Royal Bank Of Canada · TSX:RY
Royal Bank Of Canada — Q1 2014 Earnings Presentation
31 slides from Royal Bank Of Canada's earnings presentation, Feb 26, 2014
Slide 1: Royal Bank of Canada First Quarter Results
Royal Bank of Canada First Quarter Results February 26, 2014 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 Q1 2014 Report to Shareholders and Supplemen
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 Chief Executive Officer
Slide 4: Q1/2014 performance highlights
Q1/2014 performance highlights Solid net income of $2.1 billion, up 2% YoY and relatively flat QoQ Adjusted(1) net income of $2.2 billion, up 7% YoY and 2% QoQ Solid earnings growth Continued strength in Canadian Banking Higher earnings from Capital Markets, Investor & Treasury Services and
Slide 5: RBC's key strengths
RBC’s key strengths Diversified business mix, with the right balance of retail and wholesale Almost two-thirds of revenue from Canada Strategic approach in key businesses in the U.S. and select international markets Earnings by business segment(1) Revenue by geography(1) Latest twelve months e
Slide 6: Strategic priorities
Strategic priorities Strategic goals In Canada, to be the undisputed leader in financial services Globally, to be a leading provider of capital markets, investor and wealth management solutions In targeted markets, to be a leading provider of select financial services complementary to our core
Slide 7: Risk Review
Risk Review Mark Hughes Chief Risk Officer
Slide 8: Provision for credit losses (PCL)
Provision for credit losses (PCL) Total PCL Personal & Commercial Banking ($ millions, except percentage amounts) PCL relatively flat QoQ 349 287 267 334 292 – Improved credit quality in the Caribbean largely 4 00 0.35% 0.32% offset by higher provisions in Canadian Banking 0.29% 0.26% 0.27% 3 5 0
Slide 9: Canadian Banking retail portfolio credit quality
Canadian Banking retail portfolio credit quality Average retail loans ($288 billion) PCL Ratio(1) by product Small Higher provisions in small business, personal loans and credit Credit business 3 .8 0 % cards portfolios cards 1% 3 .3 0 % – Small business represents 1% of total portfolio 5% 2.79% 2
Slide 10: Financial Review
Financial Review Janice Fukakusa Chief Administrative Officer and Chief Financial Officer
Slide 11: Q1/2014 financial highlights
Q1/2014 financial highlights Q1/2014 Q4/2013 Q1/2013 ($ millions, except for EPS and ROE) Excluding specified Excluding As Reported As Reported As Reported items (1) specified items (1) Revenue $8,454 $8,454 $7,919 $7,919 $7,858 Net income $2,092 $2,184 $2,101 $2,132 $2,047 Diluted earnings per shar
Slide 12: Basel III Common Equity Tier 1 (CET1) ratio
Basel III Common Equity Tier 1 (CET1) ratio(1) 0.33% 0.32% ( 0.32%) ( 0.09%) ( 0.14%) 9.6% 9.7% Q4/2013* Internal capital CVA New pension Foreign Other (2) Q1/2014* generation implementation accounting exchange standard translation Strong internal capital generation Credit valuation adjustment (
Slide 13: Personal & Commercial Banking
Personal & Commercial Banking Net Income ($ millions) Q1/2014 Highlights Canadian Banking (1) (1) 1,163 Net income of $1,137 million, up 4% YoY and 5% QoQ 1,101 92 31 Amount 1,104 1,070 1,071 YoY QoQ ($ billions) Loans $340 6% 1% Deposits $260 7% 2% Solid volume growth across all businesses incl
Slide 14: Wealth Management
Wealth Management Net Income ($ millions) Q1/2014 Highlights Net income up 3% YoY and 16% QoQ 235 229 Higher average fee-based client asset growth 202 due to capital appreciation and strong net sales Semi-annual performance fees earned this quarter Positive impact from foreign exchange trans
Slide 15: Insurance
Insurance Net Income ($ millions) Q1/2014 Highlights 225(1) Net income down $7 million or 4% YoY and up 118 $50 million or 47% QoQ Excluding Q4/2013 charge related to new tax legislation in Canada, net income was down $68 164 million or 30%(1) QoQ Higher disability and weather-related claims 1
Slide 16: Investor & Treasury Services
Investor & Treasury Services Net Income ($ millions) Q1/2014 Highlights 106 Net income up $27 million or 34% YoY (1) Continuing benefits from efficiency 91 management activities Higher net interest income on growth in client 79 deposits Favourable impact of foreign exchange translation Net
Slide 17: Capital Markets
Capital Markets Net Income ($ millions) Q1/2014 Highlights (1) Net income up $43 million or 9% YoY (1) Lower PCL and effective tax rate 505 462 469 Favourable impact of foreign exchange translation Solid but moderately lower global markets and investment banking revenue compared to robust le
Slide 18: Appendices
Appendices
Slide 19: Canadian Banking – retail momentum
Canadian Banking – retail momentum Canadian Market Share Q1/2014 Q1/2013 Rank Market Share(1) Rank Market Share(1) Consumer Lending(2) 1 23.6% 1 22.4% Personal Core Deposits + GICs 2 20.0% 2 19.5% Long-Term Mutual Funds(3) 1 14.1% 1 14.2% Business Loans(4) $0 - $250 thousand 1 28.7% 1 26.6% $250 tho
Slide 20: Canadian Banking – net interest margin
Canadian Banking – net interest margin (1) Net interest margin increased 3 bps QoQ and was flat YoY reflecting favourable funding mix Margins are expected to continue to reflect the competitive and low interest rate environment (2) (4) 2.77% 2.73% (2) 2.73% 2.71% 2.70% (3) 2.72 2.68% Q1/2013 Q2/
Slide 21: Canadian Banking – volume growth
Canadian Banking – volume growth Average Loans & Acceptances(1)(3) Average Deposits(2)(3) ($ billions) ($ billions) oQ 6% YoY; 1% Q oQ 7% YoY; 2% Q 338 340 242 254 260 319 56 56 51 97 14 93 14 90 14 Percentage Change(1) QoQ YoY 85 86 Business 79 (inc. small business) 0% 10% Credit Cards 2% 4% Person
Slide 22: Canadian Banking – residential mortgage portfolio
Canadian Banking – residential mortgage portfolio Geographic Diversification Insured vs. Uninsured mortgages As at January 31, 2014 As at January 31, 2014 5% 12% 20% Residential Mortgages: $184 billion(1) Insured LTV: 56%(2) 41% 15% Uninsured 59% 41% 7% Atlantic Quebec Ontario Man/Sask Alberta Briti
Slide 23: Wealth Management – asset management growth
Wealth Management – asset management growth Canadian mutual fund balances and market share(1) ($ billions, except percentage amounts) 180 14.4% 14.4% 14.6% 14.6% 14.7% 14.6% 14.5% 14.5% 14.4% 1 5 .0% 160 13.9% 14.1% 14.1% 14.2% 14.2% 14.2% 14.1% 14.1% 13.8% 6.8 1 2 .0% 140 7.4 7.3 7.1 136.9 120 8.4
Slide 24: Capital Markets – revenue by business
Capital Markets – revenue by business ($ millions) Q1/2014 Q4/2013 Q1/2013 QoQ YoY Investment banking 417 430 467 (13) (50) Lending and other 409 356 373 53 36 Corporate & Investment Banking $826 $786 $840 $40 $(14) Fixed income, currencies and commodities 539 446 644 93 (105) Global equities 267 27
Slide 25: Capital Markets – revenue by geography
Capital Markets – revenue by geography ($ millions) Q1/2014 Q4/2013 Q1/2013 QoQ YoY Canada 521 451 426 70 95 U.S. 1,069 941 1,061 128 8 Europe 212 200 295 12 (83) Asia and Other 45 38 54 7 (9) Geographic revenue excluding certain items (1) $1,847 $1,630 $1,836 $217 $11 Add / (Deduct): BOLI (2) (4) -
Slide 26: Capital Markets – loan portfolio
Capital Markets – loan portfolio Lending and Syndication Revenue and Loans Outstanding by Industry(1) Loans Outstanding by Region(1) ($ billions) Q1/2014 In the last 2 years, our lending and syndication revenue grew by 31%, exceeding our loan book growth of 20%(2) 4% Energy, Mining, Exploration 1.
Slide 27: Capital Markets – trading revenue
Capital Markets– trading revenue ($ millions) Q1/2014 Q4/2013 Q1/2013 QoQ YoY Capital Markets total revenue (teb) $1,810 $1,683 $1,907 $127 $(97) Capital Markets non-trading revenue(1) 1,077 1,022 1,119 55 (42) Capital Markets trading revenue (teb) $733 $661 $788 $72 $(55) Add / (Deduct): BOLI(2) 4
Slide 28: Gross impaired loans (GIL)
Gross impaired loans (GIL) Total GIL ($ millions, except percentage amounts) 2,137 2,185 2,072 2,201 2,111 0.54% 0.54% 0.50% 0.52% 0.49% 2 5 00 2 00 0 287 302 219 229 139 1 5 00 1,872 1,891 1 00 0 1,809 1,860 1,811 5 00 0 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Personal & Commercial Banking Capital
Slide 29: Other – other income
Other – other income ($ millions) Q1/2014 Q4/2013 Q1/2013 QoQ YoY Other income – segments 112 95 113 17 (1) FV adjustments on RBC debt (2) 3 (7) (5) 5 CDS on corporate loans (3) (10) (13) 7 10 Funding related items 91 1 (4) 90 95 Other misc. items (40) (30) 26 (10) (66) Total Other – other income $1
Slide 30: Specified items impacting results
Specified items impacting results Consolidated Results Provision for post- Loss related to RBC ($ millions, except for earnings per share (EPS) amounts) Reported employment benefits and Adjusted(1) Jamaica sale restructuring charge For the three months ended January 31, 2014 Consolidated Net income
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