Royal Bank of Canada’s latest annual report indicates that bonus payments in 2025 are likely to be higher than last year, particularly at its capital markets division. The bank increased total cash-based variable compensation across the group, continuing a trend of expanding bonus pools for the second year in a row.

Overall spending on cash bonuses rose by double digits compared with the prior year. Additional compensation categories, including benefits and retention awards, also increased, while share-based compensation remained stable. The bank also slightly expanded the number of long-term compensation awards, supported by a strong rise in its share price over the same period.

These higher compensation levels reflect solid financial performance. Revenues and net income at the capital markets business both posted strong year-on-year growth, with especially strong results in trading and markets activities. Sales and trading teams are therefore expected to be the main beneficiaries when bonuses are paid, as markets revenues rose significantly over the year.

However, the higher bonus pool comes alongside workforce reductions. The bank reduced headcount in its capital markets division during the late summer, cutting several hundred roles. Despite these cuts, overall staffing levels are still slightly higher than at the beginning of the year.

The combination of rising bonuses and reduced headcount suggests that compensation per employee may increase, particularly for revenue-generating roles. At the same time, past experience shows that higher headline bonus pools do not always translate into broad-based satisfaction, especially in regions or teams where individual payouts fall short of expectations.