Net impact on fourth quarter earnings expected to be modest
TORONTO, Nov. 13 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE) today
announced it expects to record a gain in its Canadian Banking segment in the
fourth quarter ended October 31, 2007 of approximately $325 million pre-tax
($270 million after-tax). This gain relates to the Visa Inc. restructuring and
the exchange of RBC's membership interest in Visa Canada Association for
shares of Visa Inc., as previously announced on October 3, 2007. The amount of
the gain is based on an independent valuation of RBC's shares in Visa Inc. In
addition, RBC expects to record a charge of approximately $120 million pre-tax
($80 million after-tax) relating to an increase in our credit card customer
loyalty reward program liability. This reflects higher redemption rate
assumptions, consistent with our strategy of encouraging clients to more fully
use the Visa points they accumulate by providing them with a broader range of
RBC also expects to record a charge in its Capital Markets segment in the
fourth quarter associated with the valuation of subprime collateralized debt
obligations (CDOs) and subprime residential mortgage-backed securities (RMBS)
of approximately $360 million pre-tax ($160 million after-tax and reflecting
RBC expects its fourth quarter earnings to be only modestly affected by
these items due to largely offsetting impacts.
RBC is in the process of preparing its fourth quarter results and the
information provided above is based on current estimates and is subject to
change. RBC will release its fourth quarter and fiscal 2007 results on
November 30, 2007.
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 harbor"
provisions of the United States Private Securities Litigation Reform Act of
1995 and any applicable Canadian securities legislation. These forward-looking
statements include, among others, statements with respect to our fourth
quarter gain from the previously announced completion of the Visa Inc.
restructuring, and our charges relating to the valuation of CDOs and RMBS and
the increase in RBC's credit card reward program liability. The words
"anticipate," "estimate," "expect," "intend," and words and expressions of
similar import are intended to identify forward-looking statements. By their
very nature, forward-looking statements involve numerous factors and
assumptions, and are subject to inherent risks and uncertainties, both general
and specific, which give rise to the possibility that predictions, forecasts,
projections and other forward looking statements 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 include general business and economic conditions in Canada,
the United States, and other countries in which we conduct business, including
the impact from continuing volatility in the U.S. subprime residential
mortgage market and lack of liquidity in the financial markets; the impact of
the movement of the Canadian dollar relative to other currencies, particularly
the U.S. dollar and British pound; the effects of changes in government
monetary and other policies; the impact of changes in laws and regulations
including tax laws and changes in accounting standards, policies and
estimates, including changes in our estimates of provisions and allowances.
We caution that the foregoing list of important factors that may affect
future results is not exhaustive. 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 our
Third Quarter 2007 Report to Shareholders and in our 2006 Annual Report.
For further information:
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