ROYAL BANK OF CANADA REPORTS FIRST QUARTER 2024 RESULTS
Canada NewsWire
TORONTO, Feb. 28, 2024
All amounts are in Canadian dollars and are based
on financial statements presented in compliance with
International Accounting Standard 34 Interim Financial
Reporting, unless otherwise noted. Effective November
1, 2023, we adopted IFRS 17 Insurance Contracts (IFRS
17). Comparative amounts have been restated from those
previously presented. Our Q1 2024 Report to Shareholders
and Supplementary Financial Information are available
at and on
Net income Diluted EPS(1) Total PCL(2) ROE(5) CET1 Ratio(6)
$3.6 Billion $2.50 $813 Million 13.1% 14.9%
Up 14% YoY Up 12% YoY PCL on loans ratio(3) Up 50 bps YoY Above regulatory requirements
up 3 bps4 QoQ
Adjusted net income(7) Adjusted Diluted EPS(7) Total ACL(8) Adjusted ROE(7) LCR(10)
$4.1 Billion $2.85 $5.7 Billion 14.9% 132%
Down 5% YoY Down 6% YoY ACL on loans ratio(9) Down 230 bps YoY Up from 131% last
up 3 bps QoQ quarter
TORONTO, Feb. 28, 2024 /CNW/ – Royal Bank of Canada(11) (TSX: RY) (NYSE: RY) today reported net income of $3.6 billion for the quarter ended January 31, 2024, up $449 million or 14% from the prior year, which included the $1,050 million impact of the Canada Recovery Dividend (CRD) and other tax related adjustments. Diluted EPS was $2.50, up 12% over the same period. Adjusted net income(7) and adjusted diluted EPS(7) of $4.1 billion and $2.85 were down 5% and 6%, respectively, from the prior year.
Our consolidated results reflect an increase in total PCL of $281 million from a year ago, mainly reflecting higher provisions in Personal & Commercial Banking and Capital Markets, partially offset by lower provisions in Wealth Management. The PCL on loans ratio of 37 bps increased 12 bps from the prior year. The PCL on impaired loans ratio(12) was 31 bps, up 14 bps from the prior year as provisions continue to trend upwards, reflecting the impact of higher interest rates and rising unemployment.
Results also reflected the impact of specified items relating to the planned acquisition of HSBC Bank Canada (HSBC Canada), including transaction and integration costs ($265 million before-tax and $218 million after-tax), and management of closing capital volatility ($286 million before-tax and $207 million after-tax). The cost of the Federal Deposit Insurance Corporation (FDIC) special assessment of $159 million before-tax ($115 million after-tax) also impacted results.
Pre-provision, pre-tax earnings(7) of $5.2 billion were down $607 million or 11% from last year, mainly due to higher expenses, and lower revenue in Capital Markets, largely reflecting lower trading revenue compared to a strong prior year. These factors were partially offset by higher insurance investment results from favourable investment performance as we repositioned our portfolio for transition to IFRS 17. Results benefitted from higher net interest income driven by solid volume growth, as well as higher fee-based client assets reflecting market appreciation and net sales in Wealth Management.
Compared to last quarter, net income was down 9%, partly reflecting a higher effective tax rate, as results in the prior quarter included the favourable impact of the specified item relating to certain deferred tax adjustments, and higher PCL on impaired loans. Lower results in Corporate Support and Personal & Commercial Banking were partially offset by higher results in Wealth Management, Capital Markets and Insurance. Adjusted net income(7) was up 8% over the same period. Pre-provision, pre-tax earnings(7) were up 12% as higher revenue more than offset expense growth.
Our capital position remains robust, with a CET1 ratio(6) of 14.9%, supporting solid volume growth and $1.9 billion in common share dividends.
“As our first quarter results show, RBC has the right strategy in place to grow today while also generating long-term value for shareholders. Underpinned by our balance sheet strength, prudent approach to risk management and diversified business model, we delivered solid, client-driven volume growth and a continued focus on expense control. As we look towards the completion of our planned HSBC Canada acquisition, we remain focused on being a trusted advisor to clients through the delivery of new and differentiated banking experiences.”
— Dave McKay, President and Chief Executive Officer of Royal Bank of Canada
__________________________________________________________
(1) Earnings per share (EPS).
(2) Provision for credit losses (PCL).
(3) PCL on loans ratio is calculated as PCL on loans
as a percentage of average net loans and acceptances.
(4) Basis points (bps).
(5) Return on equity (ROE) is calculated as net income
available to common shareholders divided by average
common equity. For further information, refer to the
Key performance and non-GAAP measures section on pages
3 to 5 of this Earnings Release.
(6) This ratio is calculated by dividing Common Equity
Tier 1 (CET1) by risk-weighted assets (RWA), in accordance
with Office of the Superintendent of Financial Institutions'
(OSFI) Basel III Capital Adequacy Requirements (CAR)
guideline.
(7) These are non-GAAP measures. For further information,
including a reconciliation, refer to the Key performance
and non-GAAP measures section on pages 3 to 5 of this
Earnings Release.
(8) Allowance for credit losses (ACL).
(9) ACL on loans ratio is calculated as ACL on loans
as a percentage of total loans and acceptances.
(10) The Liquidity coverage ratio (LCR) is calculated
in accordance with OSFI's Liquidity Adequacy Requirements
(LAR) guideline. For further details, refer to the
Liquidity and funding risk section of our Q1 2024
Report to Shareholders.
(11) When we say "we", "us", "our", "the bank" or
"RBC", we mean Royal Bank of Canada and its subsidiaries,
as applicable.
(12) PCL on impaired loans ratio is calculated as
PCL on impaired loans as a percentage of average net
loans and acceptances.
Q1 2024 Reported:-- Net 14%12%50 bps220 Adjusted(14) 5%6%230 bps
Compared to income of bps :-- Net income
Q1 2023 $3,582 of $4,066
million-- million--
Diluted EPS of Diluted EPS of
$2.50-- ROE of $2.85-- ROE of
13.1%-- CET1 14.9%
ratio(13) of
14.9%
Q1 2024 -- Net income 9%9%180 bps40 -- Net income 8%8%70 bps
Compared to of $3,582 bps of $4,066
Q4 2023 million-- million--
Diluted EPS of Diluted EPS of
$2.50-- ROE of $2.85-- ROE of
13.1%-- CET1 14.9%
ratio(13) of
14.9%
Personal & Commercial Banking
Net income of $2,061 million decreased $65 million or 3% from a year ago, primarily attributable to higher PCL and non-interest expenses. These factors were partially offset by higher net interest income reflecting average volume growth of 9% in deposits (including 11% in personal deposits) and 5% in loans (including double-digit growth in business lending and credit cards of 14% and 13%, respectively) in Canadian Banking, and higher spreads.
Compared to last quarter, net income decreased $30 million or 1%, primarily attributable to higher PCL. This was largely offset by lower non-interest expenses, higher card service revenue, as well as higher net interest income reflecting average volume growth of 1% and higher spreads in Canadian Banking.
Wealth Management
Net income of $606 million decreased $224 million or 27% from a year ago, mainly due to the cost of the FDIC special assessment of $159 million before-tax ($115 million after-tax) in U.S. Wealth Management (including City National) in the current quarter. Higher variable compensation commensurate with increased commissionable revenue, higher staff costs and professional fees, largely reflecting continued investments in the operational infrastructure of City National, and lower net interest income also contributed to the decrease. These factors were partially offset by higher fee-based client assets reflecting market appreciation and net sales.
Compared to last quarter, net income increased $391 million, as last quarter reflected the impact of the specified item relating to impairment losses on our interest in an associated company and legal provisions in U.S. Wealth Management (including City National). These factors were partially offset by the cost of the FDIC special assessment, in the current quarter, as noted above. U.S. Wealth Management (including City National) results also included the impact of releases of provisions on performing loans in the current quarter, as compared to provisions taken last quarter.
Insurance
Net income of $220 million increased $153 million from a year ago, primarily due to higher insurance investment result from favourable investment performance as we repositioned our portfolio for the transition to IFRS 17. The current period also benefitted from favourable market conditions. The results in the prior period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17.