Q3 2024 Royal Bank of Canada Earnings Call Transcript
Key Points
- Royal Bank of Canada (RY) reported strong third-quarter earnings of $4.5 billion, with adjusted earnings of $4.7 billion.
- Canadian banking net interest income increased by 26% year over year, driven by higher interest rates and strong volume growth.
- Asset management and wealth management revenue grew by over 15%, supported by higher transactional revenue.
- Capital markets reported revenue of $3 billion, with pre-tax, pre-provision earnings of $1.2 billion, indicating strong market share gains.
- The acquisition of HSBC Canada contributed $239 million in earnings, with $292 million in adjusted earnings, and achieved significant cost synergies.
- Higher interest rates and rising unemployment in Canada are impacting consumer spending and business investment.
- Non-interest expenses increased by 11% year over year, driven by higher variable compensation and integration costs related to HSBC Canada.
- Credit quality showed signs of weakening, with net credit downgrades and elevated watch lists and delinquency rates.
- Provisions on impaired loans were up, particularly in the Canadian banking portfolio, driven by higher provisions in commercial banking and residential mortgages.
- The macroeconomic environment remains uncertain, with potential impacts from geopolitical volatility and fluctuating interest rates.
Good morning, ladies and gentlemen, and welcome to the RBC 2024 third-quarter results conference call. Please be advised that this call is being recorded.
I would now like to turn the meeting over to Asim Imran. Please go ahead.
Thank you, and good morning, everyone. Speaking today will be Dave McKay, President and Chief Executive Officer; Katherine Gibson, Interim Chief Financial Officer; and Graeme Hepworth, Chief Risk Officer. Also joining us today for your questions, Neil McLaughlin, Group Head, Personal and Commercial Banking; Doug Guzman, Group Head, Wealth Management and Insurance; and Derek Neldner, Group Head, Capital Markets.
As noted on slide 1, our comments may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing
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