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 2013 Report to Shareholders and
Supplementary Financial Information are available on our website at rbc.com/investorrelations.
TORONTO, Aug. 29, 2013 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE)
today reported record net income of $2,304 million for the quarter
ended July 31, 2013, up $64 million or 3% from the prior year and up
$368 million or 19% from last quarter. We also announced an increase to
our quarterly dividend of $0.04 or 6%, to $0.67 per share.
Excluding specified items as discussed on page 3 of this Earnings
Release, net income was $2,214 million, up $236 million or 12%(1) from last year and up $247 million or 13%(1) from last quarter. Our solid results were driven by continued strength
across most of our businesses, including record earnings in Personal &
Commercial Banking and Wealth Management.
"We continue to deliver solid performance, with record earnings of over
$2.3 billion, as we leverage our strength, scale, and strong capital
position to successfully execute on our disciplined growth strategy
through a slow growth environment," said Gordon M. Nixon, RBC President
and CEO. "Today we are also pleased to announce a 6% increase in our
quarterly dividend".
Q3 2013 compared to Q3 2012
|
|
|
|
YTD 2013 compared to YTD 2012
|
• Net income of $2,304 million (up 3% from $2,240 million)
|
|
|
|
• Net income of $6,310 million (up 12% from $5,628 million)
|
• Diluted earnings per share (EPS) of $1.52 (up $0.05 from $1.47)
|
|
|
|
• Diluted EPS of $4.15 (up $0.47 from $3.68)
|
• Return on common equity (ROE) of 20.9% (down from 22.7%)
|
|
|
|
• ROE of 19.7% (up from 19.6%)
|
• Basel III Common Equity Tier 1 (CET1) ratio of 9.2%
|
|
|
|
|
Results and measures excluding specified items(1), as detailed on page 3, include a favourable income tax adjustment of
$90 million in the current quarter, a restructuring charge of $44
million ($31 million after-tax) in the prior quarter and net favourable
adjustments of $262 million after-tax in the prior year.
Excluding specified items(1): Q3 2013 compared to Q3 2012
|
|
|
|
Excluding specified items(1): YTD 2013 compared to YTD 2012
|
• Net income of $2,214 million (up 12% from $1,978 million)
|
|
|
|
• Net income of $6,251 million (up 12% from $5,568 million)
|
• Diluted EPS of $1.46 (up $0.17 from $1.29)
|
|
|
|
• Diluted EPS of $4.11 (up $0.47 from $3.64)
|
• ROE of 20.0% (up from 19.9%)
|
|
|
|
• ROE of 19.5% (up from 19.3%)
|
Personal & Commercial Banking net income was a record $1,180 million, up $78 million or 7% compared
to last year, largely due to solid volume growth across all businesses
in Canada and lower provision for credit losses (PCL) reflecting
improved credit quality. The inclusion of our acquisition of Ally
Canada also contributed to the increase. Excluding the prior year's
favourable mortgage prepayment adjustment, net income increased
$170 million or 17%(1).
Compared to last quarter, net income was up $123 million or 12%, largely
due to the positive impact of seasonal factors, including additional
days in the quarter, and volume growth across most businesses in
Canada.
Wealth Management net income was a record $236 million, up $80 million or 51% compared to
last year, mainly due to higher average fee-based client assets
resulting from net sales and capital appreciation. Higher transaction
volumes also contributed to the increase. Excluding an unfavourable
impact of $29 million ($21 million after-tax) related to certain
regulatory and legal matters in the prior year, earnings were up $59
million or 33%(1). Compared to the prior quarter, net income was up $11 million or 5%,
mainly due to higher average fee-based client assets.
_______________________________________
1 These measures are non-GAAP. For further information, including a
reconciliation, refer to the non-GAAP measures section on page 3 of
this Earnings Release.
Insurance net income was $160 million, down $19 million or 11% from a year ago as
higher earnings from a new U.K. annuity contract this quarter were
mostly offset by higher claims costs including net claims of $14
million ($10 million after-tax) related to severe weather conditions in
Alberta and Ontario. In addition, the prior year benefitted from a $33
million ($24 million after-tax) reduction of policy acquisition
cost-related liabilities reflecting changes to our proprietary
distribution channel. Compared to the prior quarter, earnings decreased
$6 million or 4%.
Investor & Treasury Services net income was $104 million, up $53 million from a year ago, primarily
due to higher revenue and our ongoing focus on cost management
activities in Investor Services. Incremental earnings related to our
additional 50% ownership of Investor Services also contributed to the
increase. These factors were partially offset by lower funding and
liquidity revenue. Excluding last year's loss related to the
acquisition of RBC Dexia, net income increased $42 million(1). Compared to the prior quarter, net income increased $37 million,
largely driven by higher securities lending as the current quarter was
favourably impacted by the European dividend season, partially offset
by lower funding and liquidity revenue. Excluding last quarter's
restructuring charge, net income increased $6 million or 6%(1).
Capital Markets net income was $388 million, down $41 million or 10% from a year ago,
primarily due to lower fixed income trading revenue, partly as a result
of market concerns related to the planned phase-out of the U.S.
quantitative easing program, and lower investment banking activities
compared to strong levels last year. These factors were partially
offset by lower variable compensation and a favourable income tax
adjustment of $31 million related to the first half of the current
year, as a result of a lower effective tax rate for the current year.
Compared to last quarter, earnings were flat, as lower investment
banking activities across most geographies, and lower fixed income
trading revenue were offset by lower variable compensation, the
favourable income tax adjustment related to the first half of the
current year, and growth in lending, primarily in the U.S.
Corporate Support net income was $236 million, largely reflecting net favourable tax
adjustments, including a $90 million income tax adjustment related to
the prior year. Asset/liability management activities also contributed
to our results.
Capital - As at July 31, 2013, Basel III Common Equity Tier 1 (CET1) ratio was
9.2%, up 10 basis points compared to last quarter, driven by strong
internal capital generation.
Credit Quality - Total PCL of $267 million decreased $57 million or 18% from a year ago,
mainly due to lower provisions in our Caribbean and Canadian Banking
portfolios reflecting improved credit quality, partially offset by
higher provisions in Wealth Management. Total PCL decreased $21 million
or 7% from the prior quarter, mainly due to decreases in our Canadian
Banking and Capital Markets portfolios, partially offset by an increase
in Wealth Management. PCL ratio of 26 basis points declined 8 basis
points compared to the prior year and 3 basis points compared to last
quarter.
-----------------------------------------------
1 These measures are non-GAAP. For further information, including a
reconciliation, refer to the non-GAAP measures section on page 3 of
this Earnings Release.
Non-GAAP measures
Results and measures excluding specified items are non-GAAP measures.
Specified items include a favourable income tax adjustment of $90
million in the current quarter, a restructuring charge of $44 million
($31 million after-tax) in the prior quarter, and net favourable
adjustments of $262 million after-tax in the prior year including the
release of a $128 million tax uncertainty provision and net interest
income of $72 million ($53 million after-tax) related to the settlement
of several tax matters, a change in estimate of mortgage prepayment
interest of $125 million ($92 million after-tax), and a loss of $12
million ($11 million after-tax) related to our acquisition of the
remaining 50% interest in RBC Dexia.
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 2013 Report to Shareholders.
|
Net Income excluding specified items
|
(Millions of Canadian dollars, except per share and percentage amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended July 31, 2013
|
|
|
For the three months ended July 31, 2012
|
|
|
|
Reported
|
|
|
Income tax
adjustment
|
|
|
Adjusted
|
|
|
Reported
|
|
|
Tax
settlement
|
|
|
Mortgage
prepayment
adjustment
|
|
|
Loss related
to RBC Dexia
acquisition
|
|
|
Adjusted
|
Net income
|
|
$
|
2,304
|
|
$
|
(90)
|
|
$
|
2,214
|
|
$
|
2,240
|
|
$
|
(181)
|
|
$
|
(92)
|
|
$
|
11
|
|
$
|
1,978
|
Basic earnings per share
|
|
$
|
1.54
|
|
$
|
(0.06)
|
|
$
|
1.48
|
|
$
|
1.49
|
|
$
|
(0.13)
|
|
$
|
(0.06)
|
|
$
|
0.01
|
|
$
|
1.31
|
Diluted earnings per share
|
|
$
|
1.52
|
|
$
|
(0.06)
|
|
$
|
1.46
|
|
$
|
1.47
|
|
$
|
(0.12)
|
|
$
|
(0.06)
|
|
$
|
-
|
|
$
|
1.29
|
ROE
|
|
|
20.9%
|
|
|
|
|
|
20.0%
|
|
|
22.7%
|
|
|
|
|
|
|
|
|
|
|
|
19.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
I&TS
restructuring
charge
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,936
|
|
$
|
31
|
|
$
|
1,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
1.28
|
|
$
|
0.02
|
|
$
|
1.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
1.27
|
|
$
|
0.02
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROE
|
|
|
18.5%
|
|
|
|
|
|
18.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended July 31, 2013
|
|
|
For the nine months ended July 31, 2012
|
|
|
|
Reported
|
|
|
Income
tax
adjustment
|
|
|
I&TS
restructuring
charge
|
|
|
Adjusted
|
|
|
Reported
|
|
|
Tax
settlement
|
|
|
Mortgage
prepayment
adjustment
|
|
|
Loss related
to RBC Dexia
acquisition
|
|
|
Adjusted
|
Net income
|
|
$
|
6,310
|
|
$
|
(90)
|
|
$
|
31
|
|
$
|
6,251
|
|
$
|
5,628
|
|
$
|
(181)
|
|
$
|
(92)
|
|
$
|
213
|
|
$
|
5,568
|
Basic earnings per share
|
|
$
|
4.18
|
|
$
|
(0.06)
|
|
$
|
0.02
|
|
$
|
4.14
|
|
$
|
3.72
|
|
$
|
(0.13)
|
|
$
|
(0.06)
|
|
$
|
0.15
|
|
$
|
3.68
|
Diluted earnings per share
|
|
$
|
4.15
|
|
$
|
(0.06)
|
|
$
|
0.02
|
|
$
|
4.11
|
|
$
|
3.68
|
|
$
|
(0.12)
|
|
$
|
(0.06)
|
|
$
|
0.14
|
|
$
|
3.64
|
ROE
|
|
|
19.7%
|
|
|
|
|
|
|
|
|
19.5%
|
|
|
19.6%
|
|
|
|
|
|
|
|
|
|
|
|
19.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal & Commercial Banking net income, excluding specified items
|
(Millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended July 31, 2012
|
|
|
|
|
|
For the nine months ended July 31, 2012
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Mortgage
prepayment
adjustment
|
|
|
Adjusted
|
|
|
|
|
|
Reported
|
|
|
Mortgage
prepayment
adjustment
|
|
|
Adjusted
|
|
|
|
|
|
|
Net income
|
|
$
|
1,102
|
|
$
|
(92)
|
|
$
|
1,010
|
|
|
|
|
$
|
3,054
|
|
$
|
(92)
|
|
$
|
2,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor & Treasury Services net income, excluding specified items
|
(Millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended April 30, 2013
|
|
|
|
|
|
For the the three months ended July 31, 2012
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Restructuring
charge
|
|
|
Adjusted
|
|
|
|
|
|
Reported
|
|
|
Loss related
to RBC Dexia
acquisition
|
|
|
Adjusted
|
|
|
|
|
|
|
Net income
|
|
$
|
67
|
|
$
|
31
|
|
$
|
98
|
|
|
|
|
$
|
51
|
|
$
|
11
|
|
$
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended July 31, 2013
|
|
|
|
|
|
For the nine months ended July 31, 2012
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Restructuring
charge
|
|
|
Adjusted
|
|
|
|
|
|
Reported
|
|
|
Loss related
to RBC Dexia
acquisition
|
|
|
Adjusted
|
|
|
|
|
|
|
Net income
|
|
$
|
251
|
|
$
|
31
|
|
$
|
282
|
|
|
|
|
$
|
13
|
|
$
|
213
|
|
$
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 future business growth and efficiencies, our financial
performance objectives, vision and strategic goals; and include our
President and 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
future business growth and efficiencies, 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, operational, legal and
regulatory compliance, insurance, reputation and strategic risks and
other risks discussed in the Risk management and Overview of other
risks sections of our 2012 Annual Report and in the Risk management
section of our Q3 2013 Report to Shareholders; the impact of changes in
laws and regulations, including relating to the Dodd-Frank Wall Street
Reform and Consumer Protection Act and the regulations issued and to be
issued thereunder, the Basel Committee on Banking Supervision's global
standards for capital and liquidity reform, over-the-counter
derivatives reform, the payments system in Canada, consumer protection
measures and regulatory reforms in the U.K. and Europe; general
business and economic market conditions in Canada, the United States
and certain other countries in which we operate, including the effects
of the European sovereign debt crisis, and the high levels of Canadian
household debt; cybersecurity; the effects of changes in government
fiscal, monetary and other policies; the effects of competition in the
markets in which we operate; our ability to attract and retain
employees; the accuracy and completeness of information concerning our
clients and counterparties; judicial or regulatory judgments and legal
proceedings; development and integration of our distribution networks;
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 2012 Annual Report, as updated by the Overview section in our Q3
2013 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 2012 Annual
Report to Shareholders and in the Risk management section of our Q3
2013 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 2013 Report to Shareholders on our website at rbc.com/investorrelations.
Quarterly conference call and webcast presentation
Our quarterly conference call is scheduled for Thursday, August 29, 2013
at 7:30 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 (416-695-7806 or 1-888-789-9572, passcode 2674741#).
Please call between 7:20 a.m. and 7:25 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 pm
(EDT) on August 29 until November 27, 2013 at: www.rbc.com/investorrelations/ir_quarterly.html or by telephone (905-694-9451 or 1-800-408-3053, passcode 3629188#).
ABOUT RBC
Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate
under the master brand name RBC. We are Canada's largest bank as
measured by assets and market capitalization, and are among 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,
and investor services and wholesale banking on a global basis. We
employ approximately 80,000 full- and part-time employees who serve
more than 15 million personal, business, public sector and
institutional clients through offices in Canada, the U.S. and 44 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