[FWP] Royal Bank of Canada Free Writing Prospectus

Rhea-AI Filing Summary

Royal Bank of Canada (RY) has filed a Free Writing Prospectus for Auto-Callable Enhanced Return Barrier Notes linked to an equally weighted basket of five large-capitalization U.S. bank stocks (BAC, C, GS, MS, WFC). The Notes carry a 3-year tenor (Issue Date: 5-Aug-2025; Maturity: 4-Aug-2027) and feature the following key economic terms:

• Automatic Call: If on the single Call Observation Date (13-Aug-2026) the basket closes at or above the Initial Basket Value (set at 100 on trade date), the Notes are redeemed early for 115% of principal on 18-Aug-2026. No further payments are made.
• Upside Participation: If not called and the Final Basket Value exceeds the initial level, holders receive 150 % of the basket return at maturity.
• Contingent Principal Protection: If not called and the basket declines but remains at or above the 75 % Barrier, principal is returned. Below the barrier, repayment is linear with the basket decline, exposing investors to up to 100 % loss of principal.
• No coupons: The Notes pay no periodic interest.
• Issuer & Credit: Senior unsecured obligations of Royal Bank of Canada; payments depend on the issuer’s creditworthiness.
• Initial Estimated Value: $917.36 – $967.36 per $1,000 face, 3-8 % below the public offering price, reflecting embedded fees and hedging costs.

Risk highlights (summarised from the filing): potential loss of principal, limited upside if called, no equity rights, secondary-market illiquidity, valuation uncertainty, issuer conflicts, tax treatment uncertainty and credit risk of RBC.

Investors are directed to the preliminary pricing supplement and prospectus for full terms and risk factors before investing.

Positive

• 15% automatic call yield reachable after one year if the basket is flat or higher, offering an above-market short-term return.
• 150% participation rate on upside at maturity provides leveraged equity exposure if the note is not called.
• Contingent principal protection up to a 25% basket decline limits losses relative to direct equity ownership, provided the barrier is not breached.

Negative

• Capital at risk below the 75% barrier; investors can lose their entire principal in a severe downturn.
• No periodic interest payments, reducing carry versus conventional bonds.
• Initial estimated value 3-8% below par indicates embedded fees and potential negative mark-to-market on issuance.
• Single observation call caps upside at 15% if triggered, leading to reinvestment risk.
• Credit risk of Royal Bank of Canada; note is a senior unsecured obligation.
• Limited secondary-market liquidity; investors may face large bid-ask spreads if they need to exit early.

Insights

Structured Products Analyst

TL;DR: 15% call yield in one year, 150% upside thereafter, but barrier at 75% and issuer pricing discount create meaningful downside and valuation drag.

The note offers an eye-catching 15% absolute return if the basket merely holds its ground by August 2026. Because U.S. large-cap banks often exhibit correlated performance, the single observation call structure can crystallize gains quickly in a sideways or modestly bullish market.
Beyond the call date, the 150% participation rate affords leveraged upside, but only if the basket is above its initial level.
Risk is asymmetric: a 25% cushion is relatively thin for a volatile sector—during the 2023 banking volatility, several constituents fell well beyond that threshold. Below the barrier, losses mirror the equity decline, eliminating any fixed-income characteristics.
The initial estimated value (as low as 91.7% of par) confirms a substantial embedded fee. Investors effectively pre-pay for downside protection that disappears if the barrier is breached.
Credit risk is senior unsecured RBC exposure; while RBC is high-grade, spread widening could erode secondary prices. Overall, the product suits tactical investors with a positive 12-month view on U.S. bank equities and appetite for issuer and structure risk.

Multi-Asset Portfolio Manager

TL;DR: Attractive headline coupon masks call risk; modest diversification benefit; limited portfolio utility versus direct equity or vanilla bonds.

From an allocation standpoint, the note’s performance is binary. In a flat or mildly rising banking sector, it can outperform cash with a tidy 15% in 12 months. Yet that outcome removes future upside—capital is returned and must be reinvested at then-prevailing rates.
If not called, investors endure two further years of illiquidity and equity volatility without dividends. While 150% participation is appealing, a direct equity position in the five banks, with dividends and full upside, may compare favorably on a risk-adjusted basis.
The 75% barrier provides contingent protection but is far from capital-guaranteed. Stress scenarios akin to the 2020 Covid sell-off or 2023 regional-banks turmoil could breach it, leading to equity-like losses with no dividend offset.
Given the 3-8% pricing concession and potential lack of secondary liquidity, I view the instrument as tactically neutral rather than strategic. Investors comfortable with issuer credit and seeking asymmetric exposure may allocate a small sleeve; most diversified portfolios can likely achieve similar outcomes more transparently with equities and options.

Auto-Callable Enhanced Return Barrier Notes Linked to a Basket of Five Equity Securities Due August 4, 2027

PRODUCT CHARACTERISTICS

· Call Feature — If, on the Call Observation Date, the closing value of the Basket is greater than or equal to the Initial Basket Value, the Notes will be automatically called for a return of 15%. No further payments will be made on the Notes.

· Enhanced Return Potential — If the Notes are not automatically called and the Final Basket Value is greater than the Initial Basket Value, at maturity, investors will receive a return equal to 150% of the Basket Return.

· Contingent Return of Principal at Maturity — If the Notes are not automatically called and the Final Basket Value is less than or equal to the Initial Basket Value, but is greater than or equal to the Barrier Value, at maturity, investors will receive the principal amount of their Notes. If the Notes are not automatically called and the Final Basket Value is less than the Barrier Value, at maturity, investors will lose 1% of the principal amount of their Notes for each 1% that the Final Basket Value is less than the Initial Basket Value.

KEY TERMS
Issuer:	Royal Bank of Canada (“RBC”)
CUSIP:	78017PCP4
Basket Underliers:	The common stock of Bank of America Corporation (Bloomberg symbol “BAC UN”), the common stock of Citigroup Inc. (Bloomberg symbol “C UN”), the common stock of The Goldman Sachs Group, Inc. (Bloomberg symbol “GS UN”), the common stock of Morgan Stanley (Bloomberg symbol “MS UN”) and the common stock of Wells Fargo & Company (Bloomberg symbol “WFC UN”)
Basket Weighting:	With respect to each Basket Underlier: 1/5
Trade Date:	July 31, 2025
Issue Date:	August 5, 2025
Valuation Date:	July 30, 2027
Maturity Date:	August 4, 2027
Call Feature:	If, on the Call Observation Date, the closing value of the Basket is greater than or equal to the Initial Basket Value, the Notes will be automatically called. Under these circumstances, investors will receive on the Call Settlement Date per $1,000 principal amount of Notes an amount equal to $1,150 (115% of the principal amount). No further payments will be made on the Notes.
Call Observation Date:	August 13, 2026
Call Settlement Date:	August 18, 2026
Payment at Maturity:	If the Notes are not automatically called, investors will receive on the Maturity Date per $1,000 principal amount of Notes: ·   If the Final Basket Value is greater than the Initial Basket Value, an amount equal to: $1,000 + ($1,000 × Basket Return × Participation Rate) ·   If the Final Basket Value is less than or equal to the Initial Basket Value, but is greater than or equal to the Barrier Value: $1,000 ·   If the Final Basket Value is less than the Barrier Value, an amount equal to: $1,000 + ($1,000 × Basket Return) If the Notes are not automatically called and the Final Basket Value is less than the Barrier Value, you will lose a substantial portion or all of your principal amount at maturity.
Participation Rate:	150% (applicable only at maturity if the Notes are not automatically called)

KEY TERMS (continued)
Basket Return:	Final Basket Value – Initial Basket Value Initial Basket Value
Initial Basket Value:	Set equal to 100 on the Trade Date
Final Basket Value:	The closing value of the Basket on the Valuation Date
Closing Value of the Basket:	On any relevant day, the closing value of the Basket will be calculated as follows: 100 × [1 + (the sum of, for each Basket Underlier, its Basket Underlier Return on that day times its Basket Weighting)]
Barrier Value:	75, which is 75% of the Initial Basket Value
Basket Underlier Return:	With respect to each Basket Underlier on any relevant day: (a) the closing value of that Basket Underlier on that day minus the Initial Basket Underlier Value divided by (b) the Initial Basket Underlier Value
Initial Basket Underlier Value:	With respect to each Basket Underlier, the closing value of that Basket Underlier on the Trade Date

PAYOFF DIAGRAM (IF THE NOTES ARE NOT AUTOMATICALLY CALLED)

 

This document provides a summary of the terms of the Notes. Investors should carefully review the accompanying preliminary pricing supplement, product supplement, prospectus supplement and prospectus, as well as “Selected Risk Considerations” below, before making a decision to invest in the Notes:

https://www.sec.gov/Archives/edgar/data/1000275/000095010325008223/dp231021_424b2-us2728mul.htm

The initial estimated value of the Notes determined by us as of the Trade Date, which we refer to as the initial estimated value, is expected to be between $917.36 and $967.36 per $1,000 principal amount of Notes and will be less than the public offering price of the Notes. We describe the determination of the initial estimated value in more detail in the accompanying preliminary pricing supplement.

   

Selected Risk Considerations

An investment in the Notes involves significant risks. We urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the Notes. Some of the risks that apply to an investment in the Notes are summarized below, but we urge you to read also the “Selected Risk Considerations” section of the accompanying preliminary pricing supplement and the “Risk Factors” sections of the accompanying prospectus, prospectus supplement and product supplement. You should not purchase the Notes unless you understand and can bear the risks of investing in the Notes.

· You May Lose a Portion or All of the Principal Amount at Maturity.

· Your Potential Payment If the Notes Are Automatically Called Is Limited.

· The Notes Do Not Pay Interest, and Your Return on the Notes May Be Lower Than the Return on a Conventional Debt Security of Comparable Maturity.

· The Notes Are Subject to an Automatic Call.

· Payments on the Notes Are Subject to Our Credit Risk, and Market Perceptions about Our Creditworthiness May Adversely Affect the Market Value of the Notes.

· Changes in the Value of One Basket Underlier May Be Offset by Changes in the Values of the Other Basket Underliers.

· Any Payment on the Notes Will Be Determined Based on the Closing Values of the Basket Underliers on the Dates Specified.

· The U.S. Federal Income Tax Consequences of an Investment in the Notes Are Uncertain.

· There May Not Be an Active Trading Market for the Notes; Sales in the Secondary Market May Result in Significant Losses.

· The Initial Estimated Value of the Notes Will Be Less Than the Public Offering Price.

· The Initial Estimated Value of the Notes Is Only an Estimate, Calculated as of the Trade Date.

· Our and Our Affiliates’ Business and Trading Activities May Create Conflicts of Interest.

· RBCCM’s Role as Calculation Agent May Create Conflicts of Interest.

· You Will Not Have Any Rights to Any Basket Underlier.

· Any Payment on the Notes May Be Postponed and Adversely Affected by the Occurrence of a Market Disruption Event.

· Anti-dilution Protection Is Limited, and the Calculation Agent Has Discretion to Make Anti-dilution Adjustments.

· Reorganization or Other Events Could Adversely Affect the Value of the Notes or Result in the Notes Being Accelerated.

Royal Bank of Canada has filed a registration statement (including a product supplement, prospectus supplement and prospectus) with the SEC for the offering to which this document relates. Before you invest, you should read those documents and the other documents that we have filed with the SEC for more complete information about us and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, we, any agent or any dealer participating in this offering will arrange to send you those documents if you so request by calling toll-free at 1-877-688-2301.

As used in this document, “Royal Bank of Canada,” “we,” “our” and “us” mean only Royal Bank of Canada. Capitalized terms used in this document without definition are as defined in the accompanying preliminary pricing supplement.

Registration Statement No. 333-275898; filed pursuant to Rule 433

FAQ

What is the potential return if the Royal Bank of Canada (RY) note is called early?

If on 13-Aug-2026 the basket closes at or above its initial value, the note is automatically redeemed for $1,150 per $1,000 principal (15% return).

How much downside protection does the RBC Auto-Callable note provide?

Principal is protected only if the basket value remains at or above 75% of the initial level; below that, losses mirror the basket decline.

What upside participation does the note offer at maturity if not called?

Holders receive 150% of any positive basket return measured between trade date and 30-Jul-2027.

Why is the initial estimated value below the $1,000 offering price?

RBC estimates the value at $917.36–$967.36 due to structuring fees, hedging costs and issuer profit, all embedded in the price.

Does the note pay any interest or dividends?

No. The note pays no coupons and investors do not receive dividends from the underlying bank stocks.

What credit exposure do investors take on with this note?

Payments depend solely on Royal Bank of Canada’s ability to meet its senior unsecured obligations, regardless of basket performance.