Royal Bank Of Canada · TSX:RY
Royal Bank Of Canada — Q1 2020 Earnings Presentation
28 slides from Royal Bank Of Canada's earnings presentation, Feb 21, 2020
Slide 1: Royal Bank of Canada First Quarter Results
Royal Bank of Canada First Quarter Results February 21, 2020 All amounts are in Canadian dollars unless otherwise indicated and are based on financial statements prepared in compliance with International Accounting Standards 34 Interim Financial Reporting, unless otherwise noted. Our Q1 2020 Report
Slide 2: Caution regarding forward-looking statements
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
Slide 3: Overview
Overview Dave McKay President and Chief Executive Officer
Slide 4: Record earnings in the first quarter
Record earnings in the first quarter Revenue Net Income CET1 Ratio $12.8 $3.5 12.0% Billion +9% YoY(1) Billion (10 bps) +11% YoY net of Insurance +11% YoY QoQ fair value change Record Revenue Strong Earnings Growth Robust Capital & Leading ROE Strong revenue growth in Capital Diluted EPS of $2.4
Slide 5: Financial Review
Financial Review Rod Bolger Chief Financial Officer
Slide 6: Record earnings in Canadian Banking and Capital Markets
Record earnings in Canadian Banking and Capital Markets Reported Earnings ($ millions, except for EPS and ROE) Q1/2020 YoY QoQ Q1/2020 net income of $3.5 billion, up 11% YoY; diluted Revenue $12,836 11% 13% earnings per share (EPS) of $2.40, up 12% YoY Revenue Net of Insurance FV Change(1) 12,368
Slide 7: Strong capital and earnings growth continue to drive shareholder returns
Strong capital and earnings growth continue to drive shareholder returns CET1 Movement 38 bps (15) bps CET1 ratio of 12.0%, down 10 bps (14) bps (10) bps (9) bps 1 bp QoQ, mainly reflecting: Strong organic RWA growth supporting client business 12.1% Partially offset by strong internal 12.0% ca
Slide 8: Strong volume growth in Personal & Commercial Banking
Strong volume growth in Personal & Commercial Banking Net Income ($ millions) Q1/2020 Highlights 7% Canadian Banking 4% Net income up 5% YoY Strong volume growth, higher fee-based revenue and good expense control helped counteract lower NIM Revenue growth of 5% YoY Strong volume growth with
Slide 9: Strong results in Wealth Management
Strong results in Wealth Management Net Income ($ millions) Q1/2020 Highlights Net income up 4% YoY 4% Higher market valuations, continued strong net inflows, strong volume growth, and lower PCL partially offset by (15%) higher variable compensation Q1/2019 included a $28 million favourable ac
Slide 10: Solid earnings growth YoY in Insurance
Solid earnings growth YoY in Insurance Net Income ($ millions) Q1/2020 Highlights 9% Net income up 9% YoY New longevity reinsurance contracts partially offset by (36%) the lower impact from reinsurance contract renegotiations 282 Revenue up 26% YoY 181 Revenue up 15% net of insurance fair va
Slide 11: I&TS results impacted by the short-term interest rate environment
I&TS results impacted by the short-term interest rate environment Net Income ($ millions) Q1/2020 Highlights (11%) Net income down 11% YoY Primarily due to lower client deposit margins and n.m.(3) lower revenue from our asset services business 161 Revenue down 5% YoY 143 Lower client deposit
Slide 12: Record results in Capital Markets
Record results in Capital Markets Net Income ($ millions) Q1/2020 Highlights 35% Net income up 35% YoY Strong fixed income trading and Corporate and 51% Investment Banking results, and lower PCL partially offset higher compensation on improved results 882 Revenue up 21% YoY Corporate and Inv
Slide 13: Risk Review
Risk Review Graeme Hepworth Chief Risk Officer
Slide 14: Moderating provisions for credit losses
Moderating provisions for credit losses PCL Breakdown by Segment and Stage ($ millions) Key Drivers of PCL (QoQ) Q1/19 Q4/19 Q1/20 Total PCL on loans of $421 million, or 26 bps, decreased PCL on Loans $84 million, or 6 bps QoQ Personal & Commercial Banking $347 $393 $343 Performing $37 $54 $65 PCL
Slide 15: Lower PCL on impaired loans and lower GIL formations
Lower PCL on impaired loans and lower GIL formations PCL on Impaired Loans Ratio ($ millions) PCL on Impaired Loans Ratio by Segment 600 PCL PCL Ratio (bps) 50 PCL on Impaired Loans Ratio (bps) Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 28 29 25 27 500 21 30 Canadian Banking 27 34 28 31 26 400 10 Wealth Manageme
Slide 16: Canadian residential portfolio has strong underlying credit quality
Canadian residential portfolio has strong underlying credit quality Canadian Residential Mortgage Portfolio(1) As at January 31, 2020 ($ billions) Q1/2020 Highlights LTV(2) Average remaining amortization on mortgages of 18 51% 49% 62% 56% 57% 57% years $132.7 Insured Uninsured Strong underlying
Slide 17: Strong underlying credit quality in Canadian Banking
Strong underlying credit quality in Canadian Banking PCL on Impaired Loans Across our Canadian Banking Business Lines 250 Q1/2020 Average balance ($ billions) 200 150 272 100 50 80 82 5 20 (3) - (2) Residential Mortgages Personal Lending Credit Cards Small Business Commercial Q1/19 Q4/19 Q1/20 Q1/19
Slide 18: Appendices
Appendices
Slide 19: Canadian Banking benefitted from strong volume growth
Canadian Banking benefitted from strong volume growth Average Gross Loans & Acceptances(1) ($ billions) Average Deposits(1) ($ billions) 7% 9% 2% 2% 364 387 396 452 459 431 20 20 176 19 171 87 88 161 81 80 81 80 272 203 216 220 250 265 Q1/2019 Q4/2019 Q1/2020 Q1/2019 Q4/2019 Q1/2020 Percentage Chang
Slide 20: Transforming the distribution network in Canadian Banking
Transforming the distribution network in Canadian Banking Active Digital Users(1) Digital Adoption Rate(2) Active Mobile Users(1) 7% 150 bps 15% 7,354 52.5% 4,619 7,246 52.3% 4,491 51.0% 6,844 4,014 Q1/19 Q4/19 Q1/20 Q1/19 Q4/19 Q1/20 Q1/19 Q4/19 Q1/20 Mobile Sessions(3) Self-Serve Transactions(4) B
Slide 21: U.S. operations
U.S. operations U.S. Operations Revenue (US$ millions)(1) U.S. Operations Condensed Income Statement Last 12 months ended January 31, 2020 US$ millions Q1 Q2 Q3 Q4 Q1 (unless otherwise stated) 2019 2019 2019 2019 2020 Revenue 1,972 2,021 1,952 1,936 2,298 RBC WM 4.8 RBC CM Provisions For Credit Loss
Slide 22: Strong double-digit volume growth in U.S. Wealth Management (incl. CNB)
Strong double-digit volume growth in U.S. Wealth Management (incl. CNB) U.S. Wealth Management (including CNB)(1) Q1/2020 Highlights (US$) US$ millions Q1 Q2 Q3 Q4 Q1 Net income up 2% YoY (unless otherwise stated) 2019 2019 2019 2019 2020 Strong volume growth, higher fee-based revenue and Revenu
Slide 23: Growing our leading market share in Canadian retail assets under management
Growing our leading market share in Canadian retail assets under management Assets Under Management ($ billions) Net Sales ($ billions) All-in Market Share(1) All-in Market Share(1) 15.4% 15.8% 15.8% n.m.(2) 69.2% 44.9% 260 240 258.1 250.3 3 Months Ended 3 Months Ended 3 Months Ended 220 200 218.8 D
Slide 24: Capital Markets revenue breakdown by business
Capital Markets revenue breakdown by business Corporate and Investment Banking Revenue Breakdown by Business ($ millions) 23% YoY: 22% Higher M&A fees, primarily in North America Higher debt origination, largely in the U.S. (1) 1,141 Higher loan syndication in North America 927 934 Higher
Slide 25: Capital Markets revenue and loan breakdown by geography
Capital Markets revenue and loan breakdown by geography Capital Markets Revenue Breakdown by Geography ($ millions) Canada: Up YoY driven by higher fixed income trading, 2,548 132 higher M&A fees, and higher debt and equity origination, 2,098 1,987 377 partly offset by lower FX trading 128 298 136
Slide 26: Market risk trading revenue and VaR
Market risk trading revenue and VaR ($ millions) 50 40 30 20 10 0 -10 -20 -30 -40 -50 Trading Revenue Market Risk VaR During the quarter, there were no days with net trading losses. Average market risk VaR decreased from the prior quarter, due to the impact of overall lower market volatility and
Slide 27: Other items impacting results
Other items impacting results F2020 Other Items ($ millions, except for EPS) Segments Before-Tax After-Tax Diluted EPS Q1/2020 No significant items of note F2019 Other Items ($ millions, except for EPS) Segments Before-Tax After-Tax Diluted EPS Q4/2019 Gain on the sale of the private debt business o
Slide 28: Note to users
Note to users We use a variety of financial measures to evaluate our performance. In addition to generally accepted accounting principles (GAAP) prescribed measures, we use certain key performance and non-GAAP measures we believe provide useful information to investors regarding our financial condit