Royal Bank Of Canada · TSX:RY
Royal Bank Of Canada — Debt Investor Presentation (September 2004)
24 slides from Royal Bank Of Canada's debt investor presentation, Sep 18, 2004
Slide 1: Royal Bank of Canada
Royal Bank of Canada Ian MacKay Executive Vice President, Corporate Treasury Royal Bank of Canada Fixed income investor conference Kelowna, Saturday, September 18, 2004 Thank you. It’s a pleasure for me to be here today and to have the opportunity to talk about Royal Bank of Canada at this conferenc
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements From time to time, we make written and oral forward-looking statements, included in this presentation, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, in reports to shareholders and in other communications, which
Slide 3: Overview
Overview Our goals Corporate profile Asset Quality Global funding strategy 2 I’d like to begin by reviewing RBC’s goals and corporate profile before turning to asset quality and our global funding strategy. 2
Slide 4: Corporate goals
Corporate goals To be a leading North American financial services organization, recognized as: The undisputed lead provider of integrated financial services in Canada A best in class provider of personal & business financial services in the United States A premier provider of selected global financi
Slide 5: Largest and strongest rated Canadian Bank
Largest and strongest rated Canadian Bank Market Cap. and Senior Debt Ratings (as at September 13, 2004) Market Cap. Moody’s Rating/ S&P Rating/ (C$ billions) Outlook Outlook RBC 39.3 AA2/ Stable AA-/ Stable BNS 36.6 AA3/ Stable A+/ Positive TD 30.5 AA3/ Stable A+/ Stable BMO 27.4 AA3/ Stable AA-/ S
Slide 6: Financial performance vs. objectives
Financial performance vs. objectives Objectives Performance for 2004 9 mos. ’04 Profitability measures EPS growth – diluted 10-15% 8% ROE 17-19% 17.6% Revenue growth 5-8% 2%1 Expense growth < revenue growth 8%2 Allocated specific PCL/avg. loans, 0.35-0.45% 0.23% accept. & reverse repos Capital ratio
Slide 7: A leading Canadian franchise…
A leading Canadian franchise… #1 in total deposits Personal & #1 in residential mortgages Commercial #2 in personal loans Banking #2 in credit cards #1 in Canada in full-service brokerage (by assets) Wealth #1 in trust businesses Management #2 in Mutual Funds #1 in Canada in total number of insuranc
Slide 8: That is well diversified by business lines…
That is well diversified by business lines… 9 month 2004 net income contribution Consumer = 76% Wealth (Banking, Investments, Management 17% (ROE: 19.7%) Insurance 9% Insurance) (ROE: 25.4%) Institutional + other = 24% Transaction Processing 7% (ROE: 36.2%) Personal & Commercial Banking 50% Corporat
Slide 9: …and by geography
…and by geography 9 months 2004 Revenue 9 months 2004 Net income Canada Canada U.S. U.S. 62% 26% 73% 5% 23% 12% Other Other international international 8 U.S. GAAP Royal Bank of Canada is also diversified by geography. In the first 9 months of 2004, operations in Canada accounted for 62% of revenue
Slide 10: 3 new business segments – focused on clients, organized by geography
3 new business segments – focused on clients, organized by geography Canadian International Global Wholesale Consumer Consumer (Jim Westlake) (Peter Armenio) (Chuck Winograd) • Banking • U.S. Banking • Capital Markets • Investments • U.S. Brokerage • Corporate & • Insurance • Caribbean Commercial Ba
Slide 11: We have a track record of growing the bottom line
We have a track record of growing the bottom line Net income after tax (C$ billions) 1 1 1.4% ear CAGR $2.9 $3.0 5 -Y $2.4 $2.2 $2.3 $1.8 $1.7 1998 1999 2000 2001 2002 2003 9M/04 1 5-year CAGR is from 1998 to 2003 10 Cdn GAAP We have a strong track record of growing the bottom line, recording a 5-ye
Slide 12: With lower earnings volatility than Canadian peers…
With lower earnings volatility than Canadian peers… Net income volatility1 (%) 110% 50% 34% 24% 27% 11% RY NA S O BC TD BN BM CI 1 Percent standard deviation from mean net income over 16 quarter s ended July 31, 2004 Source: Bloomberg 11 Cdn GAAP While achieving strong growth in earnings, we have al
Slide 13: …and all but one of our American peers
…and all but one of our American peers Net Income volatility1 (%) 95% 74% 75% 49% 43% 32% 34% 27% 29% 30% 30% 30% 22% 16% 11% 4% B RY C BK C C E B C FC T Y M RS B I ST W ON NC BB BA US PN KE JP FIT W NT 1 Percent standard deviation from mean Net Income over 16 quarters ended June 30, 2004 (RY: 16 qu
Slide 14: Asset quality - Highlights
Asset quality - Highlights Credit quality continues to be strong across all portfolios Nonaccrual loans down $216 million from Q2/04 and $477 million from Q3/03 Allocated specific PCL ratio of 0.23% (YTD) continues to be below our medium term goal of 0.35 to 0.45% Net charge-offs ratio of 0.36% down
Slide 15: Well-diversified loan portfolio across asset classes and industry sectors…
Well-diversified loan portfolio 1 across asset classes and industry sectors… Loans outstanding mix (%) Transportation and environment 1% Automotive Industrial products Forest Products Financial services 1% 1% 1% 6% Government Mining and metals 1% 0% Energy Telecommunications and media 2% 1% Consumer
Slide 16: Decreasing nonaccrual loans and ratio
Decreasing nonaccrual loans and ratio1 C$ millions 1.37% 1.28% 2,465 0.98% 0.95% 2,288 0.83% 0.71% 1,745 1,796 1,638 1,961 1,422 1,851 1,379 1,437 1,266 1,089 504 437 366 359 372 333 2001 2002 2003 Q1/04 Q2/04 Q3/04 Consumer Business NAL Ratio 1 Nonaccrual loans (before deducting allowance for credi
Slide 17: And low net charge-off ratio
And low net charge-off ratio1 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Q3' 04 1 Net charge -offs as a percentage of average loans and acceptances 16 U.S. GAAP Similarly, the write-off (or charge-off) ratio is practically at th
Slide 18: With further reductions in sensitive sectors
With further reductions in sensitive sectors 1 C$ millions Q2/04 Q3/04 Total Net Inv. Non-inv. Total Impaired loans impaired grade grade loans Gross Net Power Generation and Distribution 1,052 136 578 465 1,043 182 130 Telecom and Cable 758 57 51 567 618 53 47 Airlines and Aerospace 538 6 142 384 52
Slide 19: And strong capital ratios
And strong capital ratios 14.00 Capital ratios (%) 13.00 12.7 12.8 12.7 12.00 12.0 11.8 11.00 11.2 10.00 9.7 9.00 9.3 9.1 8.6 8.7 8.00 8.1 7.00 6.00 1999 2000 2001 2002 2003 Q3/04 1, 2 1, 2 Total Capital Tier 1 Capital 1 Capital as a percentage of total risk adjusted assets as defined by OSFI (Canad
Slide 20: RBC Centura now vs. when acquired
RBC Centura now vs. when acquired Negative impact of spread compression Significantly lowered risk, but also yield, of investment portfolio Amortizing deposit intangibles Incurring costs of branch openings 19 Turning now to our banking business in the U.S., there are many reasons why RBC Centura’s e
Slide 21: Progress on improving U.S. Banking performance
Progress on improving U.S. Banking performance RBC Centura: Growing revenues: ? 18 De novo branches opened so far this year, with volumes tracking ahead o f goals ? strong growth in consumer and business loans and deposits ? loan growth is being generated while maintaining a strong credit culture an
Slide 22: Our global funding strategy
Our global funding strategy Accessing a variety of markets ? Established presence in the institutional and retail markets of Canada, Europe and Asia ? Benchmark transactions in several currencies ? Frequent MTN borrower in private placements & structured products ? Annual global issuance volume in t
Slide 23: Conclusion
Conclusion Will maintain clear focus on investors through unwavering commitment to: ? ratings stability ? disciplined growth ? diversification ? business leadership ? superior returns 22 In conclusion, at Royal Bank of Canada, we will maintain a clear focus on investors through unwavering commitment
Slide 24: Questions & Answers
Questions & Answers 23
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