City National Bank’s Positive Turnaround
Citi National Bank, the American branch of the Royal Bank of Canada, is working on its recovery this year. Based in Los Angeles, the bank recently reported a net profit of $114 million from May to July, marking its best performance in over three years and boosting its credit outlook.
According to RBC CEO Dave McKay, City National is actively expanding its workforce. “They’re bringing in commercial and private bankers and adding clients,” he shared with analysts. McKay feels optimistic about building a robust pipeline that could lead to growth in both loans and deposits.
There’s also a growing sense of hope among RBC executives regarding City National’s future. They note a decline in costs as the bank focuses on what they refer to as “repairs.” CFO Katherine Gibson mentioned, “We hope that trend continues as we move into 2026.”
At the end of June, City National’s assets stood at $94 billion. However, like many banks, it faced significant challenges this year due to rising interest rates, which led to increased deposit costs and unrealized losses from struggling securities.
Additionally, banks in Los Angeles had to deal with regulatory scrutiny, facing incidents in January and February. The latter incident resulted in a hefty $65 million fine tied to flaws in the bank’s risk management practices.
RBC is also working on reducing costs at City National and better integrating their US operations with other acquisitions made back in 2015.
In the quarter ending July 31, RBC reported an efficiency ratio of 81.5% for its US operations—still high, but a marked improvement of 6.6 percentage points from the previous year. A lower efficiency ratio is usually a goal for banks, as it measures non-profit costs against revenue.
McKay pointed out there’s much left to do, but they are spotting early success as they strive for a more unified US operational model. Leadership changes at City National in 2023 have brought in veterans from the 5th Third Bancorp to spearhead these efforts. It’s not just about cutting costs; they’re also looking to grow organically in the southeastern US, driven by client needs in commercial banking.
Earlier this year, RBC unveiled a revised US strategy focused on their niche areas, such as cross-selling products, expanding their mortgage services, and lending to middle-market firms.
City National’s recent quarterly results also benefited from adjustments in risk assessments related to credit quality. Alongside City National, RBC’s US operations encompass wealth management and capital markets, which collectively raked in a net income of $635 million this quarter—a 21% rise from the same time in 2024.
On the whole, RBC announced a net profit of CAD 5.4 billion, a 21% increase from last year, showing solid results across all its business segments.
Investors reacted positively, with the company’s stock climbing 6.32% during Wednesday’s trading session. Analyst John Aiken from Jeffries mentioned that while RBC expects to moderate some growth, there appears to be continual upside potential, especially with City National.
