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Royal Bank Of Canada (RY)

Participants
David McKay President and CEO
Nadine Ahn Head of Investor Relations
Rod Bolger Chief Financial Officer
Graeme Hepworth Chief Risk Officer
Neil McLaughlin Group Head Personal and Commercial Banking
Doug Guzman Group Head Wealth Management Insurance in INTS
Derek Neldner Group Head, Capital Markets
Ebrahim Poonawala Bank of America
Meny Grauman Scotiabank
Scott Chan Canaccord Genuity
Sohrab Movahedi BMO Capital Markets
Gabriel Dechaine National Bank Financial
Doug Young Desjardins Capital Markets
Lemar Persaud Cormark Securities
Mario Mendonca TD Securities
Ebrahim Poonawala Bank of America
Nigel D'Souza Veritas Investment Research
Call transcript
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Operator

Please standby, your meeting is about to begin. Good morning, ladies and gentlemen. Welcome to the RBC's Conference Call for the Third Quarter 2021 financial results. Please be advised that this call is being recorded. I would like to turn the meeting over to Nadine Ahn, Head of Investor Relations. Ms. ahead, go Please Ahn.

Nadine Ahn

good And morning, you. everyone. Thank

your will Officer, Derek Group Rod today Chief Commercial Officer. today Banking, Markets. be Personal Group Head, Group and Insurance David Executive Chief Risk in for us joining Wealth and Doug President Also Neil Bolger, and Neldner, Hepworth, McLaughlin, Head McKay, Graeme Speaking questions, Head Chief Management Guzman, Officer, Financial and INTS, Capital

that risks assumptions and comments our adjusted Actual With performance. basis everyone ask it may forward-looking and a X, have I'll be materially. useful considers ask Slide questions involve inherent bank assesses to differ to turn remind on noted could Dave. To a limit its As then also performance and in listeners you uncertainties. assessing that, the over your re-queue. statements, give both underlying to results contain would chance business we on and which I and questions, reported that

David McKay

we $X.X and deepen good across activity to client morning, new Thanks, by in market-leading franchises. attract our as we earnings client billion, reported everyone. existing Nadine. strong part driven continued And Today, of relationships

banking offset fee-based markets strategy, Our volume This higher control, of record continued pressures client and revenue. revenue by partly investment performance assets, rates. our strong was expected growth, normalization and global reflects execution disciplined expense in low-interest from

risk uncertain TCL by speak remain our credit perform later. underwriting outlook formations these times, also will lows. resulting But in impaired quality, new We well-defined to release strong continued macroeconomic well-diversified significant reserves, improvements and in underpinned to cyclical and Graeme saw of which loans in appetite. at our portfolios GIL on and

leveraged well our growth. growth of demand points to XX to XX.X% our strength year-to-date. organic of quarter, XX net XX.X% platform. our growth global across support and and above client franchise CETX and We an Sheet to strong this to billion was Balance or XX.X%, Our generate increased This of peers. business basis ratio RWA ROE

as our to geopolitical of long-term year-over-year though some by offer the global are in by billion share. of in our underscored remain, we vaccine cognizant perspective $X.X majority Canada. view growth our value and we into paid even travel XXXX. cautious million sustainable create per growing continue rollout, which to for which continued common strength shareholders restrictions. to XX% near-term, on shareholders, based in dividends And new disruption, with but support restrictions inconsistent now and regulatory the of value We I clients environment, our will XX and macro variant, in global challenges rising growth supply risks, the in posed remain global We, near-term optimism see chain book

the as term we both the in momentum services that's spend are encouraged building and reopens based Delta credit moderate remains on in by rising economy in the it capital. the we'll threat cases, the variant. goods solid, by However, in on seeing believe and could population the assets card the we're vaccinated. investments and business manage and of of working trends of foundation We XX% Canadian progressing All buyers eligible even with the economy being through term near

at As revolve scale in to interest the rates, favorable leverage scenario, profitability are our rates, would I quarter, a embedded rising grow core well-positioned higher include last noted and significantly card we franchises, economic earnings in asset model to which a more geography, diversified strong With a hike, rate scale and to is service business with appetite. and particularly product channel, and growth, our business growth consistent growth, poised or without in cycles risk lending. generate by or credit

in in seen billion continue, $XX an than cross-sell market-leading This in And we've ability, with a premium $X people average assets added gains market at rate client, and exceptional growth our we data albeit from combined mortgage core including scale. mortgages success growth and to our earning In products. have lower this share comes significant Our we over over and expect a year-over-year, investments brand in Banking, quarter. geographic produced last strong billion our Canadian months. XX

companies card growth the loans succeed. are quarter-over-quarter. of mid-corporate-sized we seeing deposit $X of both long-term $X in in U.S., and advice be billion We our to to The supporting are particular already to including launch strategy shoots last added higher-yielding the green provide loan our and mortgages. proving Canadian the new two we've $XX continues strategy commercial business and in National, over other months. also City at new seeing billion grow And strength credit the recent In successful, years, of billion portfolios, up in booking is last where Balance over few across Sheet, over core exceptional a commitments side U.S. the our service over

City and National. Over personal in a further the Banking, we last a year, deposits $XX business $XX billion billion, added in at and deposits Canadian

growth total American invest have under billion last Asset year XX% over Furthermore, billion management last to increased fee-based for sales preference investments, XX client billion both strong time. first an a to in the added billion client And we has client Managing employees Management We're months., being in year-over-year year-over-year, will the of activity to benefiting technology, continuing XX% assets $XXX core to greater or mortgages, Canadian Global people our client We're also surpassing up that also XX% for U.S. banking the XXXX in And had AUA, assets ultra-high-net-worth in a markets. RBC verticals, Banking first and in or capture Management in North shortly. with healthcare, investment. year-over-year our partly in year-over-year, record the in strong $XX client presence and teams commercial $XX Canadian from billion National businesses strong over and such California wealth on levels. team capture billion $XXX were along growth. banking increasing in markets East AUA Wealth aerospace. private basis. expanded management generating of year-over-year which Our and sequentially $XX Management, net time. I crossing increased core City speak administration growing and Adding assets, assets, adding billion as Canadian assets investment over banking, coast, or Banking, over for XX XX% an in our share under added from equity $XXX Wealth Directors

to the business Several RBC our of chain. and participate to Another venture strategy increasingly launch of differentiated Insight One entrepreneurs gain journey these XX,XXX part to value small clients including commercial made year-to-date. element example businesses are aggregated capabilities client banking competitive them is building attract their go segment. a in beyond in to their that XX,XXX customers. is data RBC RBC has proprietary With ecosystems solutions. Owner online, insights more in our to RBC of business Edge, helped and leverage broader enable markets an relevant and enable Canadian can

make time RBC to payable management a building PayEdge platform investments clients money and secure continue helps and payments our We in solution with cash our business save enrich process. for digital account a with clients. capabilities for their

funds. help culture, products, have differentiator GICs financial to as foundation rewards both will our will And support model, to with the low-interest-rate inclusive provided RBC advice, our it clients partnerships, recently support through as partner our every increasingly the this rates along a their asset life sum Canadian up managing decisions, a us park Hub diversified verticals. partners across best belief robust to Hub for way continuum This on now RBC pay technology of capital create and even and for a XXX. of continue incentivizes to higher of Investing us. and Vantage franchises clients and highlighting morning strategies and existing near grow implementing recent our a to The The their increasingly of to We them where clients. attractive value bank. discipline, help provide premium work to value allows a will we their also Innovation to term. the related spoken for value number fee-based to To the margin consolidation Calgary ideas position Ampli relationships. business mutual access for backdrop. And relationships. addition we making with RBCx, And committed investment Banking payments become cost merchants to platform RBC to help for prosper. for macro client to past. sponsor to and entrepreneurs retail announced been our includes over which across that and in who credit we offset And launch further helping risk relationship for to shareholder such the as tech, to our a expanded activity strong achieve plan card client core science Ottawa. the revenue environment we consistently on make the clean-tech, clients delivering A I prevailing quality remain be also money continue budgeting of Rod. more us of further opportunities. and financial and our metrics, core The And and and shift to provide This capital, the and scale scale, more recent out in in capabilities, our our Direct and our allow positive about to pressure. ecosystem. anchor invest clients. further MyAdvisor, of sustainable investment we long to our signing attract We've with into And to lower-yielding Canadian-tech savings as Vantage and value savings differentiated management quarter, is zero-based reevaluate client costs the expanded and clients solutions communities I retail new accounts the done even proposition it we've existing an multiproduct is revenue DoorDash such Canada Financeit, advice judiciously offerings client based breadth slate banking it business RBC. putting enables the our fundamental Last lot metrics asset-generating methodology with a risk-adjusted and and InvestEase. in depth clients our as thrive of reciprocity, to and our for continues turn and the Also, the continued new will launched client with up, over growth,

Rod Bolger

strong capital and across markets offsetting moderation along Canadian trading investment revenue, banking industry. Wealth a as with the performance and activity and than year-over-year earnings share record up Starting Banking share, earnings per $X.XX of X, billion up ago. quarterly Slide on we $X pre-tax good were of per Thanks, reported everyone. Pre-provision, XX% XXX year from Dave, morning, X% a solid revenue Management, decreased with a non-U.S. in client-driven client more

and up Excluding the exchange a pre-tax XX% of pre-provision, results RBC's yet from strong highlight resilience business a impact of earnings foreign These were interest lower model. diversified the again ago. rates, year

XX.X% last Moving quarter. X, the points the model slide up benefit our CETX guided increase ratio multipliers in through of was sequentially, parameter SVaR XX including to updates, of net for basis

$X This dividends quarter segments. And lowering since capital. offset strong saw of across the credit client-driven of largest billion. $X.X a net basis was by This cumulative net of the our XX net strong to growth internal downgrades partially business further credit billion added of nearly pandemic points upgrades, start generation capital

Basel impact Going forward, client-driven give the continue Dave our on I of an given update the highlighted to opportunities to earlier. analysis to also the initial wanted upcoming grow of we RWA changes. expect organic

coming expect the in market a of implementation the XXXX. partly benefit reforms fundamental as of XXXX, review of the be the We to are impacts guidelines favorable to from offset adverse in the risk under book impact moderately net effect trading by the

on XX. interest was Moving to slide down income year-over-year. Net

last income NIM deposits lower loan-to-deposit largely pressures. mix. strong XX margin relative to at points net the asset offset although was impact lower with to X Banking and excess revenue, X% up of pricing, due trading Excluding NIM dilutive National each Canadian from than interest from being growth X% securities. was NIM largely changes short-term ratio And year down each to deployed least in and largely a to National up quarter, decreased business. more City importantly, year-over-year Banking into due low-yielding mix, interest pressures was in volume in basis client-driven last points due in more City income was Canadian basis net competitive as quarter, last mortgages, continued in business

income, modern interest year-over-year forward, to Going to we volume results as all net bank continue strong expect growth excluding margin than more offsets trading pressures. increase moderating

Turning to slide XX.

when and of Banking base both While rates. the the near to rates don't they increase nearly are we half benefit short-term well-positioned Canadian anticipate do rise, in City because X near has deposit to National term, partly

long-end XX rates, another Wealth basis million curve benefits in we by by from with income expect increase in increase this interest $XX scenario, unchanged and net our the Canadian short-term XX the revenue forward, the would the interest points increase Banking a Looking sweep U.S. would Management deposits. million of including

income, Turning revenue non-interest ROE change strong to slide value net fund streams. Higher was our largely by higher fair and mutual in management growth of XX. insurance driven investment

management by quarter service a fees. benefits This and revenue mix revenue syndication higher due Strong XX, partly expenses fees also reduced capital accumulation market-related wealth plan. markets compensation On advisory in Banking. underwriting, decline our wealth client service This controlled, and reflected activity by markets the saw U.S. global on Higher stronger offset a in in in revenue movements in markets. in higher compensation lower to was non-interest shift M&A largely only card credit offset well were revenue, on slide capital up loan revenue. boosted year-over-year, of X% charges variable and the Canadian

will invest higher and client start year and and growth, well FX, facility back to of declined was benefit to travel discretionary on were Dave budgeting begin people to costs and as implement as to technology costs and costs. We're costs. economies some continuing lows. marketing increase the acquisition share-based due year-over-year, our while from that and by of offset largely to variable and prior equipment noted, strategies. salary higher expenses execute technology This lower Excluding cleaning in open in higher we program up due and these continue as as expenses partly revenue we cognizant as And the zero-based impact X.X% could new up, costs, drive partly Non-compensation to to growth. compensation

on year. X% billion, largely lower Banking business average, Moving Non-interest next to year last Well-controlled Canadian due Banking $X.X up Canadian income. were earnings growth growth we very XX% higher slide strong this of last up growth. leverage underpinned due a Canadian and strong fund by fees up partly On Commercial reported AUA operating X% was volume-driven earnings guidance the economic mainly up performance historical to from leverage distribution year-over-year, XX% of to current beginning was interest segment up Banking Banking strong expenses pre-tax year-to-date. personal in our quarters net XX, X% with to revenue of over combined at on higher revenue X based PCL. remain above our X X% pre-provision, to drove operating expect from projections. on quarter revenue X% end X% or annual to over the mutual

and mutual asset both XX% growth reported Turning sales. were earnings million investment earnings wealth turn our net XX, strong higher management from slide to last double-digit strong underpinned management drove was Management fund record $XXX pre-tax franchises This markets XX%. in quarterly Pre-provision and of up a client across up Wealth in Robust by growth year. constructive revenue.

net in sales X% dollars Gam growth excluding added moderate up net the benefit net quarter U.S. mutual institutional strength to from AUM. which are $XX in in City money drove over to with Canadian quarter. fourth adding billion expected of flows billion which market into long-term continued $X nearly funds, volumes sales, is strong the PPP X% interest to retail attracted income addition, National in in loans, In the RBC year-over-year

into with balance the and retail equity recent quarters, majority flows As of went mandates.

the offset a adjustments. realized contracts, favorable year Turning costs, to ago. primarily by net factors were of $XXX impact impact the of of the and increased XX, lower due claims the to X% impact These investment of partially gains reinsurance slide new actuarial insurance, longevity million income from year-ago,

XX% challenged Turning net last lower slide revenue negatively Services & margin levels revenue. deposit Investor drive an even million, increased income to liquidity Treasury of and last reported up $XX XX, from Funding to year. client more quarter compression rates continue interest year. And deposit impacting low from

gains, earnings loan investment in reported levels, M&A marks fee straight of loan year following Strong miss tightening Capital loan products also investment down XX. XX% well trading pre-provision year-over-year last row. market XX% elevated also which a the higher due and and billion slide a last impact elevated were banking lower spreads, financing were as $X to liquidity by mark-to-mark FIC revenue. were year markets. by syndication our a for Xth record banking results earnings underpinned continue dollars of benefited volatility. balances advisory billion over volatility. Corporate credit down flow down from pre-tax spread last quarter revenue secured and drove reported underwriting repo have Turning business. in markets business. down to quarter to from year-over-year Macro over lower from third of market normalized Global Equities lower fine the client market our markets robust activity. robust deal from year fees pools. recoveries recent Lower as activity were leveraged Recall last of levels in results and industry year, as spread driven and included XX% for elevated

momentum that, while across above remain accelerate I'll forward, Going We summary, with experienced to but see our solid and over solid, normalize Graeme. management. our of the issuance pipeline fiscal we peaks we debt also growth is mandates, expense expected in it first activity but anticipated to continue will origination M&A of well-positioned exhibit turn equity from a lower on half focused activity pre-pandemic peaks, recent In core levels. to continue remaining than trading and advisory year. trajectory strong the to we are franchises remain And

Graeme Hepworth

compared portfolios. improvements X.X macroeconomic of and million billion release reflects includes Canadian as and Thank credit release the our markets Starting performing both the credit during loans the last on lending primarily was capital XX, in reserves everyone. down well on personal and morning, good of of slide in for $XXX The portfolios This million loans quarter. outlook, as XXX you, to cards Banking and quarter. losses Rod, a allowance our quality

We peak X.XX% of acceptances X.XX% gold have up now released and in of reserve of pandemic-related XX% loans last with ACL its about our down from QX of year.

remains Our that both the the uncertainties ongoing government levels, businesses. level benefited and of with and conclusion COVID-XX the the variant, above well significant consumers support pre-pandemic has Delta of associated given allowances

quarter. points gross and XXX slide to X basis X.X were due are new Canadian programs, low Muted support all and as XX, the in active markets, at million Banking during our loan formations businesses, noted macroeconomic equity down across Impaired earlier. benefit million major the On government's X our access to Turning continued clients XXX loans from billion part new markets providing formations strong of in quarter. or ongoing improving and environment. debt capital this balances to impaired of decreased year to capital were

was Turning X of last XX, each our was in from lower or last points decreases trended XXX portfolio. of retail quarter, X slide down has with million XXX impaired million, to points the X mortgage portfolio, of quarter. across Banking loans PCL Canadian of all residential basis XX the on with PCL In exception basis from down quarter million and last products

is delinquency Canadian X was low of at quarter-over-quarter million quarter. rates, a markets, PCL in positive capital last lowest and portfolio, of PCL the net sustained flat gas credit and related, sectors, net commercial than real The down XX years. recovery second net the reversals estate offset was In for the and in million strong in PCL by quarter. more its our Banking credit exposures. sector. the provision Our level migration, had transportation The and X was list of portfolio with quality to we million, XX consecutive the watch due reductions from and commercial partially oil in a recovery In remains

employees on performance starting the of to real restrictions base, like slide continue With commercial companies reflection of and on our on I'd be diversification estate and portfolio credit strong practices. provide of the a XX. to easing portfolios, premises, prudent Our to quality our underwriting to an update client our return our government

Our segment, business and by portfolio type. is well property diversified geography,

impacted quarters, been challenged has and by most which prior COVID-XX portfolio in restrictions. segment retail collection foot have has malls noted the of Rent this I been closures traffic. enclosed for As faced most reduced

well-structured the the to However, malls limited our pandemic. and closed into were is loans heading exposure

portfolio, in As office of seen have not occupancy changes rent we for the collection rates. segment material this or

outlook this our more physical to of requirements will However, need office capabilities when balance where space sits, the the of uncertain need majority portfolio from not impacted with the have by COVID-XX. a companies for for materially remains and been work Remaining office. the segment in exposure distancing per as employee segments

carefully office seeing our and and monitor continue the exposure are that positive to with To are to managing the the segments. in portfolio economy we're We trends portfolio conclude, the credit we retail pleased recovers. as

vaccine progress which seen contributed easing strong pandemic-related performance quarter. to this have credit continued We significant government on restrictions -- and the distribution, has

into do, however, the expected performing pandemic an Delta And due has above uncertainty in impairments COVID-XX on increase cases While credit average. for translating this the elevated loans will PCL in in quarter, pace We uncertainty a large of trending the release delinquencies XXXX. believe recovery. variant. declined, to we This result of loans timing and impact long-term unimpaired rise a could XXXX in our reserves economic remain does adequate remain and of provision

down the to we our remain lines that quarter, we Operator, long-term total balance nonperforming last in noted I below the let's such that XXXX, as for expect our open will draw stages across And to all of loans built able with be Q&A. PCL on However, remaining averages.

Operator

Thank you.

We the will telephone questions now from take lines.

using speakerphone, making handset have your a question you your a If selection. before and [Indiscernible] please

a brief America. question, wish a Bank go question from you from Instructions] patience. the your If Ebrahim There And the register. [Operator will to for ahead. cancel to if If pause participants first you for you Instructions] this Please at you Poonawala have a Thank of question, time have be question. is [Operator

Ebrahim Poonawala

maybe, was we could market. Dave, I housing view if morning. Good just wondering your the around

being ban on it, about a election issue it's buyers obviously think promised. with you foreign the become As big

the how being policy of business especially you affordable, given appropriate just you And today? see see terms metro the your very to in housing market housing responses strong, through markets? us of mortgage do the kind coming how to make talk Just in

David McKay

question. a a comments. few that and who close to very ask the few Thanks I'll for I'll comments, to is issue, make say Neil, also

of look we basis. the housing industry on the in at So monthly structural Canada elements a

track Those lot to changes, supply-demand stats persist from obviously preference supply stimulated imbalances. we rates, shorter and marketplaces fill we of continue where quickly. about; supply a have as that have talked on inability you of demand lack highly to the a We general all low consumer things and I talked about, gap

obviously, employees, part we And talent major increases on are the our to certainly of this. country to operate. areas, and and and So attract cost worry as of our where an we the the cities to ability in the metropolitan effects the price employer about housing

to reasons talent created of we marketplaces. why across Calgary country hub base technology diversify our the the is in the One employee for and access different

the policies gone to position. insured. is flows Therefore, Still, sure about confident There's X/X stress well cash those of credit is equity and have good want that in employers, We our our your our It's of diversify and therefore, our make and the a it operate tests And to to adjudicated. on we're test, all rising stress into as to Calgary changing areas. we're the the impact the has way operating, of the make we of moves you saw in to cost housing So an ability cost worry to. don't quality adjudication the solid. question, starting book.

more do And worry, I less point long-term putting more cash is to Ebrahim, this stock, macroeconomic drive available to issue. that So is economy. where is the flow a the consumers are housing your into the

into think that policymakers as I are partly drag housing. cash long-term from much flow going economic worried, about all well So servicing

lead life elements and an the of try to of a are cost so economic that keep things happiness Canadians initiatives that we We're I'll perspective. I trying perspective, perspective, to pass the balance, balance about of and from growth living and everything prosperity country from the policy policy with in tries to important Canadians, look us Canadians. the needs that those Neil. attractiveness of all for and So keep think of to from balance think those at all policy to in And that it it's that, quality

Neil McLaughlin

Thanks, segments think and on Ebrahim, would only other test underwriting there the focus I and for our the that I book, we stress industry, mortgage the transactions business, I I The mean, in if positive I business, Dave. more built-in has granularity add different is is, think thing in think a that has there. lot the a resiliency the confidence been BXX on

imbalance, I of on think build maybe points in the just other couple a of to Dave's. terms supply-demand

start see recently to focus. think that more I started does lot more need get the I you've more side supply say airtime. a to would that's something

a driving immigration of from big We household but what's have policy, a portion very it. think very a that those -- I see -- new strong we formation comes newcomers, so

more nature, could to We actually get I things more macro increase, cooperative. developers market. some be the the things, Canada's set the policies of of say help them would more A of feedback lot from maybe municipal of a largest are in that bringing that some could supply shorter-term. that are Beyond some of

a be is but done, may could more about. tactical I think the we that something to that supply side talking be be So thing need

Ebrahim Poonawala

Got it. you. Thank Helpful color.

Operator

Thank Meny you. The next Grauman ahead. from question Scotiabank. is from go Please

Meny Grauman

Hi. touched ability call I the point Royal's if opening in you finer Good recovery than And given your the to we June? back on things case and bullish a different macro put Delta it, any change evolved, it for variant, when morning. advantage were but to I'm to think your that's outlook recovery. on highlight quarter, Dave, last for was early wondering, made it you was very a speaking, remarks, that really in outlook, there is have the of would take guess I now the anything you

David McKay

our economy positive seeing you starting through as I to XXXX. the that operating working for think where XXXX. that draws as medium-term, levels now the We the beyond XXXX, our accelerate to think We net, activity card equally nicely. grow, on at of look I economic was look credit We're it when about we're to are still progress the spend. lines. above said, activity in opportunity We're capital at see

that seeing seeing So authorized start to returning. confidence grow. that to green our of referred We're the was We're XX%. credit term shoot asset I all almost increased, think lending symbols book

through happen all the confidence. the going a variant. of as may What's to have don't we you're turn for in and pause little see signs we concerning always make health month numbers, a other variant. two So to It we're see things It's overwhelm the of the of Delta the seeing a or sure work world but to the with economic on Delta to parts starting bit a system. little

vaccination So of this the to through expect was in XXXX. down we're year it don't we'll to have the shut economy with rates. or going We last manage early XX% way

So service talking manage we upend majority given decision, I we I so not, think to will every with to And full until think reopening momentum achieved of but through of that have governments that you're slowing work, sector we've return far. have. their therefore, maybe the months this, should what deal make will ability our of some of slowing this, we the

XX economy So reopening months. on XX positive through very still progress about the the to the continued next

Meny Grauman

you. Thank

Operator

Please Scott you. from next is Chan Genuity. Thank The question Canaccord go from ahead.

Scott Chan

just the NIM at new the on I'm And pressure. slide stable, slide looking offsetting provided yields Good Banking X. the revenue the Canadian you that showing just morning. on NIE

message of And or that over of increase driving yield, So potentially the NIE what well? the kind the kind are that is is factors side stable NIE as time could more just on on that? the

Rod Bolger

on and a that deposits factor the Yeah. The Scott. receiving what question, you loan. as Thanks -- is of paying what for you're obviously well the on know NIM you're

the you been referenced. and [Indiscernible] as So a our of NIM the driver overall mix has significant

client. importantly, up And happen they're secured the green because naturally so lower overall rate because rate, very and would out, growth bottom the grow and will to continue grow. increase income again. and see see been to strong up. because commercial that and and start volume bottomed will growing costing, because down to balances start bottom to the and the strong, come And interest as is and the But as But growth well that at expect mortgage so to elevated start help tend those is net Dave to then that card has credit out low to we has talked an to and come again. products, it's deposit start it will increase balances have and that underwritten, continue out so we with we we NIM shoots to come a

Scott Chan

side, And over is to also forecasted that year? expected nor increase as the what has on about it past the or

Neil McLaughlin

I'll It's the and in. on it. me Got block, jump

year-over-year. get is, on other I trying think good side, income really there what across growth we're to the

the in a think terms what we bank, just mutual strong reflection diversification, of the growth retail within fund have I fees. of trailer

We're new FX. to Our acquisition in years over client a couple see in back little is paying of charges. the service starting of higher off last bit bounce

from investing macro obviously the direct benefiting business trend Our there.

two, obviously, I think the message other but between it's is we're really just to while a strong think the that's contribution. overall and NII up decompose -- s So I contributor I -- in NIM revenue trying think down here the is, X%, are is -- there that's income,

Scott Chan

Got it. very you much. Thank

Operator

Sohrab ahead. Capital from The Markets, go BMO please is Thank next you. question Movahedi from

Sohrab Movahedi

a also for actually about in That's business. talks there beyond great here Thanks. Canadian to the slide segue my banking is guess that Neil, Yes. I question. a

other these you're over the X? in page fee on attributing any your segment So of income results income not listed initiatives or to here,

Neil McLaughlin

Yeah.

are an really owner terms And and about, Dave new pleased and year-over-year. we're talked ability client's here be with here that in is clients think of say are the an and there, really, starting accounts to with strategy to our business our of to chain. RBC downstream turn able of in our we registrations in we'd into really clients play example the layout are get with our pleased value the for we investment business and trying two seeing to front our those really really money to get in upstream related What providing we continual small owner trajectory, distribution things value more kind we're to terms is, is focus the to I increase of customers. new what

So one will example. be there

play confidential are, consumers value get around built This terms new being see Another of accounts Company is data reconciliation our taking costs entrepreneurs this acquisition turning after a and developed we're was who where wouldn't into and automates RBC tell again, -- another a example they're does merchant of are WayPay save able -- is that else something convenient. simplifying on. until this of XXXX value there, Insight and to that payable our example the the in what value RBC the that that BXC more sort and automates was a sorry you we're really an Edge, have them can drive on and touched product of of examples we a you about and basis. taking is called further so an a couple and part client provide -- as business MIS on usually out then more process, PayEdge, can they we really But a they anonymized that small those down that there. it Dave business in chain of

see the that terms are you those just grow. on the in slide. represented of And things to strategy So to this start confidence our of continues types

Sohrab Movahedi

suppose, is much Canadian But I a top-line or trying number figure of Is both is share the benefit increasing pie? benefits mature concentrated primarily -- could of how most of in win which, fair market improvements then that they initiatives much even is, of how through pie? accrue this out if business, but the Neil, And or first of importantly a bigger the follow-up. get, probably slide, what banking in to leverage. of listed to have ultimately operating it I customers gain efficiency X, space. in number is to can these under X, guess accrue beyond your grab I your and just share of you primarily kind maybe all, or increased terms a much I say Banking, the How it and growing I'm it growth, suppose?

Neil McLaughlin

Yeah. question. Great

what funnel. something of we top about the be So as think would [Indiscernible] like

driving be There comes would is those that fee So new merchants. clients. of revenue off we stream An example that, Edge. charged Insight as that like a

As the income. is we're you another the proposition this RBC into PayEdge, which used, other I putting And down move is in the PayPlan, value into or merchants. example

from there so would I is, both say wallet -- then a and another of And of share income those. contribution and

So it both. is really

David McKay

Dave. is This

key side and and both could shopping. an small equity the also clients home We think as mentioned, this I in attracting clients, ecosystem is you I and business clients that everyday year on this new more payments like XX, show the XXX new alone.

business new to an well-constructed example really ecosystem commercial streams bank. gave strategy Investor the coming fee our this but client expansion both Day ago, to opportunity acquisition, life at drive So an we big and is a the and also articulated you X and a side, of but to part of obviously of we that's revenue years

Sohrab Movahedi

you, Thank all.

Operator

Dechaine, The Financial. Thank Please you. next ahead. go is question National Bank from from Gabriel

Gabriel Dechaine

morning. to Good you where we're to on year-and-a-half the one see next the size continuing -- A or there one exposure revenue it quick the non-comp down the focus we commission here, comp Like the expense, for grind rates. of competition side, ramp X%, there quantify the ROD whatever over up do could couple seeing where brokerage you're number? on down ones the some And variable that Is on the discount or on up? that in then X% start that outlook -- is category?

Rod Bolger

the off the direct I'll Gabriel. I'm investing. discount, and And -- I'll start. expense to Neil thanks, for hand then start sorry, for for on the

a share distribution. technology. of continue you we're So expect program why share, we dollars will that people sense We an to think in we leverage core to that's it market of we on refer initiatives. but to to, key but effective to grind our in to where businesses. the look the do in our is of also to other this expenses, down one management going continue and continue to only other efficiency invest we continuation moderate. continue as And and growing makes way And as spend costs to we're that, the grow cost to, also reasons that's cost digitize not technology, market growth

employees accordance for It's large. been to and that, have but the not lower at probably It's single-digits. straight Financial rest Unlikely. quarters? and mid-single-digits. will or X Advisors, quarters X expenses Managing compensation our Now, Directors is little X straight in going to a to up for not on be with It's to to negative uptick flow for And X bit get it our the be going to going the last variable then of our wildly. it's going negative going whatnot, for it's or grow after for of

Neil hand outlook for the So for that direct I'll is And to off investments. I expenses. think it

Neil McLaughlin

Gabriel. Thanks, Yeah. Sure.

of player X competition, commissions. on one the more terms go In mean, we've we're there. I to seeing seen

from market market The have player a who in We has player another was announcement already -- this the small there. who's some very, was week share. a very

RBC Investing on As toolsets, for there good money of there, we terms value the the look research. at in again, we feel the have platform value we in for top-tier focus Direct the our customers, is

few provide One quotes. of streaming free the to

is the on at basis. value a look the differences So investment there, we I think think market also I holistic one of is the

between the customer retail business DI Doug's DS customer, a or to So the and branch ours, between customer, a offering. [Indiscernible]

banking direct also portion A our are propositions of portion every customers. value have that We investing and of customers large market,

and So again, discounted portion those participate but the for value good paying fees a receiving for they're are comes from the trade, also banking actually in that. RBC they program what of Vantage

So delivering another that we're way value.

the So that material line. is we for mean, us, retail this look focused mean and terms of say the are market. we're part to forward, committed think having of we're every wouldn't Will We space I those not that bank's in as what would a where strong I the I watch things value market, obviously to And but a on. revenue proposition

Gabriel Dechaine

Sounds in like to pricing a you're that rush strategy. follow Thanks.

David McKay

to on question. next the move Thanks. We'll

Operator

from is question Desjardins Young ahead. Capital Please go next The Doug from you. Thank Markets.

Doug Young

morning. Hi. Good

businesses, are paying today balances clients but that still card quarter-over-quarter, the of versus percent down up monthly are pre-pandemic. credit balances year-over-year, the down on Just I'm curious

that's can lag? revolver And little tag bit I what done of and And that on some that threat. or Maybe assumption? is doing so maybe card fair if interest you've then your coming about you're growth much seeing net thoughts a something Thank what on you're stuff you in that buy-now-pay-later might the you. -- trend feel from how a if terms talk rebound the on maybe how from believe side? well. the liquidity, higher of I marketplace. higher And perspective balances the the a Is else a can from as you given income in

David McKay

Sure.

their We're of at paying look in of X large it the So terms book, segments, card you if think the to in appropriate I transactors. that's full credit card in want in terms every are the terms focus the split bill well and increase spending, as in really of the transactors is seeing Those on as this fee also driving increase you're are in balances. disproportionately the what disproportionately side, where driving interchange. year the

their the On deposit revolver Canadian the percentage actually average in to come revolver conversations down direct that aside, we more has the have a the account. pre-pandemic just correlation and the stimulus actually, of the economy we've mix, versus in and had having seen about

And I was up pay at is, on I that absolutely say isn't will hard point to seeing get really expected We're Dave when I XXXX it really it's those would look to while since we spending fairly to longer I lag interest. absolutely, So is when we segment there I dining. travel quarter would us has dining pays spiked the it, no think that used the predict, even to mid-May. XXXX. been versus of encouraging is everything sign, about last your there, except think for mean, right. the a touched be And obviously back on that categories, interest and up of that close comes timing talked sorting say us levels. is travel but

of signs. lot positive a So

NIM the story. our yield part is and down, of effective the portfolio that's So on

out are Canada than play other In options a there buy-now-pay-later, markets. how it clients in was say terms The of Globe and is in that this the article may differently I have would what good about

You're card turn for already transaction and able number that launch to any a seeing almost credit select threshold out. a capability clients to be certain of issuers over

is But in a buy what led would pay value their launch PayPlan. later have Canada. to said, look this to and that that us play something really it, differently now, in have And we think at that's properties. I as particularly out do merchants digital they want

more we're on but it not sides going participating really proposition a at so, more merchants that look are equation, lending So value a -- real so and as business, for our to in of expect. headwind both

Doug Young

Thank you.

Operator

Lemar next you. question The Please Cormark Persaud is Securities. from Thank go from ahead.

Lemar Persaud

Thanks.

I a didn't One So I XX.X% capital. about have ROE, a in here talking I'd think be here picture Tier I holding while of is question. delivering sitting big XX% equity more be common capital. but takes reason any we potential the and appreciate credit ROE a the environment, the XX% on forward. number going that wouldn't there of normalizing side, there's near Royal sustainable you a think big return of a plus puts are, But

for is term? you playing So the talk you. Thank about to out ROE me see can you where over longer I'm where maybe at I the going guess Royal

David McKay

It's maybe well that the Obviously, positive we about something is s. question. talk of And and those to I some medium-term bigger negative that you well. for ROE about drivers give the ROE above we of Thanks can ranges. objectives. obviously can think our as

also higher-yielding being City growth, credit expansion as in credit are rates back, for revolve of already as but the talked NIM and really about particularly positive NIM card such positives and and asset revenue card the we've some Canadian drivers coming call So the on spends, with stabilization all ROE, Banking, National.

Balance have the on we rate And impact. of the revenues inserted the our decreases. impact the National underestimate year-over-year interest sensitivities City of can't Sheet on rate the You

drivers think for our as capital on Balance and existing ROE's come our positive rates all back, those come Sheet existing I So are base. those as back,

more to have a revenue, don't against you that's return of if obviously enhancing. capital So put ROE

have Sheet Our pipeline which Sheet in for fees revenue ROE, more again, advise Balance through do to be that the very excess that goal Balance enhancing continue any talked capital. and we for generation conscious our play, are and have, if capital All market-leading we generate have we the enhancing growth to banking obviously, off and strong ROE past. and we strong is base ROE, shareholders mix returning existing generate and And inorganic will is fee-based of to we our really that is all to investment turns knowing as we've dilution. than clients strong the and positive about, that of make as manage very capabilities. dividend buybacks And certainly that it share any our

So about we're capital. those how are thinking

of And every RWA. color. tailwinds, earned sheet franchise would and question. through significant I you say will revenues therefore, And when that's So call deployment headwinds, existing enhance some the that, a almost up until it enhancing. quite ROE Rod, headwinds. you QX, the in tailwinds, And headwinds hand our I nicely to I net a the really to has from important I've more -- are in to we've those think balance particular as It's said add when become those opportunity

Rod Bolger

covered and Dave core Thanks. look we business have it I of the Yes. on drivers. slide. at key Couple things the

part slides, and had growth then has an annual the grown has book our XX% One value book that XX%. first is share, client-driven since EPS growth, of RWA of nearly per acquisition CAGR that showing our organic that of of XX% of year-over-year, X% tangible value our as growth

not point continue it's we we're reversal going to be of can velocity to your earnings at long ROE. not growing to level going to as Dave pointed this out continue client every question, quarter going as big so than But And relationships we're PCL. you and be because capital, a as to as out, faster on [Indiscernible] that

ROE in and with that an So the see high-teens and should out, we you strip bias. upward our

Lemar Persaud

Great. Thank you.

Operator

from ahead. from The go Mendonca you. Please next question Securities. Thank TD is Mario

Mario Mendonca

offered to impaired average go for you that suggested be of can earlier back morning. above we Royal. on XXXX in where Good long-term might the some Graeme, the outlooks PCL you loan

it. that's basis Royal term. long at only this -- the XX how phrased the something talking only points. year is might you think about impaired, basis about I for the probably over be I points to look like XX you're very long-term impaired average If XX And

a relative PCLs talking we're in near about of XXXX XXXX. So tripling impaired loan to

the you PCLs. near me impaired in to So it for encouraging outlook, that loan call are you offer tripling seeing that seems something a to to that's

numbers seeing? might And get you I my secondly, did right? Firstly, what be

Graeme Hepworth

right. are quarters. question. I I X are There your past about things, think things Thanks we've in at I numbers a Yes, comment few about looking here. general we for one really on think been is the talked

that debate support not as year think of it goes just is Part the and support differs which head losses. the over more and I mitigate last we've deferring those. XXXX. subsequent we've further the points. the government support. vaccines, progressing and on It's third around levels really two forecasting And X was loan seen reopening then that's X Let's economy, of pushes government losses assess will uncertainty certainly seen further goes great more government economic mitigates of or X it degree was those that and recovery, first point we was and the significant inflect progress government the the into those those significant of that on And into the to our the still, what support the losses. the towards and trajectory

there think we that now, would I around and right in or releases and be reserves have the in loan X so in X very get my our stage to really in losses XXXX comments, as in X funded a by our stage that place I And X our stages -- and see expect portfolio that period X. and But averages. be significant we offset loan losses, could long-term we up certain of said our will to

as that averages, articulated. that total mix, if long-term you within our So will, remains well you

Mario Mendonca

it to we it specific would higher impaired possible that would the to be then lines the if loan be in than back you what for you notion XXXX So product the go losses could long-term average, highlight this credit point comment Would granular commercial or is more just Would be cards point a like personal in at a that to on? to? us little and too it time like something loans? be

Graeme Hepworth

government to Yeah. actions well effectively the now. all we more to seen significant losses low factor loan going government and picking we're as I towards where right our businesses. and pointed work both see very obviously personal that be that's support, would suppress large levels to We've commercial support, part, that themselves, we've in the consumers insignificantly significant experiencing rate are seen in consumers with businesses, where so both as along benefiting

a of As we've we've that in we the level noted, are long, new long time. seen lowest formation seeing

obviously so sale recoveries, persist of put side right? all positive three that businesses But near-term long And kind wholesale factors Well, term. recoveries to PCL one recently, the the see expect suppresses the we have are place. in all three again, in XP seen those term. seen We've necessarily we've of, in are state the has our in over benefited near stage reserves all from that we've don't

So and all to of will economic think of off, I certainly, looking back low consumers government that some rolls normalize, recovery really those again, into but see the support out we're how losses. impact the loan or transition

said, do we I will get we to X. and and in expect will I part rise so over stages indicated, X Till point, by that releases in as And funded be it XXXX. as it

Rod Bolger

of know front lens another I significant a on comments, if have our we put me added was what you Because up stage this X is in Balance help Mario, XX% build since still we and this the on don't pandemic still X we it, have Graeme's on and also. Let picked might which Sheet.

And means seeing. we is incur which on what we've X higher that those, stage so will been that implicit in losses than

some X So to release use those the see of expect X those. do the would don't losses, we reserves. if some the losses, stage and see If of would we we against we

allowance is those think as our -- loan I about for implicit talking what So is losses well. Graeme in

Mario Mendonca

that's helpful, thank you. Okay,

Operator

ahead. next you. America. question Ebrahim Poonawala is from Bank Message] of Thank go from Please [Operator And your

Ebrahim Poonawala

Thanks taking my for question.

about lot of client Just RBC follow talking of wanted to time spend new acquisition. and Ventures up, a you ways Dave,

does structured seen some a to open a to Just then banking mean you've banks your does one, from partnership risk the play the regards longer-term the Canada framework for have is of Royal? on FinTech or in think share, U.S. client talk investors there wallet trying one externally, on as M&A disruptor Europe like in in create I to us, what bit to just or conversations do? with a to role, of opportunities opportunities grip the big And centered looking RBC with U.S.

David McKay

on Canada great and right Neil question now. is, policy the on we're say for thanks the a anticipating coming strategic That's more have that. I I'll a ventures think asking when to compete think and they're owning you market. perspective. back We're that's very discussed in when being active when on and And X anticipating open we've think feel a you obviously, all strategy give these ecosystems, this about years. designed about disruptive you that tech talked the about last type for within of about therefore, we platforms marketplace. to

and open So We've we're them been this. our preparing world. well and banking when attract ecosystems, banks compete to, see open we think banking in ability we more prepared of an for think the to clients through beyond

and the RBC pull to is cry, of through reasons like the through a clients, why One core your create value value, very strategy wrapping away. our Vantage, and DoorDash rallying more arms client the creating is for partners customers around Petro-Canada around making hard it

value wrapped have banking to compete. don't access all a have, our prepared channels significant therefore, can with create with RBC, if we well other fear it. we and we open think opportunity and really feel the how for we clients we've So to And we clients

that, you worked you with specifically, the So you. Neil, on to over policy, on worked strategy,

Neil McLaughlin

for the question. Thanks Yes.

to file So just the a now. land for the to called a has committee think. been very say in Canada, already it's We've -- government. than on FDX working standard. been market may an submitted faster come I'd the But open the advisory make to report this industry industry And been as what's some collaboratively that's the this has has now quite years few

exchange private to So data put that can have start place in a to format way. we in we safe a and

concerns. some these the paramount think of are I

supportive data. say, are at in as portability something It's end I'd of being that day, look terms So are of of open it, to at something made the the the really it do clients about that right for. a their and see of not about banking we we it's it's asking having clients

call think out. important sort to I it's of

in one that early increase in more movers. a you've many was seen there really There look been churn, of which at particularly in market UK, really competition. you If markets wasn't other the lot regions, the and haven't where a

to think lot product were Dave environment core come retail line in customers a a reach the we're value now, ones we data opportunity banking our market, of the believe we does Canada or of an at I but use think propositions way than winner. out consolidation differently, ability value view risk. I opportunity We we of play our if a as out there's wallet an that real if to the banking that open look happen spoke net more we propositions. and out to this new as to some a the bringing to

together So to probably we're is away then working spoke churn, more things things this enable is that about. privacy there to to that there's get the concerns is it. of I to And think the ready to safety get a into happen. lot But are try the if of Dave take And industry get some will and to right. those it

Ebrahim Poonawala

niche very U.S., of an side? helpful. on in terms opportunity play consumer you a for the Banking in given Dave, Retail opportunity look for like just And side an U.S. on National is focus, to oil role the is is and there City disruptor That's there the consumer at the when

David McKay

something quite great a It's about It's some for time. question. been thinking we've Yes.

straightforward capability those build I those have very bank, to access think a but to you that it deposit direct-to-consumer clients. make is need a you partner The you gives to the very deposits for key strategic key pay difficult. or plus It's is rates on market. wholesale that guess, asset in is to and, the doing talked It's strategic to that generator partners. way the table taker core a need direct-to-consumer still a with I best you it's RBC something where deposit to way. I partner the can go We've strategic along many see an

is a a assure As a again, that to said very always But It's because not given being a deposit have know effective now. mass I to held We've that. say that. just branch-based we direct-to-consumer way with we worth is the us. to want not of versus launching right high-cost is savings, investors consumer partner long before, go I off ourselves see obviously which funding do bank, a market direct-to-consumer, accessible to I'll strategic model position

on it ready talked shelf have go, we've We as the to about before.

think would direct-to-consumer would be that how So in U.S. the I strategically about

Ebrahim Poonawala

stay helpful. Thanks, tuned. Dave. That's Will

David McKay

And up. wrap think and question, then we'll one I take, more we'll

Operator

question from final And go ahead. the D'Souza Research. Please you. from be Veritas will Thank Nigel Investment

Nigel D’Souza

you. tandem? at Thank the just in in quarter. the wanted you those here assets risk-weighted touch getting two side on a expect assumptions PCL we default I'm that to And morning. reassess is, to right move well the risk reversals I reversals, we it? So have way items that Good should as as to what lower Is your drive PCL the probability of through and think as to about should benefit lower expect weighting. a on RWA your and

Graeme Hepworth

I know. and if don't not wants -- Rod they correlated, start they're one-to-one. I'll in, But add that it's correlate should Graeme. with to go, I'll he can they to that. be but chip

so long-term designed probabilities So averages. the very to are are they [Indiscernible] meant and into meet that RWA, there, really go to be purposes the regulatory

of big what granular, so year, and those a is change. to IFRS reassess of to reevaluate point-in-time methodology we of year that our big but part estimate to byproduct a this onetime a dramatically annually, And do kind more significant obviously from was We they meant in on of of kind saw a investment shift change methodology year. there, to a then more be our a data get X defaults. investment won't

so impact real-time that's that And through. of a will more translate

should they don't directionally but correlate they correlate, one-to-one. certainly So

Rod Bolger

-- I and grow build And continue pandemic and then. businesses. we our the clients as we reserve through built continue downward since we as that the bias to to The the our then expect have I'll only would to in thing that upward wholesale I and I turn one-time -- RWA would bias an a allowances parameters to here to parameters, it is, from work because expect back a Dave would decrease expect was add have

turn So with that, I'll to it Dave. back

David McKay

well-positioned adapt few I deliver variants, value? while Really just whether today, our more how were on mortgage changing our now just policy-changing in to cards, world, say I'll with revolving shareholder grow? with Maybe Canadian a appreciate are comments One X/X a around from to wrap-up volumes it's our the all and you you mention going commercials which world credit Rod. around, to down clients. are And is in reinforce growth, thing growth, centered are thematically lines questions. Thanks, of in to didn't new have we a facilities. Banking think going lending comments How drawn deal on it's term existing

opportunity of a clients we have into And First-time those of cross products. number now Vantage to unique all investment bank. clients the RBC into a other

XX risk, the a didn't We of capturing years. X banking business Global key the about in talk our X National, core Wealth about asset all chance was disproportionate worth share At been and our but Canadian that last City we've clients. today, Management to outstanding potentially different higher it's capabilities. our ago client. existing get invested franchise, moving our and percent a very Wealth to in enjoyed growth ROE, So lower in commercial years results in Asset we're XX were core to we've of and that, plus the than to Canadian into that. And would've AUA people off for to our only better their that's technology. continue net talked but cross-selling mid-corporate us well area now, whether attractive abilities grow in it or We country, high growth poised a obviously AUM. we've talked already about not And investment are And management core in for growth continue

about a but look organization. that which would mortgages particularly and talk that businesses, really say ROE our slide has you about, that it increasing cognizant are but very in we investment driving markets see risk cost but our be adjudication. a when was idea. that anything chance pipeline. the lower not back. have products, to and looking trading your for NIM, in a higher well-positioned. inserted also strong you what come to you And the today, NIM the control, don't It's does a why is adjustment, it's hope an in So side, obviously we're was a growth ROE you risk-adjusted of Really at And year-over-year, particularly FIC banking strong we portfolio after the difficult the the give U.S., in mortgages really some in on capital get new pipeline, and a Canada, to just we We strong been year-over-year obviously, s at for didn't I

strong organization. And our are manage premium the about which to a new investment streams when the for or So I on beyond and we got some to new starting for growth. Ventures drive already customers present revenue great today ability risk but only not questions ecosystem think risk, -- will around banking, growth

QX. thank you will today. very questions I you a of in for series see strong So

Operator

conference your thank continue The please and Please We [indiscernible]. your thank you conference patience. you for continue Instructions] All [Operator by. now lines momentarily. The this you. Thank again, will time, to ended. your Message] please disconnect Once by. for stand has participation. [Operator at participants, stand to begin