Royal Bank Of Canada · TSX:RY
Royal Bank Of Canada — Q1 2025 Earnings Presentation
51 slides from Royal Bank Of Canada's earnings presentation, Feb 27, 2025
Slide 1: Royal Bank of Canada First Quarter Results
Royal Bank of Canada First Quarter Results February 27, 2025 All amounts are in Canadian dollars unless otherwise indicated and are based on financial statements prepared in compliance with International Accounting Standard 34 Interim Financial Reporting, unless otherwise noted. Totals may not add,
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: Q1/25 Key Messages: Driving premium profitability and strong value creation
Q1/25 Key Messages: Driving premium profitability and strong value creation Reported Adjusted(1) Reported Adjusted(1) Record results reflecting strong momentum across our businesses $3.54 $3.62 42% 27% Diluted Earnings Per Share Diluted EPS growth Personal Commercial Banking Banking $3.8BN +23% Stro
Slide 5: Client assets and activity: Strong momentum across our businesses
Client assets and activity: Strong momentum across our businesses Personal Banking average loans Commercial Banking average Capital Markets loans and market and deposits ($ billions) loans and deposits ($ billions) share ($ billions; %)(2) 19% 11% YoY +7% LTM(3) GIB(4) YoY YoY league ranking(5) 35%
Slide 6: Acquisition of HSBC Canada: Expense synergies remain on track
Acquisition of HSBC Canada: Expense synergies remain on track On track to deliver $740MM of targeted cost synergies – As at Q1/25, RBC has achieved ~70% of annualized targeted cost synergies Fiscal Year FQ1/25 F2025 Jan-25 Oct-25 $740MM Realized Synergies Target 50% 60% 80% 100% achieved Year 1 Year
Slide 7: Q1/2025 Financial Review
Q1/2025 Financial Review Katherine Gibson Chief Financial Officer
Slide 8: Q1/25: Record results driven by strength across businesses
Q1/25: Record results driven by strength across businesses Financial Results Reported Earnings HBCA $ millions (except for EPS) Q1/2025 Net income is up 43% YoY (ex-HBCA 37%) YoY QoQ impact Revenue 16,739 24% 11% $716 Adjusted net income(2) is up 29% YoY (ex-HBCA up 23%) Net Interest Income 7,94
Slide 9: Capital: Strong position supports investment in businesses and shareholder returns
Capital: Strong position supports investment in businesses and shareholder returns CET1(1) Movement CET1 ratio(1) of 13.2%, flat QoQ, reflecting: 76 bps (33) bps (50) bps (5) bps 5 bps Strong net internal capital generation ‒ Volume growth, elevated client activity in Capital +43 bps Markets and
Slide 10: Net interest income: Solid volume growth and improved spreads
Net interest income: Solid volume growth and improved spreads Net interest income up 26% YoY; up 16% ex-HBCA All-Bank Net Interest Income ($ millions) o Net interest income (ex-trading) up 27% YoY reflecting the Personal Banking Commercial Banking inclusion of HBCA net interest income, solid volum
Slide 11: Non-interest expense: Higher staff-related costs supporting business momentum
Non-interest expense: Higher staff-related costs supporting business momentum Non-Interest Expense (NIE, $ millions) Q1/2025 Highlights Q1/24 Expenses 8,324 Reported Non-interest expense up ~11% YoY % of LTM NIE Impact of foreign exchange translation and share-based Salaries 33% Salaries & Benef
Slide 12: Personal Banking: Higher NIM and solid volume growth drove strong results
Personal Banking: Higher NIM and solid volume growth drove strong results Personal Banking: Key Metrics(1) Q1/2025 Highlights HBCA Reported Personal Banking $ millions (unless otherwise stated) Q1/2025 Impact Net income up 24% or 26% adjusted(3) YoY; PPPT(2) up 21% YoY QoQ YoY Revenue 4,811 19% 3%
Slide 13: Commercial Banking: Solid volume growth partly offset by credit migration
Commercial Banking: Solid volume growth partly offset by credit migration Commercial Banking: Key Metrics(1) Q1/2025 Highlights HBCA Reported Commercial Banking $ millions (unless otherwise stated) Q1/2025 Impact YoY QoQ Net income up 20% or 23% YoY adjusted(3); PPPT(2) up 32% Revenue 2,127 32% 2%
Slide 14: Wealth Management: Record revenue supported by strong growth in client assets
Wealth Management: Record revenue supported by strong growth in client assets Key Metrics(1) Q1/2025 Highlights Reported $ millions (unless otherwise stated) Q1/2025 Net income up 48% or 45% YoY adjusted(3) YoY QoQ Revenue 5,568 19% 7% Pre-provision, pre-tax earnings(2) up 61% YoY Net interest i
Slide 15: Capital Markets: Record earnings underpinned by broad-based revenue growth
Capital Markets: Record earnings underpinned by broad-based revenue growth Key Metrics(1) Q1/2025 Highlights Reported Net income up 24% YoY $ millions (unless otherwise stated)(2) Q1/2025 YoY QoQ Pre-provision, pre-tax(3) earnings up 31% YoY Revenue 3,756 27% 29% Corporate & Investment Banking(4
Slide 16: Insurance: Strong results further boosted by reinsurance recapture activity
Insurance: Strong results further boosted by reinsurance recapture activity Key Metrics Q1/2025 Highlights Reported $ millions (unless otherwise stated) (1) Q1/2025 Net income up 24% YoY YoY QoQ Revenue 406 12% 46% Revenue up 12% YoY Insurance Service Result 286 53% 65% Insurance service resul
Slide 17: Risk Review
Risk Review Graeme Hepworth Chief Risk Officer
Slide 18: Allowance for Credit Losses: Prudent reserve increases on performing loans
Allowance for Credit Losses: Prudent reserve increases on performing loans Allowance for Credit Losses (ACL) on Loans & Acceptances (L&A) ($ millions) L&A: $987BN L&A: $1,013BN - ACL to L&A: 0.68% ACL to L&A: 0.64% (472) 985 PCL on Performing Loans of $68MM 6,933 71 (40) 37 6,933 6,352 6,352 6,383 6
Slide 19: Gross Impaired Loans: New formations trended higher across all segments
Gross Impaired Loans: New formations trended higher across all segments Gross Impaired Loans (GIL) ($ millions, bps) Key Drivers of GIL (QoQ) 78 Total GIL increased $2,009MM QoQ (up 19 bps) due to higher impaired loans in Capital Markets and Commercial Banking 59 Personal Banking 58 55 GIL of $1
Slide 20: PCL on impaired loans: Trended higher across all segments
PCL on impaired loans: Trended higher across all segments Total RBC ($ millions, bps) Wealth Management ($ millions, bps) Average historical loss rate(1): 30 bps 16 15 39 13 31 30 11 11 26 26 $985 $46 $45 $38 $685 $672 $640 $32 $32 $623 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 P
Slide 21: Appendices
Appendices
Slide 22: Diversified business model: Driving strong value creation through the cycle
Diversified business model: Driving strong value creation through the cycle Premium growth in Reimagining Deepening client leading Canadian innovation relationships franchises Canadian Banking clients with in key Canadian Banking #1 product categories(1) 18% transaction accounts, investments, borrow
Slide 23: Net Interest Margin: Average rates and balances
Net Interest Margin: Average rates and balances Interest Income Yield(1) Average Assets ($ billions) Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 Loans 5.74% 5.87% 5.96% 5.89% 5.69% Loans 851 897 964 973 999 Securities 4.36% 4.22% 4.20% 4.08% 3.82% Securities 415 405 425 433 502 (2) R
Slide 24: Net Interest Income: Interest rate sensitivity
Net Interest Income: Interest rate sensitivity All-Bank: Impact of 100 bps change Impact of 25 bps decrease(2) across the curve(1) Net interest Revenue Short-term rates(2) Across the curve(2) income ($MM) Increase Decrease ($MM) Q4/24 Q1/25 Q4/24 Q1/25 Canadian $377 $(469) Dollar Impact Canadian $(3
Slide 25: Net Interest Margin: Canadian Banking and City National
Net Interest Margin: Canadian Banking and City National Canadian Banking NIM(1) QoQ Waterfall CNB NIM QoQ Waterfall 0.02% 0.03% 0.07% 0.22% 0.01% 2.87% 2.94% 2.85% 2.97% 2.80% (0.03)% (0.28)% 2.91% 2.69% 2.69% Q4/24 NIM Rate Impacts Competitive Product Mix Other Q1/25 NIM Q4/24 NIM Asset Yields Liab
Slide 26: Non-interest income: Strong markets and client activity drove robust growth
Non-interest income: Strong markets and client activity drove robust growth Non-Interest Income ($ millions) Q1/2025 Highlights Reported non-interest income up 23% YoY; Adjusted non- Q1/24 Non-interest income 7,153 interest income(5) up 17% YoY, excluding the prior year impact (1) from management
Slide 27: Canadian Banking: Strong operating leverage led to a 38% efficiency ratio
Canadian Banking: Strong operating leverage led to a 38% efficiency ratio Key Metrics – Q1/2025(1) Personal Reported Commercial Canadian HBCA $ millions (unless otherwise stated) Banking – Banking Banking YoY QoQ Impact Canada Revenue 4,499 2,127 6,626 23% 3% 619 Net interest income 3,257 1,796 5,05
Slide 28: Canadian Banking: Our ~16MM clients continue to adopt our digital channels
Canadian Banking: Our ~16MM clients continue to adopt our digital channels Active Digital Users (000s)(1) Digital Personal Adoption Rate(2) Active Mobile Users (000s)(1) 9% 80 bps 12% Pre- 10,016 62.8% 63.3% 7,917 pandemic 9,851 62.5% 7,802 9,192 7,038 7,354 Pre- pandemic Pre- pandemic 54.4% 4,619 Q
Slide 29: U.S. WM (incl. CNB): Growth driven by market appreciation and net sales
U.S. WM (incl. CNB): Growth driven by market appreciation and net sales Key Metrics Q1/2025 Highlights (US$ millions) US$ millions (unless otherwise stated) Q1/2025 YoY QoQ Net income up 56% or 45% YoY adjusted(2) Revenue 1,722 7% 1% CNB net income up US$57 million YoY Expenses 1,511 0% (2)% Pre
Slide 30: Corporate Support
Corporate Support Financial performance ($ millions)(1) Q1/2025 Highlights Reported Q1/2025 Q4/2024 Q1/2024 Net income of $(8)MM Revenue (TEB ) (2) 71 (28) (160) The prior year included the impact from management of U.S. WAP gains/(losses) 112 47 222 closing capital volatility related to the acq
Slide 31: Non-Interest Expense: Market volatility led to swings in share-based compensation
Non-Interest Expense: Market volatility led to swings in share-based compensation SBC (incl. U.S. WM WAP) had a $(19)MM impact on YoY expense growth $ millions (unless otherwise stated) Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 Share-based compensation 270 132 243 (17) 397 179 235 148 37
Slide 32: Market Risk Trading Revenue and Trading VaR
Market Risk Trading Revenue and Trading VaR (C$ millions) 28 30 29 25 60 50 40 30 20 10 0 -10 -20 -30 -40 -50 Trading Revenue (teb) (1) Trading VaR Trading VaR quarterly average During Q1/25, there were no days with net trading losses Average Trading VaR of C$25 million decreased C$4 million fro
Slide 33: Canadian Banking: Credit outcomes impacted by higher rates, as anticipated
Canadian Banking: Credit outcomes impacted by higher rates, as anticipated CB Retail Credit Bureau Score Canadian Banking (CB) PCL on Impaired Loans and Gross Impaired Loans Distribution(Q1/25) PCL on Impaired Loans Gross Impaired Loans Avg <636 Q1/25 3.7% (bps) (1) (bps) Credit Avg Loan Bureau 636-
Slide 34: Canadian residential portfolio: Strong underlying credit quality
Canadian residential portfolio: Strong underlying credit quality Canadian Residential Mortgage Portfolio(1) ($ billions) Canadian Banking RESL Portfolio(2) $223.0 Total $447BN Uninsured $384BN Insured Uninsured 86% Mortgage Balance $410BN $347BN $91.5 $351.7 (21%) (79%) HELOC Balance $37BN $37BN $88
Slide 35: Allowance for Credit Losses: Prudently reserved
Allowance for Credit Losses: Prudently reserved Allocation of ACL by Product as a % of Loans & Acceptances Q1/24 Q4/24 (3) Q1/25 (3) Product Stage 1 & 2 Total Stage 1 & 2 Total Stage 1 & 2 Total (1) Residential mortgages 0.08% 0.13% 0.07% 0.12% 0.08% 0.13% Other Retail 1.75% 1.91% 1.80% 2.00% 1.82%
Slide 36: Range of macroeconomic forecasts capture tariff uncertainty
Range of macroeconomic forecasts capture tariff uncertainty Within our five-scenario expected credit loss framework, our three downside scenarios (including two severe scenarios designed for the real estate and energy sectors) address the possibility for a wide range of macroeconomic shocks Our
Slide 37: Funding: Well-diversified
Funding: Well-diversified LCR(1) (total adjusted value, $BN) As at January 31, 2025, relationship-based deposits, which are the primary source of funding for retail and commercial lending, were High-quality liquid Less Net Cash Surplus = $999 billion or 56% of our total funding (including short-te
Slide 38: Items impacting results (1/3)
Items impacting results (1/3) 2025 ($ millions, except for EPS) Adjusting Item Segments Line Item Before-Tax After-Tax Diluted EPS Q1/2025 Amortization of acquisition-related intangibles Yes Multiple Segments Expenses $(153) $(117) $(0.08) HSBC Canada transaction and integration costs Yes Corporate
Slide 39: Items impacting results (2/3)
Items impacting results (2/3) 2024 ($ millions, except for EPS) Adjusting Item Segments Line Item Before-Tax After-Tax Diluted EPS Q4/2024 Legal provisions No Capital Markets Expenses $(93) $(93) $(0.07) Purchase accounting accretion of fair value Personal Banking and Net Interest No $130 $94 $0.07
Slide 40: Items impacting results (3/3)
Items impacting results (3/3) 2024 ($ millions, except for EPS) Adjusting Item Segments Line Item Before-Tax After-Tax Diluted EPS Q1/2024 $(159) / $(115)/ Cost of the FDIC special assessment No Wealth Management Expenses $(0.08) US$(117) US$(85) Amortization of acquisition-related intangibles Yes M
Slide 41: Impact of foreign currency translation
Impact of foreign currency translation Estimated impact of foreign currency translation on key income statement items For the three months ended ($ millions, except per share Q1/25 vs. Q1/25 vs. amounts) Q1/24 Q4/24 Increase (decrease): Total revenue 477 315 Non-interest expense 261 167 PPPT Earning
Slide 42: Glossary (1/2)
Glossary (1/2) Assets under administration (AUA): Assets administered by us, which are beneficially owned by clients, unless otherwise noted. Services provided in respect of assets under administration are of an administrative nature, including safekeeping, collecting investment income, settling p
Slide 43: Glossary (2/2)
Glossary (2/2) Net interest margin (NIM): Calculated as net interest income divided by average earning assets, net. Operating leverage: The difference between our revenue growth rate and non-interest expense growth rate. Reported diluted earnings per share (EPS): Calculated as net income avail
Slide 44: Additional Notes (slides 4 to 19)
Additional Notes (slides 4 to 19) Slide 4 1. Net Income and diluted EPS are adjusted for after-tax effect of (i) amortization of acquisition-related intangibles, (ii) HSBC Canada transaction and integration costs, and (iii) management of closing capital volatility related to the HSBC Canada transact
Slide 45: Additional Notes (slides 23 to 35)
Additional Notes (slides 23 to 35) Slide 23 15. Loan yield is calculated as interest income on loans as a percentage of average total net loans. Securities yield is calculated as interest and dividend income on securities as a percentage of average securities, net of applicable allowance. Repo & sec
Slide 46: Reconciliation for non-GAAP financial measures (1/5)
Reconciliation for non-GAAP financial measures (1/5) Calculation of Adjusted Net Income and Adjusted Diluted EPS $ millions (unless otherwise stated) Q1/24 Q4/24 Q1/25 All-bank Net income 3,582 4,222 5,131 Less: Non-controlling interests (NCI) (2) (3) (2) Less: Dividends on preferred shares and dist
Slide 47: Reconciliation for non-GAAP financial measures (2/5)
Reconciliation for non-GAAP financial measures (2/5) Calculation of Adjusted Non-Interest Income $ millions (unless otherwise stated) Q1/24 Q4/24 Q1/25 All-bank Non-interest income 7,153 7,403 8,791 Add: Management of closing capital volatility related to the HSBC Canada transaction 338 - - Non-inte
Slide 48: Reconciliation for non-GAAP financial measures (3/5)
Reconciliation for non-GAAP financial measures (3/5) Calculation of Adjusted Net Income $ millions (unless otherwise stated) Q1/24 Q4/24 Q1/25 Personal Banking Net Income 1,353 1,579 1,678 Add: After-tax effect of amortization of acquisition-related intangibles 4 35 34 Net income excl. specified ite
Slide 49: Reconciliation for non-GAAP financial measures (4/5)
Reconciliation for non-GAAP financial measures (4/5) Calculation of PPPT Calculation of PPPT $ millions (unless otherwise stated) Q1/24 Q4/24 Q1/25 $ millions (unless otherwise stated) Q1/24 Q4/24 Q1/25 All-Bank Wealth Management Net income 3,582 4,222 5,131 Net income 664 969 980 Income taxes 766 9
Slide 50: Reconciliation for non-GAAP financial measures (5/5)
Reconciliation for non-GAAP financial measures (5/5) Calculation of PPPT Calculation of ex-HBCA amounts Total HBCA Excl. HBCA $ millions (unless otherwise stated) Q1/24 Q4/24 Q1/25 $ millions (unless otherwise stated) Q1/25 Impact Impact U.S. Wealth Management (incl. City National) (US$) All-bank Ne
Slide 51: 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