Quick look from BMO's Sohrab MNot much pith in here.
RY-NYSE Rating Market Perform Price: Feb-23 $112.17 Target $111.00 Total Rtn 3% Bottom Line: RY's operating EPS of $2.69 beat our/consensus expectation of $2.35/$2.28. The beat to us was largely on lower PCLs of 6bps (Stage 1&2: (7)bps; Stage 3: 13bps) vs. our expectation of 25bps. Relative to us, higher P&C (better credit), Capital Markets (strong trading revenue), Wealth, and I&TS were partly offset by lower Insurance; PTPP was up ~3% y/y on ~3% higher revenue. Balance sheet remains strong with CET1 ratio of 12.5%/LCR ratio of 141%. Key Points • Credit Provisioning Included Reserve Releases. Total PCL in the quarter was $110MM/6bps and included $97MM of reserve releases on performing loans (vs. $428MM/25bps last quarter). Total allowances (specifics + collectives) now stand at $5.9B or 129bps of credit RWA (vs. "through-the-cycle" average of 88bps). COVID-19 affected industries of consumer discretionary, commercial real estate (retail), O&G, transportation, and media accounted for ~$37B/5% of total loans & BAs (stable q/q). • Deferral programs have largely ended, with balances now at ~2B (down from ~ $10B last quarter) of personal and commercial loans in Canadian banking and CNB. • PTPP income growth of ~3% y/y and +0.2% operating leverage. Expenses were down ~2.6% y/y; NIX of 56.1% improved slightly from 56.2% in Q1/20. Revenue increased 2.8% y/y reflecting volume growth and strong trading revenue ($1,377MM, up 9% y/y; strong equities and compared with prior 8-qtr average of $1,096MM), partly offset by lower margins. Total bank non-trading NIM was 249bps, down 30bps y/y, reflecting the impact of lower rates and product mix (Cdn Banking NIM down 17bps y/y, largely due to lower rates). • Strong Balance Sheet and Liquidity Position. CET1 ratio of 12.5% was flat q/ q as internal capital generation was offset by RWA growth. Total RWAs up ~2% sequentially on ~1% higher overall average loans & BAs q/q; RWA density was 32.9% up from 33.3% last quarter and 34.4% last year. LCR was 141%, lower q/q (5-year average of ~127%).