Strong Earnings Growth and …

• Fourth Quarter Earnings: $4.2 billion, including $265 million from HSBC Canada acquisition.

• Adjusted Earnings: $4.4 billion, up 18% year over year.

• Fiscal Year Earnings: $16.2 billion, adjusted earnings over $17 billion.

• Common Equity Tier 1 Ratio: 13.2%.

• Return on Equity (RoE): 14.4%, adjusted RoE of 15.5%.

• Dividend Increase: $0.06 or 4% increase in quarterly dividend.

• Net Interest Income: Up 17% year-over-year.

• Net Interest Margin: Up 6 basis points from last quarter.

• Non-Interest Expenses: Up 12% year-over-year.

• Provisions for Credit Losses: 26 basis points on impaired loans.

• Gross Impaired Loans: $5.9 billion, up $182 million.

• Assets Under Management: Increased by $139 billion or 26% from last year.

• Capital Markets Revenue: Record fourth quarter revenue, pre-provision pre-tax earnings of $5 billion for the year.

• Wealth Management Revenue: Up 20% year-over-year.

• Insurance Net Income: $162 million, up 67% from last year.

Release Date: December 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Royal Bank of Canada (NYSE:RY) reported strong fourth quarter earnings of $4.2 billion, with adjusted earnings up 18% year over year.

• The acquisition of HSBC Canada contributed $265 million to earnings, with realized run rate savings of over $400 million.

• RBC’s Common Equity Tier 1 ratio improved to 13.2%, reflecting strong internal capital generation.

• The bank added over 600,000 clients in its Canadian banking business, benefiting from strategic partnerships and innovative client value propositions.

• RBC ranked highest in the 2024 JD Power Canada Retail Banking satisfaction study, marking the fourth time in five years.

• The Canadian economy is underperforming with rising unemployment and subdued business conditions, posing potential challenges.

• Provisions for credit losses on impaired loans remain stable but are expected to increase in 2025 due to economic conditions.

• Competitive pressures in mortgage pricing and term deposits are expected to persist, impacting net interest margins.

• The bank is cautious about potential geopolitical risks, including trade tensions that could impact economic conditions.

• Higher non-interest expenses were reported, driven by variable compensation and investments in technology, which could pressure future profitability.

Q: How should we think about the 16%+ RoE target in the context of current capital requirements? Is it aspirational or achievable consistently? A: David McKay, President and CEO, emphasized that the 16%+ RoE target is not aspirational but tactical. The bank has several initiatives, including improving profitability at City National and leveraging the HSBC Canada acquisition, which are expected to help achieve this target without further capital deployment.

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