Royal Bank of Canada (NYSE:RY) Q4 2024 Earnings Conference Call December 4, 2024 8:00 AM ET Company Participants Asim Imran - Investor Relations Dave McKay - President & Chief Executive Officer Katherine Gibson - Chief Financial Officer Graeme Hepworth - Chief Risk Officer Erica Nielsen - Group Head, Personal Banking Sean Amato-Gauci - Group Head, Commercial Banking Derek Neldner - Group Head, Capital Markets Conference Call Participants Ebrahim Poonawala - Bank of America John Aiken - Jefferies Doug Young ...

Royal Bank of Canada Fourth Quarter Results December 4, 2024 All amounts are in Canadian dollars unless otherwise indicated and are based on financial statements prepared 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) and comparative amounts have been restated from those previously presented. Totals may not add and percentage changes may not reflect actual changes due to ...

Financial Performance - Total revenue for 2024 reached CAD 57,344 million, an increase of 11.4% from CAD 51,464 million in 2023 [114]. - Net income for 2024 was CAD 16,240 million, reflecting an 11.1% increase from CAD 14,612 million in 2023 [114]. - Adjusted net income for 2024 was CAD 17,430 million, up 10.1% from CAD 15,829 million in 2023 [114]. - Total revenue for the year ended October 31, 2024, was $57.344 billion, an increase from $51.464 billion in 2023, representing a growth of approximately 11% [200]. - Net income available to common shareholders for 2024 was $15.908 billion, compared to $14.369 billion in 2023, reflecting a year-over-year increase of about 10.7% [200]. - The consolidated Return on Equity (ROE) for 2024 was 14.4%, slightly up from 14.3% in 2023 [200]. - The company reported a specified item related to the HSBC Canada transaction and integration costs amounting to $960 million in 2024 [200]. - The efficiency ratio improved to 59.7%, a decrease of 20 bps from the previous year, while the adjusted efficiency ratio decreased to 57.1% [168]. Assets and Capital - Total assets increased by 8.2% to CAD 2,171,582 million from CAD 2,006,531 million in 2023 [114]. - The Common Equity Tier 1 (CET1) ratio decreased to 13.2% from 14.5% in 2023, a decline of 130 basis points [114]. - The liquidity coverage ratio (LCR) was reported at 128%, down from 131% in 2023 [114]. - The average total assets increased to $165.4 billion from $127.2 billion [254]. - The average total earning assets rose to $149.4 billion from $108.8 billion [254]. - The company aims to maintain a strong capital ratio (CET1) of 13.4% [141]. Wealth Management - Wealth Management segment saw a significant increase in net income of 27.1%, reaching CAD 3,422 million compared to CAD 2,693 million in 2023 [114]. - Wealth Management reported total revenue of $18.161 billion for 2024, with adjusted revenue of $18.403 billion after accounting for specified items [205]. - The U.S. Wealth Management segment generated CAD 8,906 million in revenue, an increase of 11.8% from CAD 7,969 million in 2023 [276]. - Canadian Wealth Management revenue increased by $717 million or 14%, largely due to higher fee-based client assets and transactional revenue [296]. - Assets Under Administration (AUA) increased to CAD 4,685,900 million in 2024, a rise of 13.9% from CAD 4,110,200 million in 2023 [283]. - The company reported a total AUA balance of $4,685,900 million at the end of the year, compared to $4,110,200 million in the previous year [288]. Risk Factors - The company emphasizes the importance of considering various risk factors that could cause actual results to differ materially from expectations [111]. - The risk factors include credit, market, liquidity, operational, and compliance risks, among others [111]. - The company provides additional information about risk factors in the risk sections of the 2024 Annual Report, which may be updated by subsequent quarterly reports [113]. Economic Outlook - Canadian GDP is expected to increase by 1.0% in calendar 2024, following a 1.5% increase in calendar 2023 [127]. - U.S. GDP growth is projected to be 2.8% in calendar 2024, after a 2.9% increase in calendar 2023 [128]. - Euro area GDP is expected to rise by 0.7% in calendar 2024, following a 0.5% increase in calendar 2023 [129]. - Economic growth in the Caribbean is expected to moderate, with risks from climate vulnerability and geopolitical conflicts impacting growth prospects [217]. - In the U.S., GDP growth resilience is anticipated to limit downward pressure on labor markets and inflation, leading to fewer interest rate reductions compared to Canada [218]. Transaction and Integration - The company completed the HSBC Canada transaction on March 28, 2024, consolidating its results into various segments [114]. - The acquisition of HSBC Bank Canada was completed for a total consideration of $15.5 billion, enhancing the company's position in commercial banking [133][134]. - The company successfully transitioned HSBC Canada clients onto the RBC Direct Investing platform, enhancing its digital capabilities [271]. Shareholder Returns - The company's total shareholder return (TSR) for the past three years was 14%, outperforming the peer group average of 11% [143]. - The total shareholder return was 57.8%, a significant increase compared to the previous year [144]. - The common share price at the end of the period was $168.39, reflecting a 52.0% increase from the previous year [144].

Core Insights - Royal Bank has consistently surpassed earnings estimates, averaging a beat of 8.30% over the last two quarters [1][2] - The most recent earnings report showed an actual earnings per share (EPS) of $2.38, exceeding the expected $2.15 by 10.70% [2] - The previous quarter also saw a positive surprise, with an actual EPS of $2.15 against an estimate of $2.03, resulting in a 5.91% surprise [2] Earnings Estimates and Predictions - Recent estimates for Royal Bank have been revised upwards, indicating a positive outlook for future earnings [3] - The Zacks Earnings ESP for Royal Bank is currently +0.09%, suggesting analysts are optimistic about the company's earnings prospects [6] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) indicates a high probability of another earnings beat [6][4] Earnings ESP Metric - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of beating consensus estimates [4] - The Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [5] - A negative Earnings ESP does not necessarily indicate an earnings miss, as many companies can still beat consensus estimates [7] Upcoming Earnings Report - Royal Bank's next earnings report is expected to be released on December 4, 2024 [6]

Core Viewpoint - Royal Bank (RY) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Recent Performance and Outlook - For the fiscal year ending October 2024, Royal Bank is expected to earn $8.91 per share, reflecting a 5.7% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Royal Bank has risen by 5.2%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Royal Bank to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Insights - Royal Bank of Canada (RBC) is focused on efficient capital allocation, maintaining a strong balance sheet, and achieving cost synergies, particularly following the HSBC acquisition [3][4][7] Capital Allocation and Financial Performance - RBC's Common Equity Tier 1 (CET1) ratio stands at 12.8%, above target levels, following the HSBC acquisition [4] - The bank generated internal capital of 70 basis points in Q3, with dividends paid out resulting in a net capital generation of 38 basis points [20] - RBC is prioritizing organic growth with high returns, followed by dividends and share buybacks, while considering smaller acquisitions in the current regulatory environment [21][22] HSBC Acquisition Insights - The HSBC acquisition has performed better than expected, with lower client attrition than forecasted and a clean credit quality book [8][9] - RBC has already realized $120 million of the anticipated $740 million in cost synergies from the acquisition, with a strong focus on integrating technology and operations [7][14] - Revenue synergies are expected from cross-selling RBC's products to HSBC's affluent client base, with $100 million in assets under management already connected to wealth management services [17] Canadian Banking Performance - RBC's Canadian banking segment shows strong loan growth, with leading market shares in mortgages, personal loans, and commercial banking [35][37] - The bank maintains a loan-to-deposit ratio of 100%, supported by a solid core deposit franchise [36] - While mortgage growth is slowing due to competition and interest rates, RBC is focused on profitability rather than chasing market share aggressively [39][40] Wealth Management Strategy - RBC's wealth management segment is a significant driver of business, with strong positions in Canada and the U.S. [66][67] - The bank is exploring opportunities for small acquisitions in the fragmented U.K. wealth management market [70] Credit Quality and Consumer Resilience - The Canadian consumer remains resilient, with high liquidity levels and prudent spending behaviors observed [48][50] - RBC has seen a slight uptick in delinquency rates in unsecured lending but maintains a high-quality loan book with strong credit metrics [51][52] Interest Rate Environment and NII Management - RBC is managing its net interest income (NII) through hedging strategies, with a focus on maintaining stability despite declining interest rates [56][58] - The bank expects that lower interest rates will eventually stimulate demand, with a forecasted positive impact on the economy over the next 18 to 24 months [54][55]

Royal Bank of Canada (NYSE:RY) Barclays 22nd Annual Global Financial Services Conference September 11, 2024 11:15 AM ET Company Participants Katherine Gibson - CFO Conference Call Participants Brian Morton - Barclays Brian Morton All right. Thank you, everyone. We're in the homestretch here. This is the final presentation for today. With us, we have Royal Bank of Canada. Joining us is Katherine Gibson, Chief Financial Officer. Welcome, Katherine. Katherine Gibson Thank you. Question-and-Answer Session Q - B ...

Royal Bank of Canada (NYSE:RY) Annual Scotiabank Financials Summit September 4, 2024 9:35 AM ET Company Participants Dave McKay - President and Chief Executive Officer Conference Call Participants Meny Grauman - Scotiabank Meny Grauman Welcome, Dave. Good to see you. Dave McKay You got that a bit close. Good morning. Meny Grauman Hope you had a good summer? Dave McKay Year goes by quickly. Meny Grauman That's right. We're back here. I wanted to start off by getting you to give me a pep talk about Canada. Da ...

Royal Bank of Canada (NYSE:RY) Annual Scotiabank Financials Summit September 4, 2024 9:35 AM ET Company Participants Dave McKay - President and Chief Executive Officer Conference Call Participants Meny Grauman - Scotiabank Meny Grauman Welcome, Dave. Good to see you. Dave McKay You got that a bit close. Good morning. Meny Grauman Hope you had a good summer? Dave McKay Year goes by quickly. Meny Grauman That's right. We're back here. I wanted to start off by getting you to give me a pep talk about Canada. Da ...

Shares of Royal Bank of Canada (RY) gained 2.4% since the release of its third-quarter fiscal 2024 (ended July 31) results. Adjusted net income of C$4.73 billion ($3.45 billion) grew 18% from the prior-year quarter. Results reflected the impacts of the specified item relating to the HSBC Canada deal and integration costs, and the amortization of acquisition-related intangibles. RY's quarterly results were aided by higher revenues, and growth in loans and deposit balances. However, an increase in expenses an ...