Royal Bank of Canada reports first quarter 2009 results



    
    All amounts are in Canadian dollars, and are based on our unaudited
    interim consolidated financial statements and related notes prepared in
    accordance with Canadian generally accepted accounting principles (GAAP),
    unless otherwise noted. Our Q1 2009 Report to Shareholders and
    supplementary financial information are available on our website at
    rbc.com/investorrelations.

    First quarter 2009 compared to first quarter 2008

    -  Net income of $1,053 million (down 15% from $1,245 million)
    -  Diluted earnings per share (EPS) of $.73 (down $.22 from $.95)
    -  Return on common equity (ROE) of 13.8% (down 770 basis points
       from 21.5%)
    -  Tier 1 capital ratio of 10.6%

    First quarter 2009 compared to fourth quarter 2008

    -  Net income of $1,053 million (down 6% from $1,120 million)
    -  Diluted EPS of $.73 (down $.08 from $.81)
    -  ROE of 13.8% (down 230 basis points from 16.1%)
    

    TORONTO, Feb. 26 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE) today
reported net income of $1,053 million for the first quarter ended January 31,
2009, down $192 million or 15% from a year ago and down $67 million or 6% from
last quarter. Our results were impacted by higher losses related to market
environment impacts including unfavourable credit valuation adjustments.
Canadian Banking, Insurance and certain businesses in Capital Markets
generated solid results.
    Market environment impacts reduced earnings by $646 million ($1,257
million pre-tax and related compensation adjustments) and EPS by $0.47,
securitization gains increased earnings by $183 million ($267 million pre-tax)
and EPS by $0.13, and a general provision for credit losses reduced earnings
by $101 million ($149 million pre-tax) and EPS by $0.07. Excluding these
items, net income was $1.6 billion and EPS was $1.14.(1)
    "These results reflect the strength of our Canadian businesses and
demonstrate the value of our diversified business model. We earned over $1
billion this quarter for our shareholders, notwithstanding market impacts,"
said Gordon M. Nixon, RBC President and CEO. "Our solid financial profile
should provide additional confidence in the strength and stability of our
organization, and supports the continued growth of our businesses. In today's
uncertain environment, we have the resources, expertise and discipline to help
our clients create a path forward."

    Canadian Banking net income was $696 million, up 3% or $23 million from
last year reflecting volume growth across all businesses, a favourable
adjustment relating to our credit card customer loyalty reward program
liability and effective cost management. Volume growth was offset by spread
compression largely relating to the lower interest rate environment. Provision
for credit losses increased $56 million over last year and $45 million over
last quarter, reflecting higher loss rates and portfolio growth.

    Wealth Management net income was $128 million, down 29% or $53 million
over last year due to the impact of capital markets on fee-based client assets
and transaction volumes.

    Insurance net income was $112 million, up 26% or $23 million over last
year. Improved Canadian life and health policyholder experience was partially
offset by lower favourable actuarial adjustments from management actions and
assumption changes.

    International Banking net loss was $144 million, down $175 million from
net income of $31 million a year ago. This decrease was primarily due to
performance of our U.S. banking business, which had investment portfolio
losses of $113 million ($94 million after-tax) and a higher provision for
credit losses. Provision for credit losses in the segment increased $129
million over last year and was essentially unchanged from the previous
quarter. Appreciation of the U.S. dollar versus the Canadian dollar also
reduced earnings by $36 million over last year.

    Capital Markets net income was $225 million, down 26% or $79 million from
a year ago due to primarily due to higher losses and higher unfavourable
credit valuation adjustments resulting from the market environment, and an
increase in provision for credit losses. Certain trading businesses continue
to perform well from increased market volatility and the lower interest rates.

    Tier 1 Capital Ratio of 10.6% was up 90 basis points from last year
largely due to capital issuances as consideration for acquisitions as well as
for general business purposes, and internal capital generation. Higher capital
levels were partially offset by higher risk-adjusted assets and a higher
capital deduction for goodwill as a result of acquisitions. Risk-adjusted
assets increased due to business growth, including acquisitions and the impact
of a weaker Canadian dollar on the translated value of foreign currency
denominated assets.

    
    ------------------------------------------
    (1) Net income and EPS excluding these items are non-GAAP financial
        measures, and we believe provide useful information to investors
        regarding our results of operations. Readers are cautioned that
        non-GAAP measures do not have any standardized meanings prescribed
        by Canadian GAAP and, therefore, are unlikely to be comparable to
        similar measures disclosed by other companies.


    SELECTED FINANCIAL AND OTHER HIGHLIGHTS

    -------------------------------------------------------------------------

                                          As at or for the three months ended
                                       --------------------------------------
    (C$ millions, except per share,     January 31   October 31   January 31
     number of and percentage amounts)        2009         2008         2008
    -------------------------------------------------------------------------
      Total revenue                    $     6,941      $ 5,069  $     5,647
      Provision for credit losses (PCL)        747          619          293
      Insurance policyholder benefits,
       claims and acquisition expense        1,076          (86)         616
      Non-interest expense                   3,622        2,989        3,120
      Net income before income taxes
       and non-controlling interest
       in subsidiaries                       1,496        1,547        1,618
    Net income                         $     1,053  $     1,120  $     1,245
    -------------------------------------------------------------------------
    Segments - net income (loss)
      Canadian Banking                 $       696  $       676  $       673
      Wealth Management                        128          116          181
      Insurance                                112           59           89
      International Banking                   (144)        (206)          31
      Capital Markets                          225          584          304
      Corporate Support                         36         (109)         (33)
    Net income                         $     1,053  $     1,120  $     1,245
    -------------------------------------------------------------------------
    Selected information
      Earnings per share
       (EPS) - basic                   $      0.74  $      0.82  $      0.96
      Earnings per share
       (EPS) - diluted                 $      0.73  $      0.81  $      0.95
      Return on common equity (ROE)(1)       13.8%        16.1%        21.5%
      Return on risk capital (RORC)(2)       21.5%        26.3%        35.6%
      Net interest margin (NIM)(3)           1.57%        1.59%        1.36%
      Specific PCL as a percentage of
       average net loans and
       acceptances                           0.80%        0.65%        0.44%
      Gross impaired loans (GIL) as
       a percentage of loans and
       acceptances                           1.19%        0.96%        0.56%
    Capital ratios and multiples
      Tier 1 capital ratio                   10.6%         9.0%         9.7%
      Total capital ratio                    12.5%        11.0%        11.2%
      Assets-to-capital multiple             17.5X        20.1X        22.1X
    Selected balance sheet and
     other information
      Total assets                     $   713,176  $   723,859  $   632,761
      Securities                           172,182      171,134      184,348
      Retail loans(4)                      192,988      195,455      174,779
      Wholesale loans(4)                    92,941       96,300       72,430
      Deposits                             422,850      438,575      394,416
      Average common equity(1)              29,050       27,000       22,600
      Average risk capital(2)               18,700       16,500       13,650
      Risk-adjusted assets                 273,561      278,579      241,206
      Assets under management (AUM)        224,900      226,900      165,000
      Assets under administration (AUA)
                     - RBC                 594,900      623,300      607,200
                     - RBC Dexia IS(5)   2,131,400    2,585,000    2,922,000
    Common share information
      Shares outstanding (000s)
                     - average basic     1,366,868    1,337,753    1,273,862
                     - average diluted   1,379,191    1,353,588    1,286,595
                     - end of period     1,406,973    1,341,260    1,276,635
      Dividends declared per share     $      0.50  $      0.50  $      0.50
      Dividend yield(6)                       5.2%         4.4%         4.0%
      Common share price (RY on TSX)
       - close, end of period          $     30.41  $     46.84  $     50.65
      Market capitalization (TSX)           42,786       62,825       64,662
    Business information (number of)
      Employees (full-time equivalent)      73,416       73,323       64,905
      Bank branches                          1,747        1,741        1,544
      Automated teller machines              4,984        4,964        4,547
    -------------------------------------------------------------------------
    Period average US$ equivalent
     of C$1.00(7)                      $     0.815  $     0.901  $     1.002
    Period-end US$ equivalent
     of C$1.00                         $     0.815  $     0.830  $     0.996
    -------------------------------------------------------------------------


    ------------------------------------------------------------
                                                 Change
                                            January 31 2009 vs.
                                       -------------------------
    (C$ millions, except per share,     October 31   January 31
     number of and percentage amounts)        2008         2008
    ------------------------------------------------------------
      Total revenue                    $     1,872  $     1,294
      Provision for credit losses (PCL)        128          454
      Insurance policyholder benefits,
       claims and acquisition expense        1,162          460
      Non-interest expense                     633          502
      Net income before income taxes
       and non-controlling interest
       in subsidiaries                         (51)        (122)
    Net income                         $       (67) $      (192)
    ------------------------------------------------------------
    Segments - net income (loss)
      Canadian Banking                 $        20  $        23
      Wealth Management                         12          (53)
      Insurance                                 53           23
      International Banking                     62         (175)
      Capital Markets                         (359)         (79)
      Corporate Support                        145           69
    Net income                         $       (67) $      (192)
    ------------------------------------------------------------
    Selected information
      Earnings per share
       (EPS) - basic                   $     (0.08) $     (0.22)
      Earnings per share
       (EPS) - diluted                 $     (0.08) $     (0.22)
      Return on common equity (ROE)(1)    (230)bps     (770)bps
      Return on risk capital (RORC)(2)    (480)bps   (1,410)bps
      Net interest margin (NIM)(3)         (20)bps      210 bps
      Specific PCL as a percentage of
       average net loans and
       acceptances                         150 bps      360 bps
      Gross impaired loans (GIL) as
       a percentage of loans and
       acceptances                         230 bps      630 bps
    Capital ratios and multiples
      Tier 1 capital ratio                 160 bps       90 bps
      Total capital ratio                  150 bps      130 bps
      Assets-to-capital multiple            (2.6)X       (4.6)X
    Selected balance sheet and
     other information
      Total assets                     $   (10,683) $    80,415
      Securities                             1,048      (12,166)
      Retail loans(4)                       (2,467)      18,209
      Wholesale loans(4)                    (3,359)      20,511
      Deposits                             (15,725)      28,434
      Average common equity(1)               2,050        6,450
      Average risk capital(2)                2,200        5,050
      Risk-adjusted assets                  (5,018)      32,355
      Assets under management (AUM)         (2,000)      59,900
      Assets under administration (AUA)
                     - RBC                 (28,400)     (12,300)
                     - RBC Dexia IS(5)    (453,600)    (790,600)
    Common share information
      Shares outstanding (000s)
                     - average basic        29,115       93,006
                     - average diluted      25,603       92,596
                     - end of period        65,713      130,338
      Dividends declared per share     $         -  $         -
      Dividend yield(6)                     80 bps      120 bps
      Common share price (RY on TSX)
       - close, end of period          $    (16.43) $    (20.24)
      Market capitalization (TSX)          (20,039)     (21,876)
    Business information (number of)
      Employees (full-time equivalent)          93        8,511
      Bank branches                              6          203
      Automated teller machines                 20          437
    ------------------------------------------------------------
    Period average US$ equivalent
     of C$1.00(7)                      $     (0.09) $     (0.19)
    Period-end US$ equivalent
     of C$1.00                         $     (0.02) $     (0.18)
    ------------------------------------------------------------

    (1) Calculated using month-end balances for the period.
    (2) Calculated using methods intended to approximate the average of the
        daily balances for the period. For more information, refer to the
        Key performance and non-GAAP measures section of our Q1 2009 Report
        to Shareholders.
    (3) Calculated as Net interest income divided by Average assets. Average
        assets are calculated per note (2) above.
    (4) Retail and wholesale loans do not include allowance for loan losses.
    (5) AUA - RBC Dexia IS represents the total AUA of the joint venture, of
        which we have a 50% ownership interest, reported on a one-month lag.
    (6) Dividends per common share divided by the average of the high and
        low share prices in the relevant period.
    (7) Calculated using month-end spot rates for the period.
    


    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 securities legislation. We may make
forward-looking statements in this earnings release, in other filings with
Canadian regulators or the United States Securities and Exchange Commission
(SEC), in reports to shareholders and in other communications. Forward-looking
statements include, but are not limited to, statements relating to our
medium-term objectives, our strategic goals and priorities, and the economic
and business outlook for us, for each of our business segments and for the
Canadian, United States and international economies. The forward-looking
information contained in this earnings release is presented for the purpose of
assisting the holders of our securities and financial analysts in
understanding our financial position and results of operations as at and for
the periods ended on the dates presented and our strategic priorities and
objectives, and may not be appropriate for other purposes. Forward-looking
statements are typically identified by words such as "believe", "expect",
"forecast", "anticipate", "intend", "estimate", "goal", "plan" and "project"
and similar expressions of future or conditional verbs such as "will", "may",
"should", "could", or "would".
    By their very nature, forward-looking statements require us to make
assumptions and are subject to inherent risks and uncertainties, which give
rise to the possibility that our predictions, forecasts, projections,
expectations or conclusions will not prove to be accurate, that our
assumptions may not be correct and that our objectives, strategic goals and
priorities will not be achieved. We caution readers not to place undue
reliance on these statements as a number of important factors could cause our
actual results to differ materially from the expectations expressed in such
forward-looking statements. These factors - many of which are beyond our
control - include: credit, market, operational, liquidity and funding risks,
and other risks discussed in the Risk, capital and liquidity management
section of our Q1 2009 Report to Shareholders and in our 2008 Annual Report to
Shareholders; market environment impacts, including the impact of the
continuing volatility in the financial markets and lack of liquidity in credit
markets, and our ability to effectively manage our liquidity and our capital
ratios and implement effective risk management procedures; general business
and economic conditions in Canada, the United States and other countries in
which we conduct business; changes in accounting standards, policies and
estimates, including changes in our estimates of provisions, allowances and
valuations; the impact of the movement of the Canadian dollar relative to
other currencies, particularly the U.S. dollar, British pound and Euro; the
effects of changes in government fiscal, monetary and other policies; the
effects of competition in the markets in which we operate; the impact of
changes in laws and regulations, including tax laws; judicial or regulatory
judgments and legal proceedings; the accuracy and completeness of information
concerning our clients and counterparties; our ability to successfully execute
our strategies and to complete and integrate strategic acquisitions and joint
ventures successfully; changes to our credit ratings; and development and
integration of our distribution networks.
    We caution that the foregoing list of important factors is not exhaustive
and other factors could also adversely affect our results. When relying on our
forward-looking statements to make decisions with respect to us, investors and
others should carefully consider the foregoing factors and other uncertainties
and potential events. Except as required by law, we do not undertake to update
any forward-looking statement, whether written or oral, that may be made from
time to time by us or on our behalf.
    Additional information about these and other factors can be found in the
Risk, capital and liquidity management section of our Q1 2009 Report to
Shareholders, and in our 2008 Annual Report to Shareholders.
    Information contained in or otherwise accessible through the websites
mentioned does not form part of this document. All references in this document
to websites are inactive textual references and are for your information only.

    ACCESS TO QUARTERLY RESULTS MATERIALS

    Interested investors, the media and others may review this quarterly
earnings release, quarterly results slides, supplementary financial
information and our Q1 2009 Report to Shareholders on our website at
rbc.com/investorrelations.

    Quarterly conference call and webcast presentation

    Our quarterly conference call is scheduled for Thursday, February 26,
2009 at 10:00 a.m. (EST) and will feature a presentation about our first
quarter results by RBC executives.  It will be followed by a question and
answer period with analysts.
    Interested parties can access the call live on a listen-only basis at:
www.rbc.com/investorrelations/ir_events_presentations.html or by telephone
(416-340-2216 or 1-866-898-9626). Please call between 9:50 a.m. and 9:55 a.m.
(EST).
    Speakers' notes will be posted on our website shortly after the call. 
Also, a recording will be available on February 26 until May 30, 2009 at:
www.rbc.com/investorrelations/ir_quarterly.html or by telephone (416-695-5800
or 1-800-408-3053, passcode 3277550 followed by the number sign).

    ABOUT RBC

    Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate
under the master brand name RBC. We are Canada's largest bank as measured by
assets and market capitalization, one of North America's leading diversified
financial services companies and among the largest banks in the world, as
measured by market capitalization. We provide personal and commercial banking,
wealth management services, insurance, corporate and investment banking and
transaction processing services on a global basis. We employ more than 80,000
full- and part-time employees who serve more than 18 million personal,
business, public sector and institutional clients through offices in Canada,
the U.S. and 52 other countries. For more information, please visit rbc.com.

    
    Trademarks used in this release include the LION & GLOBE Symbol, ROYAL
    BANK OF CANADA and RBC which are trademarks of Royal Bank of Canada used
    by Royal Bank of Canada and/or by its subsidiaries under license. All
    other trademarks mentioned in this release, which are not the property
    of Royal Bank of Canada, are owned by their respective holders. RBC
    Dexia IS and affiliated Dexia companies are licensed users of the RBC
    trademark.
    





For further information:

For further information: Media Relations Contact: Katherine Gay, VP &
Head, Corporate Communications, katherine.gay@rbc.com, (416) 974-6286 (within
Toronto) or 1-888-880-2173 (toll-free outside Toronto); Investor Relations
Contacts: Marcia Moffat, VP & Head, Investor Relations, marcia.moffat@rbc.com,
(416) 955-7803; Bill Anderson, Director, Investor Relations,
william.anderson@rbc.com, (416) 955-7804; Josie Merenda, Director, Investor
Relations, josie.merenda@rbc.om, (416) 955-7809


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