Royal Bank Of Canada · TSX:RY
Royal Bank Of Canada — Q3 2013 Earnings Presentation
31 slides from Royal Bank Of Canada's earnings presentation, Aug 29, 2013
Slide 1: Royal Bank of Canada Third Quarter Results
Royal Bank of Canada Third Quarter Results August 29, 2013 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 2013 Report to Shareholders and Supplement
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 Gordon M. Nixon President and Chief Executive Officer
Slide 4: Q3/2013 performance highlights
Q3/2013 performance highlights Record net income of $2.3 billion, up 3% YoY and 19% QoQ Adjusted(1) net income of $2.2 billion, up 12% YoY and 13% QoQ Record Q3 results Record performance in Personal & Commercial Banking and Wealth Management Continued strength in most other businesses, part
Slide 5: RBC's key strengths
RBC’s key strengths Diversified business mix, with the right balance of retail and wholesale Almost two-thirds of revenue from Canada Strategic approach in key businesses in the U.S. and select international markets Earnings by business segment(1)(2) Revenue by geography(1) Latest twelve month
Slide 6: Strategic priorities
Strategic priorities Building on leading market positions in Canada Personal & Extending our Canadian sales power Commercial Managing costs and reinvesting for the future in Canada Banking Building on strengths in innovation and technology to differentiate the client experience in the Caribb
Slide 7: Risk Review
Risk Review Morten Friis Chief Risk Officer
Slide 8: Provision for credit losses (PCL)
Provision for credit losses (PCL) Personal & Commercial Banking Total PCL ($ millions, except percentage amounts) PCL decreased $28 million, or 11% QoQ 324 362 349 288 267 – Lower provisions in our Canadian business and 0.37% Caribbean portfolios due to continued credit 0.35% 4 00 0.34% 0.29% qual
Slide 9: Canadian Banking retail portfolio credit quality
Canadian Banking retail portfolio credit quality Average Retail Loans ($283 billion) PCL Ratio(1) by Product 3 .8 0 % Small Credit business cards 1% 3 .3 0 % 2.94% 5% 2.79% 2 .8 0 % 2.60% 2.57% 2.56% Credit cards 2 .3 0 % Personal 1.68% 30% Residential 1 .8 0 % mortgages 1.39% 1.29% 64% 1 .3 0 % 0.8
Slide 10: Financial Review
Financial Review Janice Fukakusa Chief Administrative Officer and Chief Financial Officer
Slide 11: Q3/2013 financial highlights
Q3/2013 financial highlights Q3/2013 Q2/2013 Q3/2012 ($ millions, except for EPS and Excluding Excluding Excluding As reported As reported As reported ROE) specified item(1) specified item(1) specified items(1) Revenue $7,218 $7,218 $7,769 $7,769 $7,756 $7,559 Net income $2,304 $2,214 $1,936 $1,967
Slide 12: Personal & Commercial Banking
Personal & Commercial Banking Net Income ($ millions) Q3/2013 Highlights Canadian Banking (Net Income: $1,163 million) 1,102 Reported Adjusted(2) 1,180 92 YoY QoQ YoY QoQ (1) 1,057 1,010 Loan Growth 8% 1% 5% n.a. Deposit Growth 8% 1% 7% n.a. Solid volume growth across all businesses NIM of 2.77%
Slide 13: Wealth Management
Wealth Management Net Income ($ millions) Q3/2013 Highlights Net income of $236 million 236 225 Net income was up 33% YoY, excluding a specified 177 (1) item(1) 21 Higher average fee-based client assets 156 Transaction volumes higher YoY, but lower QoQ due to seasonally slow market activity
Slide 14: Insurance
Insurance Net Income ($ millions) Q3/2013 Highlights Net income of $160 million Higher annuity earnings from a new U.K. 179 annuity contract 166 160 Higher claims costs YoY, including net claims of $14 million ($10 million after-tax) related to severe weather conditions in Alberta and Ontario
Slide 15: Investor & Treasury Services
Investor & Treasury Services Net Income ($ millions) Q3/2013 Highlights Net income was $104 million, up $53 million YoY (1) 98 (1) 104 and up $37 million QoQ Excluding specified items(1), net income increased 68% YoY reflecting: 31 – Higher revenue and benefits from our ongoing focus on cost man
Slide 16: Capital Markets
Capital Markets Net Income ($ millions) Q3/2013 Highlights Corporate & Investment Banking Revenue of $669 million, down 9% YoY and (1) 429 down 7% QoQ 386 388 Lower investment banking activities across most geographies Activity levels were down from a strong Q3/2012, especially for M&A and l
Slide 17: Appendices
Appendices
Slide 18: Specified items impacting results
Specified items impacting results Adjusted Net Income Q3/2013 Q2/2013 Q3/2012 ($ millions, except for earnings per share (EPS) Segment amounts) Diluted Diluted Diluted NIAT NIAT NIAT EPS EPS EPS Reported GAAP net income $2,304 $1.52 $1,936 $1.27 $2,240 $1.47 Less: Specified items: Q3/2013 Favourable
Slide 19: Canadian Banking – retail momentum
Canadian Banking – retail momentum Canadian Market Share Q3/2013 Q3/2012 Rank Market Share (1) Rank Market Share (1) Consumer Lending (2) 1 23.6% 2 22.9% Personal Core Deposits + GICs 2 20.1% 2 19.5% Long-Term Mutual Funds (3) 1 14.2% 1 14.1% Business Loans (4) $0 - $250 thousand 1 27.8% 1 26.8% $25
Slide 20: Canadian Banking – net interest margin
Canadian Banking – net interest margin Net interest margin (NIM)(1) (Percentage) NIM increased 9 bps QoQ reflecting: (2) 2.91 Fair value purchase accounting adjustments related to Ally Canada (2) (4) (3 bps) 2.77 2.74 2.73 (3) Reversal of prior quarter accounting 2.71 (2) (4) volatility 2.74 2
Slide 21: Canadian Banking – volume growth
Canadian Banking – volume growth Average Loans & Acceptances(1)(3) Average Deposits(2)(3) ($ billions) ($ billions) 1% YoY: 8%; QoQ 1% YoY: 8%; QoQ 247 250 331 334 232 311 56 56 49 90 92 13 14 84 13 Percentage Change(1) QoQ YoY 85 85 Business - 13% 77 (inc. small business) Credit Cards 3% 5% Persona
Slide 22: Canadian Banking – residential mortgage portfolio
Canadian Banking – residential mortgage portfolio Geographic Diversification Insured vs. Uninsured mortgages (as at July 31, 2013) (as at July 31, 2013) 5% 10% 20% Residential Mortgages: $180 billion(1) Insured LTV: 47%(2) 43% 16% Uninsured 41% 57% 8% Atlantic Quebec Ontario Man/Sask Alberta British
Slide 23: Wealth Management – asset management growth
Wealth Management – asset management growth Canadian mutual fund balances and market share(1) 180 ($ billions, except percentage amounts) 1 8 .0% 160 14.4% 14.4% 14.4% 14.6% 14.6% 14.7% 14.6% 14.5% 14.1% 1 5 .0% 140 14.2% 14.2% 14.2% 13.6% 13.8% 13.9% 14.1% 14.1% 7.4 7.3 120 13.3% 8.4 7.8 1 2 .0% 9.
Slide 24: Capital Markets – revenue by business
Capital Markets – revenue by business ($ millions) Q3/2013 Q2/2013 Q3/2012 QoQ YoY Fixed income, currencies and commodities 352 393 471 (10%) (25%) Global equities 233 263 219 (11%) 6% Repo and secured financing 167 161 158 4% 6% Global Markets (teb) $752 $817 $848 (8%) (11%) Investment banking 310
Slide 25: Capital Markets – revenue by geography
Capital Markets – revenue by geography ($ millions) Q3/2013 Q2/2013 Q3/2012 QoQ YoY Canada 486 540 479 (10%) 1% U.S. 703 816 864 (14%) (19%) Europe 175 168 205 4% (15%) Asia and Other 43 59 37 (27%) 16% Geographic revenue excluding certain items (1) $1,407 $1,583 $1,585 (11%) (11%) Add / (Deduct): B
Slide 26: Capital Markets – loan portfolio
Capital Markets – loan portfolio Lending Revenue and Loans Outstanding Loans Outstanding by Industry(1) by Region(1) ($ billions) Q3/2013 In the last 2 years, our lending revenue grew by 30%, exceeding our loan book growth of 22%(2) Energy, Mining, Exploration 1.6 5% & Production, Forestry 1.3 7%
Slide 27: Capital Markets and I&TS – trading revenue
Capital Markets and I&TS – trading revenue ($ millions) Q3/2013 Q2/2013 Q3/2012 QoQ YoY Capital Markets total revenue (teb) $1,428 $1,562 $1,613 (9%) (11%) Capital Markets non-trading revenue (1) 885 976 920 (9%) (4%) Capital Markets trading revenue (teb) $543 $586 $693 (7%) (22%) Add / (Deduct): BO
Slide 28: Gross impaired loans
Gross impaired loans Total GIL ($ millions, except percentage amounts) 2,121 2,250 2,137 2,185 2,072 0.55% 0.58% 0.54% 0.54% 0.50% 2 5 00 2 0 00 203 389 287 302 219 1 5 00 1,877 1 0 00 1,820 1,809 1,860 1,811 5 00 0 Q3/2012 Q4/2012 Q1/2013 Q2/2013 Q3/2013 Personal & Commercial Banking Capital Market
Slide 29: Exposure to Europe
Exposure to Europe Q3/2013 Q2/2013 European Exposure Loans Securities(1) Repo-style OTC Total Total ($ millions) Outstanding transactions Derivatives Exposure Exposure U.K.(2) 6,996 7,268 1,287 824 16,375 15,718 Germany 96 6,720 36 555 7,407 7,522 France 635 2,711 47 227 3,620 3,264 Total U.K., Germ
Slide 30: Other – other income
Other – other income ($ millions) Q3/2013 Q2/2013 Q3/2012 QoQ YoY Other income – segments 114 125 107 (11) 7 FV adjustments on RBC debt 4 (8) 1 12 3 CDS on corporate loans (5) (12) (8) 7 3 Funding related items 31 4 46 27 (15) Other misc. items (15) 12 (34) (27) 19 Total Other – other income $129 $1
Slide 31: 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 non-GAAP measures we believe provide useful information to investors regarding our financial condition and result of op