All amounts are in Canadian dollars and are based on financial
statements prepared in compliance with International Accounting
Standard 34 Interim Financial Reporting, unless otherwise
noted. Our Q3 2019 Report to Shareholders and Supplementary
Financial Information are available at:
http://www.rbc.com/investorrelations.
Net
Income $3.3 Billion Diversified earnings
growth
|
Diluted
EPS1 $2.22
Solid 6% growth YoY
|
ROE2 16.7% Balanced
capital deployment
|
CET1
Ratio 11.9% Strong capital
ratio
|
TORONTO, Aug. 21, 2019 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE) today reported net
income of $3,263 million for the
quarter ended July 31, 2019, up
$154 million or 5% from the prior
year, with solid diluted EPS growth of 6%. Results reflected strong
earnings growth in Personal & Commercial Banking, Wealth
Management and Insurance. These were partially offset by lower
earnings in Capital Markets and Investor & Treasury Services
amidst challenging market conditions.
Compared to last quarter, net income was up $33 million with higher earnings in Personal
& Commercial Banking, Wealth Management and Insurance, largely
offset by lower earnings in Capital Markets and Investor &
Treasury Services.
Provisions for credit losses (PCL) on impaired loans ratio of 25
basis points (bps) was up 8 bps from a year ago (down 4 bps
compared to last quarter), largely due to higher provisions in
Capital Markets compared to recoveries in the prior year. Higher
provisions in Personal & Commercial Banking also contributed to
the increase. Our capital position remained strong with a Common
Equity Tier 1 (CET1) ratio of 11.9%, up 10 bps from last quarter.
In addition, today we announced an increase to our quarterly
dividend of $0.03 or 3% to
$1.05 per share.
"Our focused
strategy and diversified business mix continue to deliver strong
returns for our shareholders as we leverage our scale and
investments in technology to create new value streams for our
clients. This commitment is underpinned by the strength of our
balance sheet, disciplined risk and expense management, and the
power of imagination and insight our people deliver every day. RBC
is well-positioned to further grow our market share and navigate
the evolving market environment." – Dave
McKay, RBC President and Chief Executive
Officer
|
Q3
2019
Compared
to
Q3 2018
|
- Net income of
$3,263 million
- Diluted
EPS1 of $2.22
- ROE2 of
16.7%
- CET1 ratio of
11.9%
|
↑ 5% ↑
6% ↓ 60 bps ↑ 80 bps
|
Q3
2019
Compared
to
Q2
2019
|
- Net income of
$3,263 million
- Diluted
EPS1 of $2.22
- ROE2 of
16.7%
- CET1 ratio of
11.9%
|
↑ 1% ↑
1% ↓ 80
bps ↑ 10 bps
|
YTD
2019
Compared
to
YTD 2018
|
- Net income of
$9,665 million
- Diluted
EPS1 of $6.57
- ROE2 of
17.0%
|
↑ 5% ↑ 7% ↓ 60
bps
|
Personal & Commercial Banking
Net income of $1,664 million
increased $154 million or 10% from
last year, mainly due to average volume growth of 7% and higher
spreads in Canadian Banking. These factors were partially offset by
an increase in staff-related costs as well as technology and
related costs.
Compared to last quarter, net income increased $115 million or 7%, reflecting average volume
growth of 2% in Canadian Banking, three more days in the quarter
and lower PCL. These factors were partially offset by higher
staff-related costs.
______________________________________
|
1
|
Earnings per share
(EPS).
|
2
|
Return on Equity
(ROE). This measure does not have a standardized meaning under
GAAP. For further information, refer to the Key Performance and
non-GAAP measures section on page 3 of this Earnings
Release.
|
Wealth Management
Net income of $639 million
increased $61 million or 11% from a
year ago, primarily due to higher average fee-based client assets
driven by favourable market impacts and strong net sales, as well
as an increase in net interest income due to average volume growth
(City National Bank saw strong double-digit loan growth of 17%
YoY3). These factors were partially offset by higher
costs in support of business growth, and higher variable
compensation commensurate with revenue growth.
Compared to last quarter, net income increased $54 million or 9%, primarily reflecting higher
average fee-based client assets driven by net sales and market
appreciation, and an increase in net interest income mainly due to
average volume growth and three more days in the quarter. These
factors were partially offset by higher variable compensation
commensurate with revenue growth and the net change in the fair
value of U.S. share-based compensation
plans.
Insurance
Net income of $204 million
increased $46 million or 29% from a
year ago, primarily reflecting higher favourable investment-related
experience and the impact of new longevity reinsurance contracts.
These factors were partially offset by higher disability and life
retrocession claims costs and favourable reinsurance contract
renegotiations in the prior year.
Compared to last quarter, net income increased $50 million or 32%, mainly due to higher
favourable investment-related experience and the impact of new
longevity reinsurance contracts. These factors were partially
offset by favourable reinsurance contract renegotiations in the
prior quarter.
Investor & Treasury Services
Net income of $118 million
decreased $37 million or 24% from a
year ago, primarily due to lower client deposit margins, lower
revenue from our asset services business, and lower funding and
liquidity revenue.
Compared to last quarter, net income decreased $33 million or 22%, primarily due to lower client
deposit margins, higher costs in support of efficiency initiatives
as well as technology and related costs, and lower funding and
liquidity revenue.
Capital Markets
Net income of $653 million
decreased $45 million or 6% from a
year ago, primarily due to lower loan syndication revenue mainly in
the U.S. and Europe reflective of
the contraction in the global fee pool, higher PCL, and lower
equity trading activity across most regions. These factors were
partially offset by a lower effective tax rate largely reflecting
changes in earnings mix and lower compensation on decreased
results.
Compared to last quarter, net income decreased $123 million or 16% mainly due to lower fixed
income trading largely in the U.S. (amidst a challenging
environment relative to favorable market conditions in the second
quarter), lower debt origination primarily in Europe and the U.S., and higher PCL mainly on
performing loans. Lower equity trading in North America also contributed to the
decrease. These factors were partially offset by lower compensation
on decreased results.
Corporate Support
Net loss was $15 million in the
current quarter, mainly due to net unfavourable tax adjustments,
largely offset by asset/liability management activities. Net income
was $10 million in the prior year,
largely due to asset/liability management activities. Net income
was $15 million in the prior quarter,
largely due to asset/liability management activities and partially
offset by net unfavourable tax adjustments.
Capital and Credit Quality
Capital – As at July 31, 2019, Basel III CET1 ratio was 11.9%, up
10 bps from last quarter, mainly reflecting internal capital
generation, partially offset by higher risk-weighted assets, the
impact of lower discount rates in determining pension and other
post-employment benefit obligations, and share repurchases. This
quarter, we returned $1.7 billion of
our $3.3 billion in earnings to our
shareholders through common share dividends and buybacks.
Credit Quality – Total PCL was $425 million. PCL on loans of $429 million increased $91
million or 27% from the prior year, due to higher provisions
in Capital Markets, Wealth Management and Personal & Commercial
Banking. Total PCL ratio on loans of 27 bps increased 4 bps from
cyclical lows in the prior year. PCL ratio on impaired loans
was 25 bps.
PCL on loans decreased $12 million
or 3% from the prior quarter, and total PCL ratio on loans
improved 2 bps from last quarter, reflecting stable credit
conditions. Lower PCL on impaired loans, mainly in Personal &
Commercial Banking, was largely offset by higher PCL on performing
loans in Capital Markets.
____________________________________
|
3
|
Loan growth was 15%
YoY in U.S. Dollars.
|
Digitally Enabled Relationship Bank
90-day Active Mobile users increased 17% from a year ago to 4.3
million, resulting in a 26% increase in mobile sessions. Digital
adoption increased to 52% as we continued our digital
transformation journey.
Key Performance and Non-GAAP Measures
We measure and evaluate the performance of our consolidated
operations and each business segment using a number of financial
metrics, such as net income and ROE. ROE does not have a
standardized meaning under GAAP and may not be comparable to
similar measures disclosed by other financial institutions. We use
ROE as a measure of return on total capital invested in our
business.
Additional information about ROE and other Key Performance and
non-GAAP measures can be found under the Key Performance and
non-GAAP measures section of our Q3 2019 Report to
Shareholders.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
From time to time, we make written or oral forward-looking
statements within the meaning of certain securities laws, including
the "safe harbour" provisions of the United States Private
Securities Litigation Reform Act of 1995 and any applicable
Canadian securities legislation. We may make forward-looking
statements in this Earnings Release, in other filings with Canadian
regulators or the SEC, in other reports to shareholders, and in
other communications. Forward-looking statements in this document
include, but are not limited to, statements relating to our
financial performance objectives, vision and strategic goals, and
include our President and Chief Executive Officer's statements. The
forward-looking information contained in this Earnings Release is
presented for the purpose of assisting the holders of our
securities and financial analysts in understanding our financial
position and results of operations as at and for the periods ended
on the dates presented, as well as our financial performance
objectives, vision and strategic goals, and may not be appropriate
for other purposes. Forward-looking statements are typically
identified by words such as "believe", "expect", "foresee",
"forecast", "anticipate", "intend", "estimate", "goal", "plan" and
"project" and similar expressions of future or conditional verbs
such as "will", "may", "should", "could" or "would".
By their very nature, forward-looking statements require us to
make assumptions and are subject to inherent risks and
uncertainties, which give rise to the possibility that our
predictions, forecasts, projections, expectations or conclusions
will not prove to be accurate, that our assumptions may not be
correct and that our financial performance objectives, vision and
strategic goals will not be achieved. We caution readers not to
place undue reliance on these statements as a number of risk
factors could cause our actual results to differ materially from
the expectations expressed in such forward-looking statements.
These factors – many of which are beyond our control and the
effects of which can be difficult to predict – include: credit,
market, liquidity and funding, insurance, operational, regulatory
compliance, strategic, reputation, legal and regulatory
environment, competitive and systemic risks and other risks
discussed in the risk sections of our 2018 Annual Report and the
Risk management section of our Q3 2019 Report to Shareholders;
including global uncertainty, Canadian housing and household
indebtedness, information technology and cyber risk, regulatory
changes, digital disruption and innovation, data and third party
related risks, climate change, the business and economic conditions
in the geographic regions in which we operate, the effects of
changes in government fiscal, monetary and other policies, tax risk
and transparency, and environmental and social risk.
We caution that the foregoing list of risk factors is not
exhaustive and other factors could also adversely affect our
results. When relying on our forward-looking statements to make
decisions with respect to us, investors and others should carefully
consider the foregoing factors and other uncertainties and
potential events. Material economic assumptions underlying the
forward looking-statements contained in this Earnings Release are
set out in the Economic, market and regulatory review and outlook
section and for each business segment under the Strategic
priorities and Outlook headings in our 2018 Annual Report, as
updated by the Economic, market and regulatory review and outlook
section of our Q3 2019 Report to Shareholders. Except as required
by law, we do not undertake to update any forward-looking
statement, whether written or oral, that may be made from time to
time by us or on our behalf.
Additional information about these and other factors can be
found in the risk sections of our 2018 Annual Report and the Risk
management section of our Q3 2019 Report to Shareholders.
Information contained in or otherwise accessible through the
websites mentioned does not form part of this Earnings Release. All
references in this Earnings Release to websites are inactive
textual references and are for your information only.
ACCESS TO QUARTERLY RESULTS MATERIALS
Interested
investors, the media and others may review this quarterly Earnings
Release, quarterly results slides, supplementary financial
information and our Q3 2019 Report to Shareholders at
rbc.com/investorrelations.
Quarterly conference call and webcast presentation
Our
quarterly conference call is scheduled for August 21, 2019 at 8:00
a.m. (EST) and will feature a presentation about our third
quarter results by RBC executives. It will be followed by a
question and answer period with analysts.
Interested parties can access the call live on a listen-only
basis at
rbc.com/investorrelations/quarterly-financial-statements.html or
by telephone (416-340-2217, 866-696-5910, passcode 5037596#).
Please call between 7:50 a.m. and 7:55 a.m.
(EST).
Management's comments on results will be posted on our website
shortly following the call. A recording will be available by
5:00 p.m. (EST) from August 21, 2019 until December 3, 2019 at
rbc.com/investorrelations/quarterly-financial-statements.html or
by telephone (905-694-9451 or 800-408-3053, passcode 5322530#).
ABOUT RBC
Royal Bank of Canada is a global financial institution with
a purpose-driven, principles-led approach to delivering leading
performance. Our success comes from the 86,000+ employees who bring
our vision, values and strategy to life so we can help our clients
thrive and communities prosper. As Canada's biggest bank, and one of the largest
in the world based on market capitalization, we have a diversified
business model with a focus on innovation and providing exceptional
experiences to more than 16 million clients in Canada, the U.S. and 34 other
countries. Learn more at rbc.com.
We are proud to support a broad range of community initiatives
through donations, community investments and employee volunteer
activities. See how at rbc.com/community-sustainability.
Trademarks used in this earnings release include the LION &
GLOBE Symbol, ROYAL BANK OF CANADA
and RBC which are trademarks of Royal Bank of Canada used by Royal Bank of Canada and/or by its subsidiaries under
license. All other trademarks mentioned in this earnings release,
which are not the property of Royal Bank of Canada, are owned by their respective
holders.
SOURCE Royal Bank of Canada