is very much a function of a very high return on assets. So can you help us understand how you get from 87 to 100 on a sustainable basis?

There's a number of drivers. I've mentioned a couple already. Certainly, the acceleration of the growth and remediation of our U.S. platform, we expect to increase ROEs there, increase its contribution overall to the organization. And we're very excited about the growth opportunities across those franchises, but in particular, City National. So we've always talked about the growth potential of City National getting back to its target ROE and being more accretive to our overall target. So remediating `U.S. Each [ SBC ] while we've delivered on our cost targets, we have certainly the revenue targets that we're very excited about, and you saw us give an update that we're well on our way to about 1/3 of that already. We still have 2/3 of that to deliver an over $200 million plus of opportunity there. So you think about that great franchise and delivering there. We have our money in franchise. which, again, produces high ROEs as we deploy that into our mutual fund business into our Domain Securities business into our PH&N business at a high ROE as we won't see the type of growth, I think, in 2026 that we saw in '25 in the markets. But certainly, that is accretive to our ROEs and ROAs going forward. And then as you think about the mortgage business, we've come through probably the most difficult 3 years in the mortgage franchise in the last '25. I would say you've heard me talk about it on this stage and other stages a number of times. We've had this most significant margin compression in our history. We're carrying a very significant mortgage book at above the cost of capital, but certainly well below our target 17-plus percent. And therefore, the ability as we're seeing slowly to get those ROEs higher through margin expansion and cost takeout are very significant. And that -- given the size of that book, you can imagine on a $450 billion book when you start to see 5, 10 basis points of margin expansion, that's accretive as well. So you have that business. So you've got your advisory businesses and capital markets are also very strong. And overall, that's accretive to ROE. So ROEs will really come from then as you summarize that, 1/3 of it will come from NII growth, 1/3 of it will come from certainly other income growth and then 1/3 of it from a variety of factors. You don't want to talk about AI, but it certainly is one of the most significant forces of change in our society and in the banking industry. And as the market leader and the third largest -- third highest rated bank in the world in deploying AI. And this is the third straight year we've been rated in the top 2 or 3 in the world in commercializing and deploying AI. It's because we've worked hard in our data. We've been building models for a decade. We have over 100 PhDs in AI. And we've got a lot of experience in deploying these models, and we're accelerating that. And you saw that as part of the investor theme, but that is certainly a catalyst for better margin, better profitability across the organization. We just articulated 9 large projects that you saw in our Investor Day, but there's a lot more going on beyond that as well in the organization, and that creates opportunities on the ROE -- ROE side. So for all that, that gave us confidence that our ROAs can improve towards 100 basis points up to there. And then certainly, that's part of the story in driving to a 17-plus percent ROE. That's a lot of different levers that the organization has at its disposable to get after that. So if one doesn't work as well as we hoped, we've got so many others. And that gave us confidence, notwithstanding the geopolitical uncertainty and the volatility around trade and tariffs, we had enough levers at our disposal to continue to manage the organization in a more efficient way, producing higher ROE growth for our shareholders.

And so to summarize, 1/3 of NII, 1/3 coming from other income and then 1/3 you said other factors, but it sounded like efficiency essentially is.

Part of it is efficiency.

Part of it is efficiency and through AI. All right. That's okay. Great.

Well, there's a number of ways of getting there, a number of paths and we're always looking for that flexibility in adapting and moving forward. So we have a lot of levers at our disposal, and we've invested heavily in our franchise.

And so one of the other things that I get asked a lot is, all right, ROEs are going higher. It sounds like yours is really ROA improvement, a little less on the leverage. But all the same, the question comes up about risk. So are we moving the risk dial to move the ROE higher? And my suspect the answer would be no there, but what is -- what do you see as the biggest risk to your plans over the very short and medium term?

Well, the first answer is that we are not changing our risk appetite. I mean we recognize that for so many in this room, we're through the cycle hold. We're over-indexed through the cycle hold and then managing to a consistent risk appetite and risk profile is absolutely critical to our investment thesis. We want to produce the highest ROE premium growth franchise at a lower volatility level. And that is our investment thesis, and that's what drives so many of you into our stock and over-indexed into our stock, and we respect that and certainly managing to that. So we do not take or look at taking a change in risk appetite to create that type of growth. And that's really important to us, and we constantly monitor that and stress our portfolio and talk about risk appetites with our Board and everything else we do as a management team. So I think really important to emphasize that, that's within the consistent risk appetite. And when you have a premium franchise that has such a diversity to it, we don't need to take risk to grow in the majority of our markets. So I think outsized risk to growth. So I think that's a really important statement that all this strategy and how we're managing the business is within a consistent risk appetite that we've articulated to you over the last decade. So I think that's important. I think your second part of the question was what is the outlook then and how you're thinking about that.

Risk you see on the horizon that could maybe...

I still think leverage and credit risk are still one of the key risk that we have to manage. We still haven't resolved CUSMA. We haven't resolved some of the quota system that you're going to see within the steel sector, within the softwood lumber sector, within dairy sector, and therefore, that will have impacts to certain firms. And I would say it's hard to sit here and say with confidence that every firm is going to make it through that repositioning. There will be some firms that struggle and therefore, it could be a little lumpy going forward as we try to resolve some of the sectoral issues around CUSMA. We don't expect any shock to the overall agreement because it's really good for America at the end of the day and good for Canada. I think that's a really important basis for a perspective. So I think there's going to be some volatility within those sectors, and you should expect a little bit of spikiness overall. Consumer remains resilient at the end of the day. There's a bit of creep as we have a K-shaped economy as everyone continues to talk about. And there's an increasing differentiation between the top 20% of earners in both Canada and the United States and the bottom and the 60% or 40%. And that growing differentiation and disparity is really driving the political agenda in both countries. I mean you see what's on Canadians' minds is the majority are surveyed and it's inflation, it's jobs, it's housing at the end of the day. So that -- the 40% part of our overall population in Canada are driving a big part of our agenda. And aren't -- and they're struggling. They're struggling to make ends meet. At the end of the day, they're making their payments. For the most part, they don't have homes that are renters in the economy. And therefore, as we see the cost of housing come down, as we see interest rates come down, we see rents come down, I think that's helpful to a big part of our population that are struggling to make ends meet. That disparity is much greater in the United States and much more severe and will become, I think, is a huge political issue and will become an increasing political issue as you approach the midterms in November, whether it's electricity costs, partly driven by AI and the impact of AI demand and compute demand on electricity costs is quite severe, and you might see a doubling of retail electricity, residential electricity rates in the United States because of that. So all those are big issues to be solved, and that will drive a big part of the political agenda. So I think from that perspective, the consumers remains resilient and largely working, sometimes 2 jobs. And I think we're probably okay there. So I do worry about -- so the sectoral credit. There is a significant amount of leverage in the system right now that we're keeping an eye on. So I think that is one of the key risks. And geopolitical risk is obvious at the end of the day, and you need to spend the rest of the time talking about that. Then the other things I worry about are cyber risk. I constantly worry about cyber risk in an enhanced, more [ fractures], more confrontational geopolitical world, cyber risk continues to increase. It's not just commercial cyber risk that we take on. It's nation-state cyber risk and trying to disrupt infrastructure within a given country for geopolitical purposes. So we spend an enormous amount of money and time defending against that. And I think that is a big part of the value proposition that leading institutions like RBC offer Canadians and our customers in general. We're offering security, peace of mind, strength and stability, cyber defense, and therefore, brand and trust around that are critical. And when you think about it I often get the questions, are you worried about stablecoin? Are you worried about fintech disruption? I said, well, when you come back to who are you going to trust to protect you, who are you going to trust to invest? There's so many fintechs have been hacked at the end of the day. And the resources that you need to defend your perimeter and defend your franchise are growing and they're significant. Even the hundreds and hundreds, if not [ $1 billion ] that we spend in defending, not every institution can afford that. And that bar keeps getting higher and higher and higher. I worry about cyber because it's your brand, systems brand and confidence in the system. I think that would be a second risk that would get a lot of my focus and a lot of my team's focus. I could go on, but those would be the 2 big ones, credit and cyber.

And on credit, last year, we did see one file that was noticeable. How should we think about that? Is that now maybe part for the course going forward that it can occasionally happen. It just sort of is what it is, you're a big bank, you can handle it. Or should we think about credit risk being less episodic going forward? How do you frame that for investors?

We had initially a highly rated external utility that we stretched ourselves into. So I would say there was a bit of a one-off risk where we stretched ourselves into a bridge loan financing that was at the upper end of our appetite because it was a highly rated utility. I think our learning from that is it doesn't matter if it's a highly rated utility, we're going to moderate some of the absolute hold levels there. So I think we got our heads around maybe a bit of an exception to what we would normally do given the construct there, and we got caught. And we wrote off more than we wanted to write off, and that was -- we earned through that quite nicely, but still not happy that the situation happened. It may resolve itself over the coming months a little bit. We'll see. But it's obviously hung up in a lot of political rhetoric as well. So I think that would be our learning that notwithstanding that, we're going to be conservative.

So we've touched upon the outlook some of the things that you're working on towards higher returns in a somewhat constructive. We talked about risks. Maybe one last thing that I sort of picked up on in the last little bit is could taxes be a bit of a headwind for you? And how should we think about that?

Yes, I think we've signaled pretty clearly where we expect the range of tax impact to come in. So certainly, there's a couple of headwinds that we have to earn into. One, we've been very clear about the impact of PPA impact of the acquisition of HSBC that, that has been a bit of a tailwinds in our consumer NII, and we'll fully earn through that. But just to keep reminding people that will take a bit of a point off our growth as we don't have that largely for the most of 2026 point of NII growth in that business. And taxes, certainly, as we go and look at Pillar 2 and Pillar 2 gets implemented around the world and enforced around the world, and our overall tax burden will increase as Katherine, our CFO, has articulated well into that range that we put out there. So I think there's certainly a headwind there, notwithstanding the headwinds that we have to earn all those tailwinds we talked about and the confidence that we still set our medium-term target at 17-plus percent ROE is that we understand the challenge in front of us, and we're fully prepared to deliver on that. So yes, there are headwinds, and we'll earn through them.

Are you worried about it longer term?

Taxes, and how we're going to pay for everything?

Not just in this country, I think even globally where you operate.

Certainly, our governments are carrying significant amount of debt. I'm obviously more worried about the U.S. fiscal situation than the Canadian fiscal situation. But we don't have unlimited capacity to borrow in Canada as well. And we've got significant commitments we've made to defense and commitments we made to infrastructure. So I am quite concerned about the U.S. economy as far as U.S. more fiscal situation and significant deficit being incurred. It's a wonderful floor under the economy. The end of the day, it's kind of washing out cycles with a significant amount of government spend and GDP creation. So it's nice to have, but you just can't count on that being there at that level for a prolonged period of time without more serious things happening. So absolutely from that perspective, deficits are -- have to be managed appropriately. And I think we're seeing some imbalances that are concerning.

Now the fun part, we're going to go to some audience Q&A.

Yes, fire away.

First one, would you accept a temporarily lower ROE for a large strategic M&A transaction?

Temporarily short term. I don't have any significant gaps that I have to close that I would say are strategic. So when I'm looking at a roll-up, I'm looking at much more accretive short term or I'll pass on it. I passed on so many acquisitions because they're just not accretive enough and we have so much opportunity on the inorganic side. So if it was transformational in our ability to compete in the long term, when I look at it, absolutely I'd look at it. It's my job, our currency is really strong. But the story of how quickly we can earn back to that 17-plus percent would be really important to the overall storyline to even consider doing it. And we don't get -- we don't work for free, right? So we're not going to give all the synergies to the seller at the end of the day. And I think you're in a market with so much capital flowing around that the deals are going to get done are going to be very advantageous to the seller. At the end of the day, there's a lot of buyers out there. So I'm a little skeptical on the ability to really drive shareholder value through M&A right now to tell you the truth. And we're very much focused on just organic growth, but there are a couple of opportunities in the wealth space that I think in the United States that would be transformational that we'd have to look at. And they'll be -- they're high, high-quality franchises and they'll be hotly coveted and whether you can be the winning franchise and still deliver all those benefits to the shareholder is questionable, but you want to be there and have a look at the end of the day, you want to get the call and you want to try to make it work. But there are few and far between. I tell you the truth. They may never trade, but you're always ready in case they do and try to make the business case work. So yes, I would look at it. I think that's would be crazy not to. But our earn back to 17% would be a big part of the story.

Okay. We're up to the point where I always promise to give the last word to the CEO Dave, maybe you could summarize or give everybody your key messages that you want them to think about for your company into 2026.

I think we're operating in a constructive environment that's balanced. I see enormous opportunity for ROI in the United States, whether it's our City National franchise, our wealth franchise, our capital markets franchise. We're very excited about the growth opportunity that we articulated in our Investor Day in the U.S. And in Canada, we continue to take share. We continue to benefit from an overall market-leading franchise in every business we're doing. Canada has, I think, some unprecedented growth opportunities that we haven't seen in the last decade or 15 years. So I've been more excited about Canada than I have been in the last decade. I think the tone at the top is really good. The ideas are in the right direction, and we're all pulling in the right way. And I think we've got to get these things done, and they're not easy things to get done as far as our infrastructure build, but they're accretive to growth and accretive to prosperity and they diversify our economy and make us a stronger nation going forward. And I think super supportive of the direction we're going. So I think I feel the world is seeing that for the first time. And therefore, I'm excited about the amount of capital that's looking at ROI from outside the country as well to capitalize on that opportunity as we try to grow our investor base and diversify our investor base. So great opportunity to grow and improve our mortgages in Canada. We'll continue to see good spend on the credit card side. We're excited about the depositing our money -- our market-leading deposit business, which is critical to driving ROEs and critical to driving that premium performance. Still is your deposits are key. And we've invested heavily in our deposit business through partnerships, through technology, whether it's commercial deposit taking, consumer deposit taking and most recently, RBC Clear. And our senior markets, our capital markets in the U.S., we're very proud of the product we built and the awards that we received when we built it have translated into customers signing up for the product and using it to the point that we raised $23 billion of funding and of deposits in U.S. senior markets from scratch, from not even having a product 3 years ago. And we think we can take that to -- as we talked about the $50 billion plus. And that is transformational from our growth perspective. And it changes how we can look at acquisitions where before I could not solve someone else's U.S. funding challenge, like Comerica having a funding challenge and can't grow. I could never solve that. Now I can getting closer to being able to solve that for other institutions that are struggling. And therefore, that could change the overall synergy case and synergy story from ROI looking at opportunities in the U.S. So all that work gives us enormous flexibility, significant growth opportunities in on-balance sheet, off-balance sheet. And it's the balance of our global franchise and our diversified client franchises that I think is the power of RBC. And I'm excited. I'm really excited. And AI is just another wave of opportunity to create shareholder value and client value at the end of the day. So there's a lot of levers to pull and a market that I think will have more opportunity going forward, and we're well positioned to take advantage of that.

Okay. With that, we're going to end the session with RBC. Thank you very much.

Thank you. Thanks, Darko.