RBC says winning the 'AI arms race' key to future growth despite trade war uncertainty

United States President Donald Trump’s tariffs have sparked fears of a recession in Canada, but this country’s largest bank is confident it can overcome any near-term hurdles and continue to post healthy growth during the next few years.

Royal Bank of Canada executives say that aside from focusing on acquiring more clients and cementing relationships in Canada as well as boosting its businesses globally, including in the U.S., the use of artificial intelligence will help “unlock” opportunities.

“Taking our strong digital, data and AI capabilities to the next level is such an important part of how we’ll continue to build the bank of the future and unlock our next phase of growth,” RBC chief executive Dave McKay said on Thursday at the bank’s first Investor Day event since 2018.

But he said the bank needs to adapt to “several macro forces of change,” such as the shift to “hyper-personalization and an AI arms race that every business needs to keep up with,” changing immigration dynamics and the backdrop of deglobalization and global tariffs.

“On one hand, we have lower interest rates in Canada to stimulate investments,” he said. “However, this is being offset to a degree by increased uncertainty created by tariffs and the impact that’s having on businesses and jobs.”

McKay said markets are strongly reacting to any kind of positive news because they sense opportunities and don’t want to get delayed in seizing them.

“Negative news causes a pause, but the positive news gets you encouraged again, and you move fast,” he said.

RBC had to put aside more-than-expected money for potentially bad loans in its first quarter, but a key reason why the lender easily beat analysts’ expectations was the performance of its personal business