Welcome!

News Feed Item

Royal Bank of Canada reports third quarter 2014 results

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 Q3 2014 Report to Shareholders and Supplementary Financial Information are available on our website at rbc.com/investorrelations.

TORONTO, Aug. 22, 2014 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE) today reported record net income of $2,378 million for the quarter ended July 31, 2014, up $93 million or 4% from the prior year and up $177 million or 8% from last quarter. We also announced an increase to our quarterly dividend of $0.04 or 6%, to $0.75 per share.

Excluding specified items as noted below and discussed on page 3 of this Earnings Release, net income was $2,418 million, up $223 million or 10% from the prior year and up $217 million or 10% from last quarter(1). Our results were driven by record earnings in Canadian Banking, Capital Markets, Wealth Management and Insurance, as well as solid results in Investor & Treasury Services. Our performance also reflects strong revenue growth, solid credit quality and positive operating leverage across most businesses.

"RBC had a record third quarter, delivering earnings of over $2.3 billion. These results demonstrate the strength of our diversified business model," said Dave McKay, RBC President and Chief Executive Officer. "Our ability to innovate and use capital effectively while managing costs positions us well to execute our client-focused strategy and extend our leadership positions across our key businesses."

Q3 2014 compared to Q3 2013
• Net income of $2,378 million (up 4% from $2,285 million)
• Diluted earnings per share (EPS) of $1.59 (up $0.08 from $1.51)
• Return on common equity (ROE)(2) of 19.6% (down from 21.3%)
• Basel III Common Equity Tier 1 (CET1) ratio of 9.5%
    YTD 2014 compared to YTD 2013
• Net income of $6,671 million (up 7% from $6,241 million)
• Diluted EPS of $4.43 (up $0.33 from $4.10)
• ROE of 19.0% (down from 20.0%)
       
Excluding specified items(1): Q3 2014 compared to Q3 2013
• Net income of $2,418 million (up 10% from $2,195 million)
• Diluted EPS of $1.62 (up $0.17 from $1.45)
• ROE of 20.0% (down from 20.4%)
    Excluding specified items(1): YTD 2014 compared to YTD 2013
• Net income of $6,803 million (up 10% from $6,182 million)
• Diluted EPS of $4.52 (up $0.46 from $4.06)
• ROE of 19.4% (down from 19.8%)

Specified items(1) , as detailed on page 3, include a loss of $40 million (before- and after-tax), which includes foreign currency translation related to the closing of the sale of RBC Jamaica this quarter, a loss of $60 million (before and after-tax) also related to the sale of RBC Jamaica, along with provisions related to post-employment benefits and restructuring charges in the Caribbean of $40 million ($32 million after-tax) in Q1 2014, a favourable income tax adjustment of $90 million in Q3 2013, and a restructuring charge of $44 million ($31 million after-tax) related to the integration of Investor Services in Q2 2013.

Personal & Commercial Banking net income was $1,138 million, down $29 million or 2% compared to last year. Excluding the loss related to the sale of RBC Jamaica this quarter as noted above, net income was up $11 million or 1%(1). Canadian Banking net income was a record $1,185 million, up $34 million or 3%, driven by volume growth of 4% and strong growth in fee-based revenue primarily from mutual fund sales. These factors were partially offset by higher provisions for credit losses (PCL).

Compared to last quarter, Personal & Commercial Banking net income was up $23 million or 2%. Excluding the loss related to the sale of RBC Jamaica this quarter, net income was up $63 million or 6%(1). Canadian Banking net income was up $75 million or 7%, largely due to seasonal factors including additional days in the quarter, volume growth across most businesses and higher mutual fund sales, partially offset by higher PCL.

Wealth Management net income was a record $285 million, up $52 million or 22% compared to last year, mainly due to higher average fee-based client assets across all businesses resulting from capital appreciation and net sales. Compared to the prior quarter, net income was up $7 million or 3%, mainly due to higher average fee-based client assets.

________________________________________

1  These are non-GAAP measures. For further information, including a reconciliation, refer to the non-GAAP measures section on page 3 of this Earnings Release.
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 Q3 2014 Report to Shareholders.

 

Insurance net income was a record $214 million, up $54 million or 34% from a year ago, mainly due to favourable actuarial adjustments reflecting management actions and assumption changes and lower net claims costs, as the prior year included net claims of $14 million ($10 million after-tax) related to severe weather conditions in Alberta and Ontario. Compared to the prior quarter, net income was up $60 million or 39%, mainly due to favourable actuarial adjustments reflecting management actions and assumption changes, and lower net claims costs.

Investor & Treasury Services net income was $110 million, up $6 million or 6% from a year ago, largely reflecting higher funding and liquidity revenue from tightening credit spreads and increased net interest income from the growth in client deposits. Compared to the prior quarter, net income decreased $2 million or 2%, as lower custodial fees and the impact of foreign exchange translation was largely offset by seasonally higher securities lending revenue.

Capital Markets net income was a record $641 million, up $255 million or 66% from a year ago reflecting growth across all of our businesses. Trading and origination activity was robust this quarter driven by stronger equity and debt markets and increased activity levels from our client-focused strategies. Strong growth in lending and loan syndication also contributed to the increase. These factors were partially offset by higher variable compensation on improved results and higher litigation provisions and related legal costs.

Compared to last quarter, net income was up $134 million or 26%, mainly reflecting strong growth in equity and debt origination and higher trading revenue, partially offset by higher variable compensation on improved results and lower M&A activity.

Corporate Support reported a net loss of $10 million largely reflecting net unfavourable tax adjustments, mostly offset by asset/liability management activities. Net income in the prior year was $235 million, largely reflecting net favourable tax adjustments, including a $90 million income tax adjustment related to 2012.

Capital - As at July 31, 2014, our Basel III CET1 ratio was 9.5%, down 20 basis points compared to last quarter, primarily reflecting higher risk-weighted assets mainly due to an update to risk parameters in our corporate and business lending portfolios and business growth, partially offset by internal capital generation.

Credit Quality - Total PCL of $283 million increased $16 million or 6% from a year ago, and increased $39 million or 16% from the prior quarter, largely reflecting higher provisions in our Caribbean portfolio and also in our Canadian Banking commercial lending portfolio, partially offset by lower provisions in Capital Markets. Our PCL ratio of 26 basis points was unchanged compared to the prior year and up 3 basis points compared to last quarter.

Non-GAAP measures
ROE and results and measures excluding specified items are non-GAAP measures. Specified items comprise:

  • In the current quarter, a loss of $40 million (before and after-tax), which includes foreign currency translation, related to the closing of the sale on June 27, 2014 of RBC Royal Bank (Jamaica) Limited and RBTT Securities Jamaica Limited (collectively "RBC Jamaica").
  • In Q1 2014, a loss of $60 million (before and after-tax) also related to the sale of RBC Jamaica noted above, along with provisions related to post-employment benefits and restructuring charges in the Caribbean of $40 million ($32 million after-tax).
  • In Q3 2013, a favourable income tax adjustment of $90 million in Corporate Support.
  • In Q2 2013, a restructuring charge of $44 million ($31 million after-tax) related to the integration of Investor Services.

Given the nature and purpose of our management reporting framework, we use and report certain non-GAAP financial measures, which are not defined, do not have a standardized meaning under GAAP and may not be comparable with similar information disclosed by other financial institutions. We believe that excluding these specified items from our results is more reflective of our ongoing operating results, will provide readers with a better understanding of our performance and should enhance the comparability of our comparative periods. For further information refer to the Key Performance and non-GAAP measures section of our Q3 2014 Report to Shareholders.

Net Income, excluding specified items
  For the three months ended July 31, 2014   For the nine months ended July 31, 2014
(Millions of Canadian dollars, except per
share and percentage amounts)
Reported Loss related to
sale of RBC
Jamaica
Adjusted   Reported Loss related to
sale of RBC
Jamaica
Provision for post-
employment
benefits and
restructuring
charge in the
Caribbean
Adjusted
Net income  $ 2,378  $ 40  $ 2,418    $ 6,671  $ 100  $ 32  $ 6,803
Basic earnings per share  $ 1.59  $ 0.03  $ 1.62    $ 4.45  $ 0.07  $ 0.02  $ 4.54
Diluted earnings per share  $ 1.59  $ 0.03  $ 1.62    $ 4.43  $ 0.07  $ 0.02  $ 4.52
ROE 19.6%   20.0%   19.0%     19.4%
                 
  For the three months ended July 31, 2013   For the the nine months ended July 31, 2013
(Millions of Canadian dollars, except per
share and percentage amounts)
Reported Income tax
adjustment 
Adjusted   Reported Restructuring
charge in I&TS
Income tax
adjustment
Adjusted
Net income  $ 2,285  $ (90)  $ 2,195    $ 6,241  $ 31  $ (90)  $ 6,182
Basic earnings per share  $ 1.52  $ (0.06)  $ 1.46    $ 4.14  $ 0.02  $ (0.06)  $ 4.10
Diluted earnings per share  $ 1.51  $ (0.06)  $ 1.45    $ 4.10  $ 0.02  $ (0.06)  $ 4.06
ROE 21.3%   20.4%   20.0%     19.8%
                 
Personal & Commercial Banking net income, excluding specified items
  For the three months ended July 31, 2014   For the nine months ended July 31, 2014
(Millions of Canadian dollars) Reported Loss related to
sale of RBC
Jamaica
Adjusted   Reported Loss related to
sale of RBC
Jamaica
Provision for post-
employment
benefits and
restructuring
charge in the
Caribbean
Adjusted
Net income  $ 1,138  $ 40  $ 1,178    $ 3,324  $ 100  $ 32  $ 3,456
                 
Investor & Treasury Services net income, excluding specified items
                 
  For the nine months ended July 31, 2013    
(Millions of Canadian dollars) Reported Restructuring
charge in I&TS
Adjusted          
Net income  $ 248  $ 31  $ 279          

 

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 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 "would".

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our 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, regulatory compliance, litigation, operational, strategic, reputation and competitive risks and other risks discussed in the Risk management and Overview of other risks sections of our 2013 Annual Report and in the Risk management section of our Q3 2014 Report to Shareholders; the impact of regulatory reforms, including relating to the Basel Committee on Banking Supervision's (BCBS) global standards for capital and liquidity reform, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued and to be issued thereunder, over-the-counter derivatives reform, the payments system in Canada, the U.S. Foreign Account Tax Compliance Act (FATCA), and regulatory reforms in the United Kingdom (U.K.) and Europe; the high levels of Canadian household debt; cybersecurity; 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; our ability to attract and retain employees; the accuracy and completeness of information concerning our clients and counterparties; the development and integration of our distribution networks; model, information technology and social media risk; and the impact of environmental issues.

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 2013 Annual Report, as updated by the Overview section in our Q3 2014 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 2013 Annual Report to Shareholders and in the Risk management section of our Q3 2014 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 Q3 2014 Report to Shareholders on our website at rbc.com/investorrelations.

Quarterly conference call and webcast presentation
Our quarterly conference call is scheduled for Friday August 22nd, 2014 at 8:00 a.m. (EDT) and will feature a presentation about our third 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 5921388#). Please call between 7:50 a.m. and 7:55 a.m. (EDT).

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. (EDT) on August 22, 2014 until December 2, 2014 at: www.rbc.com/investorrelations/ir_quarterly.html or by telephone (905-694-9451 or 1-800-408-3053, passcode 7418592#).

ABOUT RBC
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 services, insurance, investor services and capital markets products and services on a global basis. We employ approximately 79,000 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 40 other countries. For more information, please visit rbc.com.

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 respective holders.

 

SOURCE RBC

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
Internet of @ThingsExpo has announced today that Chris Matthieu has been named tech chair of Internet of @ThingsExpo 2016 Silicon Valley. The 6thInternet of @ThingsExpo will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
An IoT product’s log files speak volumes about what’s happening with your products in the field, pinpointing current and potential issues, and enabling you to predict failures and save millions of dollars in inventory. But until recently, no one knew how to listen. In his session at @ThingsExpo, Dan Gettens, Chief Research Officer at OnProcess, will discuss recent research by Massachusetts Institute of Technology and OnProcess Technology, where MIT created a new, breakthrough analytics model f...
Most of us already know that adopting new cloud applications can boost a business’s productivity by enabling organizations to be more agile and ready to change course in our fast-moving and connected digital world. But the rapid adoption of cloud apps and services also brings with it profound security threats, including visibility and control challenges that aren’t present in traditional on-premises environments. At the same time, the cloud – because of its interconnected, flexible and adaptable...
As organizations shift towards IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. Commvault can ensure protection, access and E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his general session at 18th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Part...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform and how we integrate our thinking to solve complicated problems. In his session at 19th Cloud Expo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm ...
Digitization is driving a fundamental change in society that is transforming the way businesses work with their customers, their supply chains and their people. Digital transformation leverages DevOps best practices, such as Agile Parallel Development, Continuous Delivery and Agile Operations to capitalize on opportunities and create competitive differentiation in the application economy. However, information security has been notably absent from the DevOps movement. Speed doesn’t have to negat...
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Leading cloud-centric IT organizations are establishing core capabilities to improve productivity, control costs and provide a highly responsive end-user experience. Key steps along this journey include creating an end-user cloud services catalog, automating workflows and provisioning, and implementing IT showback and chargeback. In his session at 19th Cloud Expo, Mark Jamensky, executive vice president of Products at Embotics, will walk attendees through an in-depth case study of enterprise I...
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
Your business relies on your applications and your employees to stay in business. Whether you develop apps or manage business critical apps that help fuel your business, what happens when users experience sluggish performance? You and all technical teams across the organization – application, network, operations, among others, as well as, those outside the organization, like ISPs and third-party providers – are called in to solve the problem.
SYS-CON Events announced today that Niagara Networks will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Niagara Networks offers the highest port-density systems, and the most complete Next-Generation Network Visibility systems including Network Packet Brokers, Bypass Switches, and Network TAPs.
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...