Royal Bank Of Canada · TSX:RY
Royal Bank Of Canada — Investor Day (June 2018)
135 slides from Royal Bank Of Canada's investor day presentation, Jun 13, 2018
Slide 1: Creating More Value for Clients – Investor Day 2018
RBC), CREATING MORE VALUE FOR CLIENTS INVESTOR DAY 2018 JUNE 13, 2018
Slide 2: Agenda
Agenda 01. 03. 05. 07. Creating More Extending Market Leadership Moving Closing Value for Clients in Wealth Management Beyond Banking and Q&A 8:00AM – 8:15AM 8:45AM – 9:05AM 9:40AM – 10:30AM 10:45AM – 11:45AM Break 15 minutes 8:15AM – 8:45AM 9:05AM – 9:25AM 10:30AM – 10:45AM 02. 04. 06. Leveraging U
Slide 3: 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 4: Creating More Value for Clients
01 . CREATING MORE VALUE FOR CLIENTS Dave McKay President & Chief Executive Officer 3
Slide 5: Creating more value for clients
Creating more value for clients Ventures & Partnerships Market Leading Market Leading Retail Bank Wealth Manager Technology & Data 4
Slide 6: Our Purpose, Our Vision, Our Story
Our Purpose Helping clients thrive and communities prosper Our Vision To be among the world’s most trusted and successful financial institutions Our Story Financial Diversified strength business model underpinned by Leading Innovation is in Market leader with leading prudent risk and corporate citiz
Slide 7: Attracting and retaining the best talent
Attracting and retaining the best talent Evolving Building Always Modernized our Culture Talent for Learning Performance Growth Enablement Leaders in Driving Future Exceptional Employee Sustainable Growth Ready Experience New Intrapreneurship Voice of our Innovative Recruitment Leadership People Pra
Slide 8: Our responsibilities
Our responsibilities Inherent in our vision is a promise to contribute to a better and more sustainable future - for the economy, society, and the environment • Committing to young people • Supporting a clean economy • Using our capabilities for public good • Fostering diversity and inclusion 7
Slide 9: Market leader in Canada
Market leader in Canada Domestic Leadership Scale and Reach Service Excellence #1 or #2 market share across Largest distribution network Recognized as Canada’s Canadian Banking(1) in Canada(1)(5) most valuable brand(6) Largest full-service wealth 13MM Canadian Banking #1 in Customer Satisfaction adv
Slide 10: Our long standing differentiators
Our long standing differentiators Largest Proprietary Loyalty Program Payments Largest Largest Reach Largest Client Wealth & & Deposit & Distribution Transactions Base Growth Asset Manager Largest Bank for Business 9
Slide 11: The world is changing
The world is changing Platform Disruption Shifting Consumer Expectations Data, Innovation & Cybersecurity Technology Forces Fraud & Identity of 1.11" Regulatory Changes Change Societal Changes Economic Cycles Climate Change Geopolitical Tensions 10
Slide 12: Changing business value chains and customer value propositions
Changing business value chains and customer value propositions Socialize Shop Build Watch Search Work Play 11
Slide 13: Digitally Enabled Relationship Bank creates value
Digitally Enabled Relationship Bank creates value Deep understanding of clients Payments franchise + loyalty programs + partners Providing relevant advice Best people + Data & Analytics + Artificial Intelligence Best in class services and products Avion + RBC Rewards + Homeline + Investments Providi
Slide 14: Ventures & Partnerships creating more value
Ventures & Creating more value Partnerships Mobile Business Banking Largest Ecosystems Goal to grow clients at Proprietary up to 3x Loyalty Program our current rate Payments Largest Deepen existing client Largest Reach & Largest Client Wealth & relationships by Deposit & Distribution Transactions Ba
Slide 15: Leveraging Unique Assets to Drive Market Share Shift in Canadian Banking
02 LEVERAGING UNIQUE . ASSETS TO DRIVE MARKET SHARE SHIFT IN CANADIAN BANKING Neil McLaughlin Group Head, Personal & Commercial Banking 15
Slide 16: We have built the market leading Canadian retail bank
We have built the market leading Canadian retail bank Market Leading Retail Bank 1,221 locations #1 Travel Rewards Core GIC and Largest branch network Deposits Savings Credit card(1) >2,900 Mutual Banking Contact centre professionals Funds and and Cards Payments ETFs 2,600+ Client #1 Mobile App Busi
Slide 17: Our privileged assets cannot be easily replicated
Our privileged assets cannot be easily replicated Market Leading Retail Bank Scale & Leading #1 Deposit & Proprietary Data & Insights Client Base Payments Business Rewards 17
Slide 18: Our scale means we can invest more
Our scale means we can invest more Market Key Product Market Share(1) Leading Retail Bank #1 #1 #2 #2 #1 #1 #1 #1 32.8% 27.3% 26.4% 26.4% 21.4% 20.9% 20.0% 18.8% (2) (3) Home Equity Personal Credit Cards Personal Personal Mutual Business Business (4) (5) Loans Core GICs Funds Loans Deposits (6) Depo
Slide 19: Canada's leading deposit and payment franchise
Canada’s leading deposit and payment franchise Market 4-5x Leading Retail Bank more likely to consolidate their (2) business with RBC 9MM personal banking (1) transaction accounts >2BN transactions per year (3) 19 (1) Debit and credit card transaction accounts.(2) More products compared to non-trans
Slide 20: Transactions provide data to fuel the business
Transactions provide data to fuel the business… Market More Relevant Offers = Deeper Relationships Leading Retail Bank Client % of households with ‘Next Best Offer’ Insights broad product suite(2) Increased 18% 13% lift in net Risk response rate Wallet 11% Models across all Share channels(3) >2BN Tr
Slide 21: AI powered insights for our clients
…and AI powered insights for our clients Market NOMI: Financial insights for individuals Insights for Businesses Leading Retail Bank Award-winning digital money management platform with 3.4MM active users(1)(2) +25% +100% App Frequency Interactions(3) of Savings(3) Non-NOMI users NOMI User Drop by o
Slide 22: RBC Rewards – Canada's leading loyalty program
RBC Rewards – Canada’s leading loyalty program Market We have a highly engaged and growing We have built partnerships that offer members Leading Retail Bank membership base robust redemption options 7% 5MM growth in points redeemed(3) active members(1) 86% redemptions are digital(2) $1BN+ in value d
Slide 23: RBC Rewards – Delivering more value to clients
RBC Rewards – Delivering more value to clients Market Leading We are well-positioned to issue more points RBC Reward members…(2) Retail Bank than our peers by 2019 are 1.7x more digitally engaged have 1.5x more RBC products 2012 2013 2014 2015 2016 2017 (1) (1) RBC Peer 1 Peer 2 are 2x more profitab
Slide 24: Creating more value – Client Growth
Ventures & Creating more value Partnerships Market Leading Retail Bank STRONG FUND PROPRIETARY PERFORMANCE REWARDS 1,221 locations GIC and Attract new clients Core Largest branch network Deposits Savings RECIPROCITY PROGRAM >2,900 NOMI Mutual Banking Funds and Contact centre professionals and Cards
Slide 25: Digitally-Enabled Relationship Bank strategy driving shareholder value
Our Digitally-Enabled Relationship Bank strategy is driving shareholder value Market Leading Retail Bank Deepen Attract new existing Drive clients client efficiencies relationships 25
Slide 26: Digitally-Enabled Relationship Bank strategy driving shareholder value
Our Digitally-Enabled Relationship Bank strategy is driving shareholder value Market Leading Retail Bank Deepen Attract new existing Drive clients client efficiencies relationships 26
Slide 27: Branches remain an important channel for client acquisition
Branches remain an important channel for client acquisition Evolving our branch format to increase Market Leading customer relevancy Retail Bank 200k clients visit a branch everyday(1) 2-YR CAGR of 8% in sales dollar volumes(1) 2-YR CAGR of 2x 5% Client acquisition rate compared in expert appointmen
Slide 28: We are driving digital adoption
We are driving digital adoption… Market Leading Retail Digital clients are more engaged and Bank have more products Active Digital Users(1) Mobile and 6.5MM Online Banking 1x interaction +8% YoY every 2 days (versus 1x per month in branch) 49% adoption Digital clients have ~2x more +6 pts since 2015
Slide 29: Leading in digital sales and marketing
…and are leading in digital sales and marketing Market Higher digital sales as % sales Digital mass-marketing example Leading Retail Bank (Cards, Personal Deposit Accounts, and Personal Loans) Approved new-to-RBC Credit Card Applications +6 30% pts +3x 24% Target of >50% by 2021 +5% 2015 2017 Person
Slide 30: RBC credit cards growing at 2-3x the rate of competitors
RBC credit cards are growing at 2-3x the rate of our competitors Cards balance growth (YoY) (4) Market Broad suite of credit card products Leading Retail Bank 7.1% 7.3% • Attracting more premium customers 6.3% 6.0% – Awarded #1, #3 and #4 in premium travel(1) 5.0% • 35% of Avioners are new to RBC, 3
Slide 31: Iconic partners bring more value to clients
Iconic partners bring more value to clients and more clients to RBC Market Leading Retail Bank ~115k new accounts(1) >500k linked accounts(2) 50% new to RBC(1) 31 (1) In F2017 (2) Since launch on October 31, 2017
Slide 32: Market leading growth with business clients
Market leading growth with business clients Innovating for Investing in expert Driving growth in Market Leading Retail Small Business Commercial Account Managers Business lending(1) Bank ($BN) 5% CAGR 1,289 67 9% 1,192 CAGR 1,162 61 57 Over 40 curated apps providing key business metrics and insights
Slide 33: New banking accounts provide foundation to deepen relationships
New banking accounts provide the foundation to deepen relationships Success in key growth segments Market Leading Retail Bank Youth market share(1) (2) +3 28% pts 25% 13% 2016 2017 YoY increase in everyday banking account acquisition(3) Newcomer YoY growth(2) +3 4% pts 1% Canadian newcomer RBC's New
Slide 34: Digitally-Enabled Relationship Bank strategy driving shareholder value
Our Digitally-Enabled Relationship Bank strategy is driving shareholder value Market Leading Retail Bank Deepen Attract new existing Drive clients client efficiencies relationships 34
Slide 35: Leveraging scale and reciprocity to drive share of wallet
Leveraging scale and reciprocity to drive share of wallet Market Leading Retail Bank Industry leading products per customer Expanding our Reciprocity program Percent of clients with transaction accounts, investments and borrowing products(1) 18.0 18.0 17.0 + 11.5 11.5 11.3 Small 2015 2016 2017 Busin
Slide 36: Enhancing digital advice capabilities
Enhancing our digital advice capabilities to drive investment share of wallet MyAdvisor – Digital financial advisor solution Market Leading Retail Bank 32.8% Market share in mutual funds (1) 37% higher AUM per client for MyAdvisor versus traditional clients(2) ~1,600 +7,000 investment advice appoint
Slide 37: Expanding mortgage share of wallet through home ownership journey
Expanding mortgage share of wallet through the home ownership journey Market Leading Retail Bank DREAM SHOP BUY MOVE LIVE True House Neighbourhood Explorer Mortgage Pre-Approval Mortgage Renewal Hub Affordability Tool >35% increase in digital leads generated since launch of the home ecosystem tools(
Slide 38: Digitally-Enabled Relationship Bank strategy driving shareholder value
Our Digitally-Enabled Relationship Bank strategy is driving shareholder value Market Leading Retail Bank Deepen Attract new existing Drive clients client efficiencies relationships 38
Slide 39: Mobile is enabling lower cost and more convenient servicing
Mobile is enabling lower cost and more convenient servicing Transactions by channel Mobile adopters are driving efficiencies in everyday banking Market Leading Retail Bank 48 E-Transfers(2) Bill payments(2) Online Banking 46 Mobile Branch Mobile Branch 44 Transaction Count (Millions) 42 40 38 N/A Mo
Slide 40: Our branch strategy increases relevancy while reducing cost
Our branch strategy increases relevancy while reducing cost Market Reduced service FTE in line with migration to digital Leading Retail Bank (2%) CAGR Since 2015, branch count is down 4%, with branch square footage 30% 30% 31% 33% 35% +6 pts down 6% 29% 29% 29% 30% 31% +2 pts ~75% of branch leases a
Slide 41: Simplified internal operations to drive greater efficiencies
Simplified and streamlined our internal operations to drive greater efficiencies Operations expenses ($MM) Efficiency and cost management are part of our DNA Market Leading Retail Bank 1,013 Document preparation 70% of documents are being submitted to 978 977 operations through digital capture 7.6%
Slide 42: Our clients are telling us we're on the right track
Our clients are telling us we’re on the right track Market Leading Retail Bank Highest in customer Highest in Overall satisfaction among Mobile Highest satisfaction in Customer Satisfaction for Banking Apps for a 2nd Advice & Onboarding(1) a 3rd consecutive year(1) consecutive year(1) (1) J.D Power,
Slide 43: Canadian Banking Goals
Market Leading Retail Bank Canadian Banking Goals Up to 3x our current client Drive efficiency ratio lower acquisition rate leading to to <40% by 2021 2.5MM+ new clients by 2023(1) (1) Includes contribution from RBC Ventures 43
Slide 44: Leveraging Unique Assets – Key Takeaways
Market Key Takeaways Leading Retail Bank Best-in-class value propositions coupled with significant distribution advantage Deeper digital engagement as client expectations and behaviours change Leveraging Unique Leveraging our advantage in Payments and Data Assets to Drive to accelerate growth Market
Slide 45: Extending Market Leadership Position
03 EXTENDING MARKET . LEADERSHIP POSITION Doug Guzman Group Head Wealth Management & Insurance
Slide 46: Wealth Management – Key Takeaways
Market Leading Wealth Management – Key Takeaways Wealth Manager • Sustainable advantage of scale, talent and infrastructure − A self reinforcing system Extending Market Leadership Position • Track record of premium growth vs. industry • External disruption magnifies our advantage 46
Slide 47: Full spectrum of investment advice models
Full spectrum of investment advice models to address different client needs Market Market Leading Leading Wealth Wealth Manager Manager Self-Directed Automated Hybrid Advice – Hybrid Advice – Full Service Full Service Investing Advice Untethered Tethered Advice Discretionary WM Personal / Dedicated
Slide 48: High Net Worth Distribution – Canada's market leader
High Net Worth Distribution – Canada’s market leader Market Leading Investments Banking & Credit Other WM Solutions Wealth Manager #1 #1 #1 full-service brokerage by assets, revenue and profit(1) private bank by revenue, estate & trust business profit, deposits and loans(4) by assets(2) #2 private i
Slide 49: HNW Distribution – Significant lead over competitors
HNW Distribution – Significant lead over our competitors Market Leading Wealth RBC Dominion Securities’ Manager Market Share of Full-Service Brokerage Assets(1) Gross Revenue 25% $2.5BN +10% CAGR ~80% larger $1.6BN 14% 28.4% $310BN 25.7% RBC DS Next-Closest 2012 2017 (#1 rank) Competitor DS Gross Re
Slide 50: HNW Distribution – Outpacing market growth
HNW Distribution – Outpacing market growth Market Leading Wealth RBC Dominion Securities’ AUA Market Share AUA CAGR (2007-2017) Manager 32.5% 31.5% 29.7% 30.4% Industry +5.5% 28.4% 29.0% 25.0% 25.3% 24.2% 23.1% 22.4% Big 6 Bank 21.6% Brokerages +5.1% ex. RBC Dec Dec Dec Dec Dec Dec RBC 2007 2009 201
Slide 51: HNW Distribution – Scale, capabilities and innovation
HNW Distribution – Scale, capabilities and innovation Market Leading Wealth Manager 6 1 Greater Scale Investment in Industry- Leading Capabilities 5 Increased Market Share, Our Sustainable Better Client Outcomes 2 Margins & Cashflow Competitive Advantage & Experiences Better Advisor Higher Productiv
Slide 52: HNW Distribution – A wealth planning ecosystem
HNW Distribution – A wealth planning ecosystem Market Leading Wealth Holistic Wealth Planning Advice Best-in-Class Wealth Planning Talent Manager Charitable giving Cross-border Financial planning planning accredited wealth specialists (industry’s 200+ largest team of wealth planning professionals) H
Slide 53: HNW Distribution – Most attractive employer to advisors
HNW Distribution – Most attractive employer to investment advisors Market Leading How Investment Advisors Rated Their Firms Wealth Manager Products & support for HNW clients 9.6 Technology tools & advisor desktops 8.8 Mobile technology 9.0 Fee-based models 9.4 Support for: Financial planning 9.2 Wil
Slide 54: HNW Distribution – Largest and most productive advisor bases
HNW Distribution – One of industry’s largest & most productive advisor bases Market Leading Share of Industry’s Wealth Fee-Based Assets per Advisor(2) Revenue per Advisor(2) Manager Investment Advisors(1) ($ millions) ($ millions) +7% $98 CAGR 17.4% 17.1% Over 1.7x the $1.4 peer average +30% 16.2% $
Slide 55: HNW Distribution – Momentum focusing on HNW families
HNW Distribution – Continued momentum in focusing on HNW families Market Leading Wealth Manager Percentage of Households by Wealth Band for RBC Dominion Securities 13% 21% <$100K 29% 16% 25% $100K-$250K 26% 21% 22% 22% $250K-$500K 20% 17% $500K-$1MM 14% 27% >$1MM (HNW) 11% 15% 2007 2012 2017 55 Sour
Slide 56: HNW Distribution – Forces of change
HNW Distribution – Forces of change Market Leading External changes… Wealth Manager Changing Client Expectations Changing Technology Changing Regulation …provide a tailwind to RBC’s leadership Advice Breadth of Client Discovery Scale to Digital Models Solutions & Planning Invest 56
Slide 57: HNW Distribution – Innovating with digital
HNW Distribution – Innovating with digital to widen our lead Market Leading Nora Bot Advisor’s Virtual Assistant (AVA) Wealth Manager Robotics Process Automation Portfolio Insights 100+ Processes automated globally since 2017 Hours of capacity freed up to focus on ~100K higher value activities for o
Slide 58: HNW Distribution – Key takeaways
HNW Distribution – Key takeaways Market Leading Wealth Manager 6 1 Greater Scale Investment in Industry- Leading Capabilities 5 Increased Market Share, Our Sustainable Better Client Outcomes 2 Margins & Cashflow Competitive Advantage & Experiences Better Advisor Higher Productivity Recruitment & Ret
Slide 59: HNW Distribution – Key Takeaways
Market Leading HNW Distribution – Key Takeaways Wealth Manager • Sustainable advantage of scale, talent and infrastructure − A self reinforcing system Extending Market Leadership Position • Track record of premium growth vs. industry • External disruption magnifies our advantage 59
Slide 60: Global Asset Management – Canada's largest money manager
Global Asset Management – Canada’s largest money manager Market Leading Wealth Total Assets Under Management AUM by Client Segment Manager (in C$ billions) 422 ~20% larger 355 48% $424.5BN (as of Q2/2018) 52% RBC GAM Next-Closest Retail Institutional (Dec.2017) Big 6 Asset Manager(1) 60 (1) Based on
Slide 61: Global Asset Management – Scale, capabilities and innovation
Global Asset Management – Scale, capabilities and innovation Market Leading Wealth Manager Scale Retail Asset Investment in Increased Management Industry-Leading Market Share, Portfolio Pricing Margins Management Flexibility Institutional & Cashflow Talent & Asset Capabilities Management Canada’s Le
Slide 62: GAM – Industry-leading strengths in Canadian retail
Global Asset Management – Industry-leading strengths in Canadian retail Market Leading Wealth Manager Top-Tier Distribution Strong-Performing & Exceptional Operational with Unmatched Scale Wide-Ranging Solutions Client Service Excellence Canada’s largest retail Fee leader with average branch network
Slide 63: GAM – Delivering persistently strong performance
Global Asset Management – Delivering persistently strong performance Market Leading Wealth Manager RBC GAM Canadian Retail Performance Award-Winning Investment Management(2) 3-Year Performance, Gross of Fees(1) 92% 92% 85% 84% 81% 78% 77% 75% 74% 72% Best Overall Funds Group for 7 of the past 10 yea
Slide 64: GAM – Track record of superior net flows
Global Asset Management – Track record of superior net flows Market Leading Cumulative Long-Term Mutual Fund Net Sales(1) Average Monthly Redemption Rates of LT Funds(3) Wealth Manager Apr.2008 – Apr.2018, in C$ billions Calendar Year 2012 – 2017 80 75.2 1.24% 70 1.16% ~4.5x 1.15% 1.14% 60 1.10% 1.0
Slide 65: GAM – Outsized market share in Canadian retail
Global Asset Management – Achieving outsized market share in Canadian retail Market Leading RBC GAM’s Mutual Fund Market Share(1) RBC GAM’s Share of Industry Long-Term Net Sales(3) Wealth Manager Dec.2003 – Apr.2018 Calendar Year 2012 – 2017 14.9% 27.8% ~50% larger 23.6% 22.4% 7.4% 32.8% 10.0% 17.5%
Slide 66: GAM – Enhancing our investment capabilities
Global Asset Management – Enhancing our investment capabilities Market Leading Wealth Manager “New Active” & Quantitative Environmental, Social and Investment Capabilities Governance (ESG) Investing Next-Gen Investment Exchange-Traded Funds (ETFs) Solutions and Services 66
Slide 67: GAM – Becoming a digitally-powered asset manager
Global Asset Management – Becoming a digitally-powered asset manager Market Leading Digitally-enabling employee Delivering advisor investment Wealth Manager & advisor experience tools & services Your title here Your title here Portfolio Your title here Company members share a common GAM purpose and
Slide 68: Global Asset Management – Key takeaways
Global Asset Management – Key takeaways Market Leading Wealth Manager Scale Retail Asset Investment in Increased Management Industry-Leading Market Share, Portfolio Pricing Margins Management Flexibility Institutional & Cashflow Talent & Asset Capabilities Management Canada’s Leading Distribution Be
Slide 69: Global Asset Management – Key Takeaways
Market Leading Global Asset Management – Key Takeaways Wealth Manager • Sustainable advantage of scale, talent and infrastructure − A self reinforcing system Extending Market Leadership Position • Track record of premium growth vs. industry • External disruption magnifies our advantage 69
Slide 70: Growing shared client relationships across platforms
Growing shared client relationships across platforms Market Leading Wealth Manager 35% 16% of HNW Canadian Banking clients of Canadian Banking clients also have a relationship with invest in GAM mutual funds(2) Canadian Wealth Management(1) Significant opportunity to deepen client relationships 70 (
Slide 71: Strong Technology & Data Foundation
04 STRONG TECHNOLOGY & . DATA FOUNDATION Bruce Ross Group Head, Technology & Operations 71
Slide 72: Ventures & Partnerships Creating More Value
Ventures & Creating More Value Partnerships Technology & Data Mobile Business Banking Largest Ecosystems Goal to grow clients at Proprietary up to 3x Loyalty Program our current rate Payments Largest Deepen existing client Largest Reach & Largest Client Wealth & relationships by Deposit & Distributi
Slide 73: Differentiated technology platform – Key Takeaways
Key Takeaways Technology & Data Leveraging the scale of our global technology investment to create market leading operational efficiency and the leading Digitally Enabled Relationship Bank Differentiated technology Next-Gen delivery platform to deliver exceptional client experience at speed platform
Slide 74: Leveraging our scale in technology
Leveraging our scale in technology to deliver superior business outcomes Technology & Data Global Scale and Reach Supporting Business Growth Creating Value for Clients 11,000 6.5MM Leading professionals in 37 countries digital banking clients digital franchise $75BN AI-powered insights 1,700 clients
Slide 75: Growing investments to support the Digitally Enabled Relationship Bank
Growing investments to support the Digitally Enabled Relationship Bank Technology & Data Spend on technology is growing… … in targeted areas over the last four years to support our Technology spend ($BN) clients +7.5% CAGR Cumulative $1.1BN investments made in digital application development growing
Slide 76: Driving operational efficiencies while supporting growth
Driving operational efficiencies while supporting significant business growth Technology & Data We have driven operational efficiencies …while investing $400MM in technology capability +$1 BN Next-Gen delivery AI and data platform $430MM platform Modular systems Infrastructure using API’s platform a
Slide 77: Next-Gen development platform
Built a Next-Gen development platform, delivering high quality solutions at speed Technology & Data Agile DevOps and Reusable On-demand automation services and environment Continuous Integration components Rapid iteration & Deployment APIs, Analytics, Scalable, flexible Business and provisioning, cl
Slide 78: Our delivery platform enabling all businesses
Our delivery platform is enabling all businesses to exceed client expectations Technology & Data NOMI MyAdvisor Canadian Banking Wealth Management Advanced Client Experience Capital Markets Investor & Treasury Services 78
Slide 79: World class AI and Analytics platform
Our world class AI and Analytics platform is giving us better customer insights Technology & Data RBC data differentiators Our investments in AI are creating leading-edge capabilities and delivering benefits Invested $225MM over 4 years in our AI and data analytics platform World-class Data acquisit
Slide 80: Leveraging AI and data capabilities to create value
Leveraging AI and data capabilities to create tangible value for our clients Technology & Data Data Credit Risk Indicator Model Model Location-based Intelligence Inputs Outputs Prediction Payment History Credit Risk Score Decision Available Credit Do Not/Offer Credit Explanation Total Balances Model
Slide 81: Drop by our booth to learn more
Technology & Data Drop by our booth 81 81 to learn more
Slide 82: Significant investments in cybersecurity
Significant investments in cybersecurity to protect the bank and our clients Technology & Data Doubled investment in cybersecurity in the last 4 years Identify Protect 42% improvement Detect in control efficacy through automation Recover Respond 3x faster threat detection of cyber attacks leveraging
Slide 83: Rich innovation ecosystem
We have developed a rich innovation ecosystem Technology & Data Unique Partnerships (FinTech, Big Tech) 9 Innovation Labs Research Institutions around the world Fostering Engineering & RBC Ventures, Incubators Innovation Culture and Accelerators Digital RBC 83
Slide 84: Attracting and developing the best talent
Attracting and developing the best talent is a strategic focus for RBC Technology & Data Continuing to build RBC’s brand 3,000+ employees 700 hires in Redesigning our talent practices emerging skills upskilled with areas (in the last digital capabilities 18 months) Redesigning our working environmen
Slide 85: Strong technology foundation fuels business growth
Strong technology foundation fuels business growth Technology & Data 85
Slide 86: Moving Beyond Banking
05 MOVING BEYOND . BANKING Mike Dobbins Chief Strategy & Corporate Development Officer 86
Slide 87: Ventures & Partnerships Creating More Value
Ventures & Creating More Value Partnerships Ventures & Partnerships Mobile Business Banking Largest Ecosystems Goal to grow clients at Proprietary up to 3x Loyalty Program our current rate Payments Largest Deepen existing client Largest Reach & Largest Client Wealth & relationships by Deposit & Dist
Slide 88: Moving beyond banking
Ventures & Partnerships Moving beyond banking 88
Slide 89: Innovative companies achieved scale in client segments banks compete for
These innovative companies have achieved considerable scale by creating useful and frictionless services for client segments that banks compete for everyday… Ventures & Partnerships Houzz Shopify Credit Karma 40 Million+ 600 Thousand 80 Million Homeowners and Professionals Shopify Stores Members in
Slide 90: But Why not?
These innovative companies have achieved considerable scale by creating useful and frictionless services for client segments banks compete for every day … Houzz Shopify Credit Karma 40… Million+ 600 Thousand and none of them were created by a80bank! Million Homeowners and Professionals Shopify Store
Slide 91: Historically, banks store, lend, move and invest your money
Ventures & Partnerships $ Historically, banks store, lend, move and $ invest your money $ 91
Slide 92: RBC's digitally-enabled relationship bank
Ventures & Partnerships INNOVATIVE PRODUCT LEADER PROPRIETARY STRATEGIC REWARDS $ PARTNERSHIPS RBC’s digitally-enabled relationship bank delivers $ considerably more value for clients $ DATA AND DIVERSIFIED TECHNOLOGY DISTRIBUTION SCALE PERSONALIZED ADVICE 92
Slide 93: RBC Ventures goes beyond banking
Ventures & Partnerships mobility INNOVATIVE PRODUCT LEADER home PROPRIETARY STRATEGIC REWARDS $ PARTNERSHIPS RBC Ventures goes beyond banking to deliver unique value $ for all Canadians $ DATA AND DIVERSIFIED TECHNOLOGY DISTRIBUTION BUSINESS SCALE PERSONALIZED ADVICE lifestyle 93
Slide 94: RBC Ventures engaging Canadians in new ways
RBC Ventures is engaging Canadians in new and innovative ways Ventures & Partnerships reimagining … 1 2 … where the relationship with … the services we provide the client begins and the frequency they are used Engagement Always-on Early in the Journey Solutions 3 … how we define and serve the client
Slide 95: Introducing Ownr
“SO easy, SO simple, and SO effective” Introducing Ownr – Engaging clients earlier in the journey Dane Fader, Owner, GreenerBins Better Insights Connect apps to track marketing Enables aspiring entrepreneurs campaigns, web traffic, sales activity to launch their businesses and more Registration and
Slide 96: Ownr
“SO easy, SO simple, and SO effective” Introducing Ownr – Engaging clients earlier in the journey Dane Fader, Owner, GreenerBins Business Insights and where Tools ownr Logo Design and Branding starts Registration and Where First to serve Incorporation most Banking banks Accounting / start Invoicing
Slide 97: Introducing DRIVE
800+ 50,000+ Introducing DRIVE – Always-on solutions for Canadians Dealers Signed Autos Registered Vehicle Value Just enter the license plate number and get the car’s value, instantly Delivering value to car owners every day Document Peace of Mind Storage Recall notices and A digital glovebox vehicl
Slide 98: Drive
800+ 50,000+ Introducing DRIVE – Always-on solutions for Canadians Dealers Signed Autos Registered Where Notifications Drive (e.g., recalls, car value) Regular focuses Service Always-on, differentiated Major Repairs Where coming soon Search most coming Buy / Sell banks soon focus Finance and Episodi
Slide 99: Introducing Finfit
Introducing Finfit – Making RBC’s trusted advice open to everyone Spend Trends Financial advice, free Simple and clear views of your spending credit score and history personalized insights Free Credit Score And free credit simulations All in One Place Link and manage all your bank accounts Personali
Slide 100: Finfit
Introducing Finfit – Making RBC’s trusted advice open to everyone Ventures & Partnerships wh0 Education and finfit Advice Personal Financial serves Management Who Most Credit Score and All Canadians Simulation Banking Solutions banks Savings Goals support Coming soon and Progress Clients only Tracki
Slide 101: Introducing Arrive
Introducing Arrive: Making your move to Canada stress free arrivein.ca “By 2036 100 per cent of Canada's population growth will be as a result of immigration ” Ahmed D. Hussen Minister of Immigration, Refugees and Citizenship 101
Slide 102: We've accomplished a lot and we're only getting started
We’ve accomplished a lot … and we’re only getting started Ventures & Partnerships 7 12+ 12 20+ 1 Ventures New Ventures Strategic New strategic Acquisition launched under investments partnerships (MoveSnap) development 102
Slide 103: Strong partnerships are key to delivering new capabilities
Strong partnerships are key to delivering new capabilities, distribution and value Ventures & Partnerships Value Capabilities Incremental value Differentiated experiences through targeted offers delivered in part through and more select partners Distribution Access to engaged customer bases 1 Free M
Slide 104: Our goal
Our goal Ventures & Partnerships Engaging millions of Canadians earlier, more often and in more compelling ways, Our aspiration will result in significant growth to our RBC client base. Grow and Convert Approach A relationship Acquire 5MM+ Venture users to start > Actively convert 10% to RBC clients
Slide 105: Combined, our strategies fuel each other
Combined, our strategies fuel each other and make Ventures & Partnerships it difficult for others to replicate mobility INNOVATIVE PRODUCT LEADER home PROPRIETARY STRATEGIC REWARDS $ PARTNERSHIPS $ $ $ $ DATA AND DIVERSIFIED TECHNOLOGY DISTRIBUTION BUSINESS SCALE PERSONALIZED ADVICE lifestyle 105
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106
Slide 107: Ampli – Coming Late 2018
ampli Your Rewards. Amplified. COMING LATE 2018
Slide 108: Evolution of Financial Targets
06 EVOLUTION OF FINANCIAL . TARGETS Rod Bolger Chief Financial Officer 108
Slide 109: Ventures & Partnerships Creating more value
Ventures & Creating More Value Partnerships Financials Mobile Business Goal to grow Banking Ecosystems new clients at Largest Proprietary Loyalty Program up to 3x our current rate Deepen our existing Payments Largest Largest Reach relationships by & Largest Client Wealth & Deposit Asset providing &
Slide 110: Consistent performance above medium-term financial objectives
Consistent performance above medium-term financial objectives Financials 2012 2013 2014 2015 2016 2017 2018 H1 2012-2017 Diluted EPS Growth CAGR 7%+ 9% Return on Equity(1) Average 16%+ 18% Dividend Payout Ratio Average 40% - 50% 47% Capital Ratio
Slide 111: Sustained earnings growth with consistent returns to shareholders
Sustained earnings growth with consistent returns to shareholders EPS & DPS 5-YR CAGR: 9% Leading Total Shareholder Return(1) Financials 16% Reported EPS DPS 7.56 6.73 6.78 14% 13% 13% 6.00 5.49 4.91 5-YR 5-YR Average Dividend Payout Ratio of 47% 6% 6% 3.24 3.48 2.84 3.08 2.28 2.53 2012 2013 2014 20
Slide 112: Diversified business mix and disciplined risk management
Diversified business mix and disciplined approach to risk management Track record of stable earnings and resilience through the cycle Financials 1 Improvement in geographic mix 2 Portfolio diversification 3 Focused on prime Retail loans Mortgage loans originated Data capabilities support credit Incr
Slide 113: Diversified business model with client leading franchises
Diversified business model with client leading franchises 2017 Financials CANADA 5-Yr CAGR INTERNATIONAL NIAT 8% 5-YR CAGR Revenue 5% NIAT 17% Revenue 7% U.S. 5-YR CAGR NIAT 16% Revenue 14% Canada Revenue U.S. Revenue International Revenue CM P&CB P&CB 9% 1% 13% I&TS 4% CM 25% WM Insurance 13% 10% $
Slide 114: We continue to save
We continue to save… Canadian Banking Wealth Management Financials Operations Costs Operations Costs Canadian Banking Wealth Management non-U.S. Operations costs trending lower with Canadian Banking Revenue was up 5% from 2015 to 2017, while non- revenue increasing 11% from 2015 to 2017 interest exp
Slide 115: …to invest in our future
…to invest in our future Investing in Growing Financials Ventures & Partnerships Digital & App Dev Since Inception… Application Development Ventures +25% CAGR in digital application development and 7 New Ventures launched, 12+ under development transformation in past 4 years Partnerships New Systems
Slide 116: All business segments have improved efficiency
All business segments have improved efficiency Financials Personal & Commercial Wealth Management Insurance(1) Investor & Treasury Capital Markets Banking Services WM non-U.S. Net of Insurance 79% Fair Value Change(2) 76% 77% 60% 61% 58% 47% 45% 74% 3 pts 41% 39% 17 pts 69% 3 pts 2 pts 12% 2 pt
Slide 117: A good business profile for premium returns
A good business profile for premium returns ROE Industry-leading returns Financials All segments returning above 6% the cost of capital *Size of bubble represents earnings size. Insurance 5% Cost of Capital 4% Return on Assets (ROA) RBC ROE(2) 2012 2013 2014 2015 2016 2017 2018 H1 Wealth RY Canadian
Slide 118: Strong capital accretion and return of capital
Strong capital accretion and return of capital Financials Growing Capital Ratio Deployment of Earnings Investment 10.9% CET1 ratio in Business Accretion $9.1BN 2.9% Buffer $3.7BN 1.0% G-SIB Surcharge Returned $20BN Share 10.6% 10.8% 10.9% 2.5% Capital Buffer or 60% of earnings 9.6% 9.9% Buybacks 8.9
Slide 119: Continued benefits expected from rising interest rates
Continued benefits expected from rising interest rates Financials Canada U.S. Next 2 Rate Next 2 Rate Increases Increases First 3 Rate First 5 Rate Increases Increases 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Incremental NII by 2021(1) Incremental NII by 2021(1) ~C$1.4BN ~US$400MM 119 (1) I
Slide 120: Improved efficiency while investing to create more value
Improved efficiency while investing to create more value for clients Financials Net Interest Margin (13 bps) Volume Growth 2010 2017 CAGR Canadian Canadian Retail: 6% Banking Revenue Operating Banking Efficiency Ratio Commercial: 6% AUA: 8% = Growth CAGR ~5% Leverage ~1% = Efficiency Ratio 47% Nomin
Slide 121: Raising the bar – Opportunities to drive growth and efficiencies
Raising the bar – Opportunities to drive growth and efficiencies in Canadian Banking Financials Net Interest Income +$1.4BN for Canadian Banking Efficiencies Digital Adoption Macro Tailwinds 2021 2017 Nominal GDP: 3.5% Canadian Network Canadian Equities: 6% Premium Transformation Banking Banking Eff
Slide 122: Well positioned for future growth in Wealth Management
Well positioned for future growth in Wealth Management Financials Driving Net Sales & Net New Assets One RBC Deepen client Efficiencies relationships Strong Investment Growing Performance Sustainable 2017 Advantage of 2021 WM non-U.S. = WM non-U.S. Scale Efficiency Ratio Macro Tailwinds Nominal GDP:
Slide 123: Well Positioned to Create More Value for Clients and Shareholders
Financials Track Record of Exceeding Our High Financial Bar The Future: Creating More Value from Strategic Initiatives 1) Revenue growth – C$1.9BN of revenue growth from interest rates by 2021 – Enhanced volume growth Well Positioned to Create More Value 2) Driving efficiency ratio lower – Saving &
Slide 124: Closing Remarks
07 . CLOSING REMARKS Dave McKay President & Chief Executive Officer 124
Slide 125: Ventures & Partnerships Creating more value
Ventures & Creating more value Partnerships Mobile Business Banking Largest Ecosystems Goal to grow clients at Proprietary up to 3x Loyalty Program our current rate Payments Largest Deepen existing client Largest Reach & Largest Client Wealth & relationships by Deposit & Distribution Transactions Ba
Slide 126: Appendix – Speakers
08 . APPENDIX – SPEAKERS 126
Slide 127: Speakers – David I. McKay
Speakers David I. McKay President & Chief Executive Officer Dave McKay is President and CEO of RBC. Dave is credited with helping transform the bank’s retail division and introduce new technology that has enabled RBC to adapt and evolve to rapidly-changing consumer demands. Appointed President and C
Slide 128: Speakers – Rod Bolger
Speakers Rod Bolger Chief Financial Officer As Chief Financial Officer, Rod Bolger is responsible for Finance, Taxation, Corporate Treasury, Investor Relations and the Law Group. Together with other members of Group Executive, he is responsible for setting the overall strategic direction of RBC. In
Slide 129: Speakers – Neil McLaughlin
Speakers Neil McLaughlin Group Head, Personal & Commercial Banking As Group Head, Personal & Commercial Banking, Neil McLaughlin is responsible for RBC’s banking businesses in Canada and the Caribbean, including personal and commercial financial services, credit cards and payments, digital solutions
Slide 130: Speakers – Douglas A. Guzman
Speakers Douglas A. Guzman Group Head, Wealth Management & Insurance As Group Head, Wealth Management & Insurance, Doug Guzman leads the RBC businesses that serve the needs of affluent and high net worth clients globally, and teams that provide asset management and trust products. He also oversees R
Slide 131: Speakers – Bruce Ross
Speakers Bruce Ross Group Head, Technology & Operations As Group Head, Technology & Operations, RBC, Bruce Ross is responsible for the strategy and overall management of global technology and operations for RBC, which includes applications development, infrastructure and enterprise operations. In ad
Slide 132: Speakers – Michael Dobbins
Speakers Michael Dobbins Chief Strategy and Corporate Development Officer As Chief Strategy & Corporate Development Officer, Mike is responsible for working with Group Executive to develop RBC’s overall strategic plan as well as providing leadership for mergers and acquisitions. Mike also chairs RBC
Slide 133: Speakers – Dr. Foteini Agrafioti
Speakers Dr. Foteini Agrafioti Chief Science Officer Dr. Foteini Agrafioti is the Chief Science Officer at RBC and Head of Borealis AI, RBC’s Research Institute in Artificial Intelligence. She is responsible for RBC’s intellectual property portfolio in the fields of AI and machine learning. Prior to
Slide 134: Speakers – Sean Amato-Gauci
Speakers Sean Amato-Gauci Executive Vice President, Cards, Payments & Banking As Executive Vice President, Cards, Payments & Banking, Sean Amato-Gauci is responsible for the strategic direction and operational performance for cards (credit, debit, prepaid, commercial) retail payments, personal banki
Slide 135: 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