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 2016 Report to Shareholders and
Supplementary Financial Information are available on our website at rbc.com/investorrelations.
TORONTO, Feb. 24, 2016 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE)
today reported net income of $2,447 million for the first quarter ended
January 31, 2016, flat from the prior year. Our results reflect higher
earnings in Wealth Management which benefited from the inclusion of our
acquisition of City National Bank (City National) which closed on
November 2, 2015 and contributed $53 million to earnings; $107 million(1) excluding amortization of intangibles of $31 million after-tax and $23
million after-tax of acquisition and integration costs. Results also
reflect record earnings in Personal & Commercial Banking and higher
earnings in Investor & Treasury Services offset by lower results in
Insurance and Capital Markets. Our results include favourable foreign
exchange translation. Our provision for credit loss (PCL) ratio of
0.31% increased 7 bps from the prior year, resulting from the low oil
price environment. In addition, today we announced an increase to our
quarterly dividend of $0.02 or 3% to $0.81 per share.
Compared to last quarter, net income decreased $146 million or 6%,
mainly reflecting the prior quarter net favourable tax adjustments
recorded in Corporate Support. Higher earnings in Investor & Treasury
Services, Wealth Management, Personal & Commercial Banking and Capital
Markets were also partially offset by lower earnings in Insurance.
We maintained a strong Common Equity Tier 1 (CET1) ratio of 9.9%, down
70 bps from the prior quarter, reflecting the impact from the closing
of the City National acquisition.
"Within the context of a challenging macro environment, we delivered
solid earnings of $2.4 billion this quarter, and I'm pleased to
announce a 3% increase to our quarterly dividend," said Dave McKay, RBC
President and CEO. "In today's environment, I'm confident that RBC's
diversified business model and disciplined risk and cost management
approach position us well to continue to support our clients and
deliver long-term value to our shareholders."
Q1 2016 compared to Q1 2015
Net income of $2,447 million (flat from $2,456 million)
Diluted earnings per share (EPS) of $1.58 (down $0.07 from $1.65)
Return on common equity (ROE)(2) of 15.3% (down 400 bps from 19.3%)
Basel III CET1 ratio of 9.9% (up 30 bps from 9.6%)
Q1 2016 compared to Q4 2015
Net income of $2,447 million (down 6% from $2,593 million)
Diluted EPS of $1.58 (down $0.16 from $1.74)
ROE of 15.3% (down 260 bps from 17.9%)
Basel III CET1 ratio of 9.9% (down 70 bps from 10.6%)
1 City National results excluding amortization of intangibles and
acquisition and integration costs is a non-GAAP measure that provides
readers with a better understanding of management's perspective on our
2 This measure does not have a standardized meaning under GAAP.For
further information, refer to the Key performance and non-GAAP measures
section of our Q1 2016 Report to Shareholders.
Q1 2016 Business Segment Performance
Personal & Commercial Banking net income was a record $1,290 million, up $35 million or 3% compared
to last year. Canadian Banking net income was $1,231 million, up $11
million or 1% compared to last year, driven by solid volume growth of
6% and higher fee-based revenue, mainly offset by lower spreads.
Results also reflect higher costs to support business growth and higher
PCL. Caribbean & U.S. Banking net income was $59 million, up $24
million from last year, largely reflecting the favourable impact of
foreign exchange translation and cost management initiatives.
Compared to last quarter, Personal & Commercial Banking net income was
up $20 million or 2%. Canadian Banking net income was relatively flat
compared to last quarter as solid volume growth, higher fee-based
revenue and lower marketing costs were largely offset by higher PCL and
lower spreads. Caribbean & U.S. Banking net income was up $16 million,
largely reflecting higher fee-based revenue and the favourable impact
of foreign exchange translation.
Wealth Management net income of $303 million was up $73 million or 32% from last year,
largely reflecting the inclusion of our acquisition of City National,
which contributed $53 million to net income, after amortization of
intangibles and acquisition and integration costs as noted above.
Results also reflect lower restructuring costs of $19 million ($18
million after-tax) related to our International Wealth Management
business, and higher earnings from growth in fee-based client assets,
mainly in Canadian Wealth Management and Global Asset Management. These
factors were partially offset by lower semi-annual performance fees,
and lower earnings due to a decrease in transaction volumes reflecting
unfavourable market conditions.
Compared to last quarter, net income was up $48 million or 19%, mainly
due to the inclusion of our acquisition of City National as noted
Insurance net income of $131 million decreased $54 million or 29% from last year,
reflecting higher claim costs, mainly in our life retrocession
business, and lower earnings from a new U.K. annuity contract as
compared to two new contracts last year.
Compared to last quarter, net income was down $94 million or 42%, as the
prior quarter included favourable actuarial adjustments reflecting
management actions and assumption changes. Higher claims costs also
contributed to the decrease.
Investor & Treasury Services net income of $143 million was relatively flat from last year, primarily
due to higher funding and liquidity results, the positive impact of
foreign exchange translation, and increased earnings from growth in
client deposits. These factors were mostly offset by higher technology
initiative spend and lower custodial fees.
Compared to last quarter, net income was up $55 million or 63%,
primarily due to higher funding and liquidity results reflecting
stabilizing credit spreads.
Capital Markets net income of $570 million decreased $24 million or 4% from last year,
primarily due to lower results in Global Markets and Corporate and
Investment Banking as compared to strong levels last year, and higher
PCL. These factors were partially offset by lower variable
compensation, the positive impact of foreign exchange translation and a
lower effective tax rate.
Compared to last quarter, net income was up $15 million or 3%, driven by
higher trading results reflecting increased client activity and
moderately improved market conditions, lower litigation provisions and
related legal costs, and higher results in Corporate and Investment
Banking. These factors were partially offset by higher PCL. In
addition, our results in the prior quarter included favourable income
Corporate Support net income was $10 million, largely reflecting asset/liability
management activities. Net income last year was $50 million, largely
reflecting a gain on sale of a real estate asset and asset/liability
management activities. Net income last quarter was $200 million, mainly
reflecting net favourable tax adjustments and asset/liability
management activities, partially offset by transaction costs related to
our acquisition of City National.
Capital - As at January 31, 2016, Basel III CET1 ratio was 9.9%, down 70 bps
compared to last quarter, largely reflecting the acquisition of City
National which closed on November 2, 2015, partially offset by internal
Credit Quality - Total PCL of $410 million increased $140 million or 52% from a year
ago, largely reflecting higher PCL in Capital Markets mainly due to
higher provisions in the oil & gas and utilities sectors, and higher
provisions in Personal & Commercial Banking largely in our personal
lending and credit card portfolios. Our PCL ratio was 0.31%, up 7 bps
compared to last year and up 8 bps compared to last quarter.
Total gross impaired loans (GIL) of $3,120 million increased $987
million or 46% from last year, of which $576 million is related to
Federal Deposit Insurance Corporation covered loans we acquired through
our City National transaction. The increase in GIL was also partially
due to the impact of foreign exchange translation and an increase in
impaired oil & gas loans. Our GIL ratio was 0.59%, up 13 bps compared
to last year and up 12 bps compared to last quarter.
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 filings with
Canadian regulators or the U.S. 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 financial performance objectives, vision and strategic
goals, and include our President and Chief Executive Officer's
statements. 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, our financial performance objectives, vision and
strategic goals, and may not be appropriate for other purposes.
Forward-looking statements are typically identified by words such as
"believe", "expect", "foresee", "forecast", "anticipate", "intend",
"estimate", "goal", "plan" and "project" and similar expressions of
future or conditional verbs such as "will", "may", "should", "could" or
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 financial
performance objectives, vision and strategic goals will not be
achieved. We caution readers not to place undue reliance on these
statements as a number of risk 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 and the effects of which can be difficult to predict -
include: credit, market, liquidity and funding, insurance, operational,
regulatory compliance, strategic, reputation, legal and regulatory
environment, competitive and systematic risks and other risks discussed
in the Risk management and Overview of other risks sections of our 2015
Annual Report and in the Risk management section of our Q1 2016 Report
to Shareholders; weak oil and gas prices; the high levels of Canadian
household debt; exposure to more volatile sectors, such as lending
related to commercial real estate and leveraged financing;
cybersecurity; anti-money laundering; the business and economic
conditions in Canada, the U.S. and certain other countries in which we
operate; the effects of changes in government fiscal, monetary and
other policies; tax risk and transparency; and environmental risk.
We caution that the foregoing list of risk 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. Material economic
assumptions underlying the forward looking-statements contained in this
earnings release are set out in the Overview and outlook section and
for each business segment under the heading Outlook and priorities in
our 2015 Annual Report, as updated by the Overview and outlook section
in our Q1 2016 Report to Shareholders. 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 management and Overview of other risks sections of our 2015 Annual
Report to Shareholders and in the Risk management section of our Q1
2016 Report to Shareholders.
Information contained in or otherwise accessible through the websites
mentioned does not form part of this earnings release. All references
in this earnings release 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 2016 Report to Shareholders on our website at rbc.com/investorrelations.
Quarterly conference call and webcast presentation
Our quarterly conference call is scheduled for Wednesday February 24th, 2016 at 8:00 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 (416-340-2217 or 1-866-696-5910, passcode 6770410#).
Please call between 7:50 a.m. and 7:55 a.m. (EST).
Management's comments on results will be posted on our website shortly
following the call. Also, a recording will be available by 5:00 p.m.
(EST) on February 24th, 2016 until May 25th, 2016 at: www.rbc.com/investorrelations/ir_quarterly.html or by telephone (905-694-9451 or 1-800-408-3053, passcode 9484611#).
Royal Bank of Canada is Canada's largest bank, and one of the largest
banks in the world, based on market capitalization. We are one of North
America's leading diversified financial services companies, and provide
personal and commercial banking, wealth management, insurance, investor
services and capital markets products and services on a global
basis. We have over 80,000 full- and part-time employees who serve more
than 16 million personal, business, public sector and institutional
clients through offices in Canada, the U.S. and 37 other countries. For
more information, please visit rbc.com. RBC helps communities prosper,
supporting a broad range of community initiatives through donations,
community investments, sponsorships and employee volunteer activities.
In 2015, we contributed more than $100 million to causes around the
Trademarks used in this earnings 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 earnings release, which
are not the property of Royal Bank of Canada, are owned by their
For further information:
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