Royal Bank of Canada (NYSE:RY) Q1 2024 Earnings Conference

By / / Royal Bank of Canada

The following is a summary of the Royal Bank of Canada (RY) Q1 2024 Earnings Call Transcript:

Financial Performance:

  • Royal Bank of Canada reported Q1 earnings of $3.6 billion and adjusted earnings of $4.1 billion.
  • Capital Markets recorded strong pre-provision pre-tax earnings of $1.3 billion.
  • The ratio of allowance for credit losses increased to 64 basis points.
  • CET1 (Common Equity Tier 1) ratio of 14.9%, up 220 basis points from last year, indicating strong balance sheet.
  • Mortgage growth declined to 3% year-over-year while commercial loan growth was strong, up 14% from last year.
  • Earnings per share of $2.50 this quarter, down 6% from last year.
  • Noninterest expenses were up 10% from last year.
  • The net interest income was up 2% year-over-year.
  • The adjusted effective tax rate was 18.3%.
  • Core expense growth decelerated to 2% year-over-year.
  • Personal & Commercial Banking reported earnings of $2.1 billion.
  • Wealth Management earnings were down 27% from last year.
  • The planned acquisition of HSBC Canada is expected to reduce the CET1 ratio by approximately 250 basis points.
  • The net income generated by the Insurance division was $220 million.
  • Added $133 million of provisions on performing loans this quarter.

Business Progress:

  • Royal Bank of Canada (RBC) is aligning with consumer duty regulations in the UK.
  • BlueBay Asset Management is now fully integrated within Global Asset Management.
  • Record net new-to-bank clients increased by 29% year-over-year.
  • Combined assets under administration grew to nearly $1.6 trillion.
  • Strategy for City National Bank focusing on optimization, balance-sheet enhancement, creating efficiencies, and multi-product client focus.
  • On track for the planned acquisition of HSBC Canada.
  • Focus on cost reduction with expected core expense growth between low- to mid-single-digit range in 2024.
  • Allowances for credit losses (ACL) on performing loans increased by $1.2 billion or 37%.
  • Sound lending standards maintained in commercial real estate exposure.
  • Confidence in achieving the $740 million cost synergies, mainly due to technology-related front-end improvements.
  • Growth driven by restructuring of their front office which aligns senior bankers with larger commercial clients.
  • Not expanded their risk appetite in their business.
  • Strategy to grow with their best clients and continue to be with them as they expand their franchise.
  • The integration of HSBC presents an opportunity to offer new products to its client set.
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