Despite escalating tensions between the United States and Canada, Dave McKay, CEO of the Royal Bank of Canada (RBC), remains optimistic about the future of U.S.-Canada economic relations. McKay emphasized that RBC is investing in projects that foster cooperation between the two nations, rather than preparing for a decoupling. "We're investing in growth, not decoupling," he stated, highlighting RBC's role in financing cross-border oil and gas pipelines and the creation of a Global Transaction Banking unit to streamline operations in North America.
The trade war between the U.S. and Canada has been marked by tit-for-tat tariffs and strained negotiations. Prime Minister Mark Carney has advocated for reducing Canada's dependence on the U.S., but McKay believes that the benefits of trade between the two countries will ultimately prevail. He pointed to the United States-Mexico-Canada Agreement (USMCA) as evidence of ongoing cooperation, noting that the agreement remains in effect until 2036.
While McKay maintains a positive outlook, RBC has taken precautions to protect itself from potential economic downturns. In May 2025, the bank increased its provisions for credit losses by 54% to guard against the impact of the trade war. Analysts note that RBC has diversified its operations to reduce reliance on U.S.-exposed businesses, with wealth management and capital markets contributing significantly to its recent net income.
McKay also addressed challenges faced by City National Bank, RBC's U.S. subsidiary, which suffered losses and regulatory fines in 2023. Under new leadership, City National has recovered, reporting a net income of $184 million in the most recent quarter. McKay attributed this turnaround to the hiring of experienced executives from Fifth Third Bancorp, who brought expertise in managing a regional bank.