November 30, 2023

ROYAL BANK OF CANADA REPORTS FOURTH QUARTER AND 2023 RESULTS

All amounts are in Canadian dollars and are based on our audited Annual and unaudited Interim Consolidated Financial Statements for the year and quarter ended October 31, 2023 and related notes prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, unless otherwise noted. Our 2023 Annual Report (which includes our audited Annual Consolidated Financial Statements and accompanying Management’s Discussion & Analysis), our 2023 Annual Information Form and our Supplementary Financial Information are available on our website at http://www.rbc.com/investorrelations and on https://www.sedarplus.ca.

2023 Net income
$14.9 Billion
Down 6% YoY

2023 Diluted EPS1
$10.50
Down 5% YoY

2023 Total PCL2
$2,468 Million
PCL on loans ratio3
up 23 bps4 YoY

2023 ROE5
14.2%
Down from 16.4%
last year

CET1 Ratio6
14.5%
Above regulatory
requirements

2023 Adjusted net income7
$16.1 Billion
Up slightly from
last year

2023 Adjusted diluted EPS7
$11.38
Up 2% YoY

2023 Total ACL8
$5.4 Billion
ACL on loans ratio9
up 3 bps QoQ

2023 Adjusted ROE7
15.4%
Down from 16.6%
last year

2023 LCR10
131%
Down from 134%
last quarter

TORONTO, Nov. 30, 2023 /CNW/ – Royal Bank of Canada11 (TSX: RY) (NYSE: RY) today reported net income of $14.9 billion for the year ended October 31, 2023, down $941 million or 6% from the prior year. Diluted EPS12 was $10.50, down 5% over the prior year. Adjusted net income7 of $16.1 billion was up slightly from the prior year. Adjusted diluted EPS7 of $11.38 was up 2% from the prior year. 1

Our consolidated results reflect an increase in total PCL of $2.0 billion from a year ago, primarily reflecting higher provisions in Personal & Commercial Banking and Capital Markets. The PCL on loans ratio of 29 bps increased 23 bps from the prior year. The PCL on impaired loans ratio12 was 21 bps, up 11 bps from the prior year as provisions continue to trend upwards from pandemic lows. Results benefitted from lower taxes reflecting a favourable shift in earnings mix and the impact of the specified item relating to certain deferred tax adjustments of $578 million.

Pre-provision, pre-tax earnings7 of $20.9 billion were up 2% from last year, mainly reflecting higher net interest income driven by higher spreads and strong volume growth in Canadian Banking and higher loan growth in Wealth Management. Higher revenue in Capital Markets reflecting higher revenue in Corporate & Investment Banking and Global Markets also contributed to the increase. These factors were partially offset by higher staff-related expenses (including severance) and professional fees. Ongoing technology investments and higher discretionary costs to support strong client-driven growth also contributed to higher expenses.

Our capital position remained robust with a Common Equity Tier 1 (CET1) ratio6 of 14.5%, up 190 bps from the prior year, supporting solid volume growth. In addition, this year we returned $7.4 billion to our shareholders through dividends.

Today, we declared a quarterly dividend of $1.38 per share reflecting an increase of $0.03 or 2%.

“In a year defined by uncertainty, RBC served as a stabilizing force for our clients, communities, colleagues and shareholders. Our overall performance in 2023 exemplifies our standing as an all-weather bank. Our strong balance sheet, prudent risk management and diversified business model continue to underpin our ability to deliver differentiated client experiences and advice across all our businesses. As we enter 2024, RBC will work to provide the best client value as efficiently as possible, sharpening our focus to ensure our people and investments are aligned to build the bank of the future. Across RBC, our employees remain steadfast in their commitment to helping clients and communities adapt and thrive in a changing world.”

– Dave McKay, President and Chief Executive Officer of Royal Bank of Canada

_______________________

Earnings per share (EPS).

Provision for credit losses (PCL).

PCL on loans ratio is calculated as PCL on loans as a percentage of average net loans and acceptances.

Basis points (bps).

Return on equity (ROE). For further information, refer to the Key performance and non-GAAP measures section on pages 11 to 13 of this Earnings Release.

This ratio is calculated by dividing Common Equity Tier 1 (CET1) by risk-weighted assets, in accordance with the Office of the Superintendent of Financial Institutions’ (OSFI) Basel III Capital Adequacy Requirements (CAR) guideline.

These are non-GAAP measures. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section on pages 11 to 13 of this Earnings Release.

Allowance for credit losses (ACL).

ACL on loans ratio is calculated as ACL on loans as a percentage of total loans and acceptances.

The Liquidity coverage ratio (LCR) is calculated in accordance with OSFI’s Liquidity Adequacy Requirements (LAR) guideline. For further details, refer to the Liquidity and funding risk section of our 2023 Annual Report.

When we say “we”, “us”, “our”, or “RBC”, we mean Royal Bank of Canada and its subsidiaries, as applicable.

PCL on impaired loans ratio is calculated as PCL on impaired loans as a percentage of average net loans and acceptances.

2023 Full-Year Business Segment Performance

1% lower earnings in Personal & Commercial Banking, primarily attributable to higher provisions on performing and impaired loans reflecting a credit environment impacted by slowing economic growth and rising interest rates, with the benchmark interest rate up by 125 bps in fiscal 2023 and by 475 bps since the beginning of March 2022. Higher expenses mainly reflecting staff-related (including higher average FTE) and marketing costs, as well as ongoing investments in technology to enhance the client experience and deliver personalized advice, also contributed to the decrease in earnings. Our results were also impacted by a higher effective tax rate reflecting the 1.5% increase in the Canadian corporate tax rate, which was implemented at the beginning of the fiscal year. These factors were partially offset by higher net interest income reflecting higher spreads, largely as a result of interest rate increases, and average volume growth of 8% in deposits (with significant growth in term deposit products reflecting client preference for higher yields) and 7% in loans (with strong double-digit loan growth in business lending and credit cards) in Canadian Banking. Approximately 650 thousand net new clients were added in Canadian Banking in 2023, up more than 60% from last year.24% lower earnings in Wealth Management, mainly attributable to higher staff costs and professional fees, largely reflecting continued investments in the operational infrastructure of City National. Higher PCL and the impact of the specified item relating to impairment losses on our interest in an associated company also contributed to the decrease. These factors were partially offset by higher net interest income driven by higher interest rates. Adjusted net income[13] decreased 19%. Our wealth advisory businesses performed well with continued net positive flows of fee-based client assets reflecting the quality of our advice, clients’ trust in our brand and the breadth of our investment and holistic wealth planning solutions. City National saw average loan growth of 12% (based on U.S. dollar figures).6% lower earnings in Insurance, largely due to higher capital funding costs, partially offset by improved claims experience. The business generated over $1 billion in group annuity new business sales representing ~20% growth, and providing retirement income security to more Canadian retirees.23% earnings growth in Capital Markets, mainly due to lower taxes reflecting changes in earnings mix, higher revenue in Corporate & Investment Banking and Global Markets and the impact of foreign exchange translation. While industry-wide fee pools remained muted as clients largely maintained a risk-off position, our market share gains helped deliver strong results. These factors were partially offset by higher PCL, higher compensation and ongoing technology investments. Trading activity remained elevated as we saw improvement in the credit trading environment as well as robust results in macro-focused businesses, such as rates, underpinned by strong client flows.

Q4 2023 Performance
Net income and diluted EPS of $4.1 billion and $2.90, respectively, were both up 6% from a year ago. Adjusted net income13 and adjusted diluted EPS13 of $4.0 billion and $2.78, respectively, were up 1% and flat compared to the prior year, respectively.

Results this quarter reflected higher provisions for credit losses, with a PCL on loans ratio of 34 bps. Results benefitted from lower taxes reflecting a favourable shift in earnings mix and the impact of the specified item relating to certain deferred tax adjustments of $578 million.

Pre-provision, pre-tax earnings13 of $4.8 billion were down 9% from a year ago, due to lower revenue in Wealth Management, largely reflecting the impact of impairment losses with respect to our interest in an associated company, as well as lower revenue in Global Markets. Results were also impacted by higher expenses, reflecting higher staff-related costs including severance, higher professional fees, ongoing technology investments and other items, such as legal provisions in U.S. Wealth Management. These factors were partially offset by higher net interest income driven by higher spreads and strong volume growth in Canadian Banking, higher revenue in Corporate & Investment Banking, and higher fee-based revenue in Wealth Management.

Compared to last quarter, net income was up $259 million or 7% reflecting higher results in Corporate Support, Insurance and Capital Markets, partially offset by lower results in Wealth Management and Personal & Commercial Banking. Adjusted net income13 was down 1% over the same period.

Q4 2023
Compared to
Q4 2022

Reported:

· Net income of $4,131 million

· Diluted EPS of $2.90

· ROE of 15.2%

· CET1 ratio14 of 14.5%

↑ 6%

↓40 bps

↑190 bps190 bps

Adjusted13:

· Net income of $3,965 million

· Diluted EPS of $2.78

· ROE of 14.6%

↑ 1%

→ 0%

↓ 120 bps

Q4 2023
Compared to
Q3 2023

· Net income of $4,131 million

· Diluted EPS of $2.90

· ROE of 15.2%

· CET1 ratio14 of 14.5%14

↑ 7%

↑ 6%

↑ 60 bps

↑ 40 bps

· Net income of $3,965 million

· Diluted EPS of $2.78

· ROE of 14.6%

↓ 1%

↓ 2%

↓ 50 bps

_________________

These are non-GAAP measures. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section on pages 11 to 13 of this Earnings Release.

This ratio is calculated by dividing CET1 by risk-weighted assets, in accordance with OSFI’s Basel III CAR guideline.

Q4 2023 Business and Reporting Segment Performance

Personal & Commercial Banking

Net income of $2,091 million decreased $48 million or 2% from a year ago, primarily attributable to higher PCL and higher staff-related costs, largely reflecting severance. A higher effective tax rate reflecting the 1.5% increase in the Canadian corporate tax rate also contributed to the decrease. These factors were partially offset by higher net interest income, reflecting higher spreads and average volume growth of 7% in Canadian Banking.

Compared to last quarter, net income decreased $43 million or 2%, primarily due to higher PCL on performing loans in our Canadian Banking portfolios driven by unfavourable changes in credit quality and higher staff-related costs, largely reflecting severance. These factors were partially offset by higher net interest income, primarily attributable to higher spreads and average volume growth of 3% in Canadian Banking.

Wealth Management

Net income decreased $607 million or 74% from a year ago, mainly due to the impact of the specified item relating to impairment losses on our interest in an associated company, higher staff costs and professional fees, largely reflecting continued investments in the operational infrastructure of City National, and the impact of legal provisions. These factors were partially offset by higher average fee-based client assets reflecting market appreciation and net sales. Adjusted net income15 decreased $430 million or 52%.

Compared to last quarter, net income decreased $448 million or 68%, mainly due to the impact of the specified item relating to impairment losses on our interest in an associated company, the impact of legal provisions and the gain on the partial sale of RBC Investor Services® operations in the prior quarter. These factors were partially offset by higher net interest income driven by higher interest rates. Adjusted net income15 decreased $271 million or 41%.

Insurance

Net income of $289 million increased $21 million or 8% from last year, mainly due to improved claims experience, a premium adjustment in the prior year, benefits from favourable reinsurance contract renegotiations and business growth. These factors were partially offset by lower favourable investment-related experience and higher capital funding costs.

Compared to last quarter, net income increased $62 million or 27%, mainly due to favourable annual actuarial assumption updates and improved claims experience. These factors were partially offset by lower favourable investment-related experience.

Capital Markets

Net income of $987 million increased $260 million or 36% from a year ago, primarily due to lower taxes reflecting changes in earnings mix and higher revenue in Corporate & Investment Banking. These factors were partially offset by higher PCL and lower revenue in Global Markets.

Compared to last quarter, net income increased $38 million or 4%, mainly due to lower taxes reflecting changes in earnings mix and lower PCL mainly on impaired loans. Higher loan syndication activity, largely in the U.S., also contributed to the increase. These factors were partially offset by lower fixed income and equity trading revenue across most regions.

Corporate Support

Net income was $549 million in the current quarter, primarily due to a specified item relating to certain deferred tax adjustments of $578 million, as well as a favourable impact from tax-related items. These factors were partially offset by the after-tax impact of transaction and integration costs of $167 million relating to the planned acquisition of HSBC Canada, which is treated as a specified item. Net loss was $101 million in the prior quarter, primarily due to transaction and integration costs of $84 million relating to the planned acquisition of HSBC Canada, which is treated as a specified item. Net loss was $74 million in the prior year, primarily due to residual unallocated items and unfavourable tax adjustments.

Capital, Liquidity and Credit Quality

Capital – As at October 31, 2023, our CET1 ratio16 was 14.5%, up 190 bps from last year, mainly reflecting net internal capital generation, the favorable impact of the Basel III reforms and share issuances under the DRIP. These factors were partially offset by risk-weighted asset growth (excluding FX) and the impact of the CRD and other tax related adjustments.

Liquidity – For the quarter ended October 31, 2023, the average LCR17 was 131%, which translates into a surplus of approximately $91 billion, compared to 134% and a surplus of approximately $97 billion in the prior quarter. Average LCR levels decreased from prior quarter primarily due to lower wholesale funding levels and loan growth, partially offset by an increase in client deposits.

The Net Stable Funding Ratio18 (NSFR) as at October 31, 2023 was 113%, which translates into a surplus of approximately $109 billion, compared to 112% and a surplus of approximately $104 billion in the prior quarter. NSFR increased compared to the prior quarter mainly due to an increase in deposits and stable funding, partially offset by loan growth. 17

________________

These are non-GAAP measures. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section on pages 11 to 13 of this Earnings Release.

This ratio is calculated by dividing CET1 by risk-weighted assets, in accordance with OSFI’s Basel III CAR guideline.

The LCR is calculated in accordance with OSFI’s LAR guideline. For further details, refer to the Liquidity and funding risk section of our 2023 Annual Report.

Credit Quality

Q4 2023 vs. Q4 2022
Total PCL of $720 million increased $339 million or 89% from a year ago, primarily reflecting higher provisions in Personal & Commercial Banking and Capital Markets. The PCL on loans ratio of 34 bps increased 16 bps. The PCL on impaired loans ratio of 25 bps increased 13 bps.

PCL on performing loans of $194 million increased $68 million or 54%, mainly due to higher provisions in Personal & Commercial Banking as last year reflected the impact of releases in our Caribbean Banking portfolios driven by the recovery from the COVID-19 pandemic and model updates.

PCL on impaired loans of $539 million increased $285 million, mainly reflecting higher provisions in our Canadian Banking portfolios. Higher provisions in Capital Markets across most sectors also contributed to the increase.

Q4 2023 vs. Q3 2023
Total PCL increased $104 million or 17% from last quarter, primarily reflecting higher provisions in Personal & Commercial Banking and U.S. Wealth Management (including City National), partially offset by lower provisions in Capital Markets. The PCL on loans ratio of 34 bps increased 5 bps. The PCL on impaired loans ratio of 25 bps increased 2 bps.

PCL on performing loans increased $74 million or 62%, mainly due to higher provisions in our Canadian Banking portfolios, largely driven by unfavourable changes in credit quality.

PCL on impaired loans increased $40 million or 8%, mainly due to higher provisions in our Canadian Banking portfolios and in U.S. Wealth Management (including City National), primarily in the telecom and media and consumer discretionary sectors. This was partially offset by lower provisions in Capital Markets.

_____________________

The NSFR is calculated in accordance with OSFI’s LAR guideline. For further details, refer to the Liquidity and funding risk section of our 2023 Annual Report.

Selected financial and other highlights

As at or for the three months ended

As at or for the year ended

October 31

July 31

October 31

(Millions of Canadian dollars, except per share, number of and percentage amounts)

2023

2022

2023

2022

Total revenue

13,026

14,489

12,567

56,129

48,985

Provision for credit losses (PCL)

720

616

381

2,468

484

Insurance policyholder benefits, claims and acquisition expense (PBCAE)

1,379

116

4,022

1,783

Non-interest expense

8,143

7,861

7,209

31,173

26,609

Income before income taxes

4,071

4,633

4,861

18,466

20,109

Net income

4,131

3,872

3,882

14,866

15,807

Net income – adjusted (1)

3,965

4,017

3,934

16,083

15,998

Segments – net income

Personal & Commercial Banking

2,091

2,134

2,139

8,266

8,370

Wealth Management (2)

215

663

822

2,427

3,210

Insurance

289

227

268

803

857

Capital Markets (2)

987

949

727

4,139

3,368

Corporate Support

549

(101)

(74)

(769)

Net income

4,131

3,872

3,882

14,866

15,807

Selected information

Earnings per share (EPS) – basic

2.90

2.74

2.75

10.51

11.08

– diluted

2.90

2.73

2.74

10.50

11.06

Earnings per share (EPS) – basic adjusted (1)

2.78

2.84

2.78

11.39

11.21

– diluted adjusted (1)

2.78

2.84

2.78

11.38

11.19

Return on common equity (ROE) (3), (4)

15.2 %

14.6 %

15.6 %

14.2 %

16.4 %

Return on common equity (ROE) adjusted (1)

14.6 %

15.1 %

15.8 %

15.4 %

16.6 %

Average common equity (3)

105,850

103,850

97,150

102,800

94,700

Net interest margin (NIM) – on average earning assets, net (4)

1.51 %

1.50 %

1.56 %

1.50 %

1.48 %

PCL on loans as a % of average net loans and acceptances

0.34 %

0.29 %

0.18 %

0.29 %

0.06 %

PCL on performing loans as a % of average net loans and acceptances

0.09 %

0.06 %

0.08 %

(0.04) %

PCL on impaired loans as a % of average net loans and acceptances

0.25 %

0.23 %

0.12 %

0.21 %

0.10 %

Gross impaired loans (GIL) as a % of loans and acceptances

0.42 %

0.38 %

0.26 %

0.42 %

0.26 %

Liquidity coverage ratio (LCR) (4), (5)

131 %

134 %

125 %

131 %

125 %

Net stable funding ratio (NSFR) (4), (5)

113 %

112 %

113 %

112 %

Capital, Leverage and Total loss absorbing capacity (TLAC) ratios (4), (6)

Common Equity Tier 1 (CET1) ratio

14.5 %

14.1 %

12.6 %

14.5 %

12.6 %

Tier 1 capital ratio

15.7 %

15.4 %

13.8 %

15.7 %

13.8 %

Total capital ratio

17.6 %

17.3 %

15.4 %

17.6 %

15.4 %

Leverage ratio

4.3 %

4.2 %

4.4 %

4.3 %

4.4 %

TLAC ratio

31.0 %

30.9 %

26.4 %

31.0 %

26.4 %

TLAC leverage ratio

8.5 %

Selected balance sheet and other information (7)

Total assets

2,004,992

1,957,734

1,917,219

2,004,992

1,917,219

Securities, net of applicable allowance

409,730

372,625

318,223

409,730

318,223

Loans, net of allowance for loan losses

852,773

835,714

819,965

852,773

819,965

Derivative related assets

142,450

115,914

154,439

142,450

154,439

Deposits

1,231,687

1,215,671

1,208,814

1,231,687

1,208,814

Common equity

110,347

105,004

100,746

110,347

100,746

Total risk-weighted assets (RWA) (4), (6)

596,223

585,899

609,879

596,223

609,879

Assets under management (AUM) (4)

1,067,500

1,095,400

999,700

1,067,500

999,700

Assets under administration (AUA) (4), (8), (9)

4,338,000

4,420,000

5,653,600

4,338,000

5,653,600

Common share information

Shares outstanding (000s) – average basic

1,399,337

1,393,515

1,386,925

1,391,020

1,403,654

– average diluted

1,400,465

1,394,939

1,388,548

1,392,529

1,406,034

– end of period

1,400,511

1,394,997

1,382,911

1,400,511

1,382,911

Dividends declared per common share

1.35

1.28

5.34

4.96

Dividend yield (4)

4.5 %

4.2 %

4.0 %

4.3 %

3.7 %

Dividend payout ratio (4)

47 %

49 %

47 %

51 %

45 %

Common share price (RY on TSX) (10)

110.76

130.73

126.05

110.76

126.05

Market capitalization (TSX) (10)

155,121

182,368

174,316

155,121

174,316

Business information (number of)

Employees (full-time equivalent) (FTE)

91,398

93,753

91,427

91,398

91,427

Bank branches

1,247

1,257

1,271

1,247

1,271

Automated teller machines (ATMs)

4,341

4,353

4,368

4,341

4,368

Period average US$ equivalent of C$1.00 (11)

0.732

0.750

0.739

0.741

0.774

Period-end US$ equivalent of C$1.00

0.721

0.758

0.734

0.721

0.734

(1)

These are non-GAAP measures. For further details, including a reconciliation, refer to the Key performance and non-GAAP measures section of this Earnings Release. Amounts have been revised from those previously presented to conform to our basis of presentation for this non-GAAP measure.

(2)

Amounts have been revised from those previously presented to conform to our new basis of segment presentation. For further details, refer to the About Royal Bank of Canada section of our 2023 Annual Report.

(3)

Average amounts are calculated using methods intended to approximate the average of the daily balances for the period. This includes average common equity used in the calculation of ROE. For further details, refer to the Key performance and non-GAAP measures section of this Earnings Release.

(4)

See the Glossary section of our annual Management’s Discussion and Analysis dated November 29, 2023, for the fiscal year ended October 31, 2023, available at www.sedarplus.ca, for an explanation of the composition of this measure. Such explanation is incorporated by reference hereto.

(5)

The LCR and NSFR are calculated in accordance with the OSFI’s LAR guideline. LCR is the average for the three months ended for each respective period. For further details, refer to the Liquidity and funding risk section of our 2023 Annual Report.

(6)

Capital ratios and RWA are calculated using OSFI’s CAR guideline, the Leverage ratio is calculated using OSFI’s Leverage Requirements (LR) guideline, and both the TLAC and TLAC leverage ratios are calculated using OSFI’s TLAC guideline. The results for the three months and year ended October 31, 2023 and three months ended July 31, 2023 reflect our adoption of the revised CAR and LR guidelines that came into effect in Q2 2023 as part of OSFI’s implementation of the Basel III reforms. For further details, refer to the Capital management section of our 2023 Annual Report.

(7)

Represents period-end spot balances.

(8)

AUA includes $13 billion and $7 billion (July 31, 2023 – $13 billion and $7 billion, October 31, 2022 – $15 billion and $6 billion) of securitized residential mortgages and credit card loans, respectively.

(9)

Comparative amounts have been revised from those previously presented.

(10)

Based on TSX closing market price at period-end.

(11)

Average amounts are calculated using month-end spot rates for the period.

Personal & Commercial Banking

As at or for the three months ended

October 31

July 31

October 31

(Millions of Canadian dollars, except percentage amounts and as otherwise noted)

2023

2022

Net interest income

4,188

4,062

3,901

Non-interest income

1,530

1,501

1,518

Total revenue

5,718

5,563

5,419

PCL on performing assets

103

PCL on impaired assets

348

300

230

PCL

451

305

286

Non-interest expense

2,410

2,319

2,270

Income before income taxes

2,857

2,939

2,863

Net income

2,091

2,134

2,139

Revenue by business

Canadian Banking

5,434

5,292

5,179

Caribbean & U.S. Banking

284

271

240

Key ratios

ROE

26.7 %

28.1 %

30.5 %

NIM

2.77 %

2.74 %

2.72 %

Efficiency ratio (1)

42.1 %

41.7 %

41.9 %

Operating leverage (2)

(0.7) %

(1.5) %

8.9 %

Selected balance sheet information

Average total assets

631,500

619,700

597,600

Average total earning assets, net

599,400

588,400

569,000

Average loans and acceptances, net

607,200

596,000

574,300

Average deposits

621,000

601,100

570,200

Other information

AUA (3), (4), (5)

336,800

357,500

340,300

Average AUA

341,700

349,100

338,300

AUM (4)

5,900

5,700

5,600

Number of employees (FTE)

38,027

39,218

38,450

Credit information

PCL on impaired loans as a % of average net loans and acceptances

0.23 %

0.20 %

0.16 %

Other selected information – Canadian Banking

Net income

1,998

2,043

1,999

NIM

2.71 %

2.68 %

2.70 %

Efficiency ratio

40.9 %

40.5 %

40.3 %

Operating leverage

(1.4) %

(2.0) %

9.2 %

(1)

Calculated as non-interest expense divided by total revenue.

(2)

Defined as the difference between our revenue growth rate and non-interest expense growth rate.

(3)

AUA includes securitized residential mortgages and credit card loans as at October 31, 2023 of $13 billion and $7 billion, respectively (July 31, 2023 – $13 billion and $7 billion, October 31, 2022 – $15 billion and $6 billion).

(4)

Represents period-end spot balances.

(5)

Comparative amounts have been revised from those previously presented.

Q4 2023 vs. Q4 2022
Net income decreased $48 million or 2% from a year ago, primarily attributable to higher PCL and higher staff-related costs, largely reflecting severance. A higher effective tax rate reflecting the 1.5% increase in the Canadian corporate tax rate also contributed to the decrease. These factors were partially offset by higher net interest income, reflecting higher spreads and average volume growth of 7% in Canadian Banking.

Total revenue increased $299 million or 6%.

Canadian Banking revenue increased $255 million or 5%, primarily due to higher net interest income reflecting higher spreads and average volume growth of 9% in deposits and 6% in loans.

Caribbean & U.S. Banking revenue increased $44 million or 18%, mainly due to higher net interest income reflecting improved spreads.

Net interest margin was up 5 bps, mainly due to the impact of the higher interest rate environment.

PCL increased $165 million or 58%, mainly reflecting higher provisions on impaired loans in our Canadian Banking retail portfolios, resulting in an increase of 7 bps in the PCL on impaired loans ratio. Higher provisions on performing loans in our Caribbean Banking portfolios also contributed to the increase, mainly reflecting the impact of releases last year driven by the recovery from the COVID-19 pandemic and model updates. These drivers were partially offset by lower provisions on performing loans in our Canadian Banking retail portfolios.

Non-interest expense increased $140 million or 6%, mainly attributable to higher staff-related costs, largely reflecting severance.

Q4 2023 vs. Q3 2023
Net income decreased $43 million or 2% from last quarter, primarily due to higher PCL on performing loans in our Canadian Banking portfolios driven by unfavourable changes in credit quality and higher staff-related costs, largely reflecting severance. These factors were partially offset by higher net interest income, primarily attributable to higher spreads and average volume growth of 3% in Canadian Banking.

Net interest margin was up 3 bps, mainly due to the impact of the higher interest rate environment, partially offset by lower mortgage spreads mainly due to competitive pricing pressures.

Wealth Management

As at or for the three months ended

October 31

July 31

October 31

(Millions of Canadian dollars, except number of, percentage amounts and as otherwise noted)

2023

2023 (1)

2022 (1)

Net interest income (2)

1,143

1,047

1,189

Non-interest income (2)

3,045

3,355

3,098

Total revenue

4,188

4,402

4,287

PCL on performing assets

PCL on impaired assets

PCL

132

102

Non-interest expense

3,749

3,498

3,172

Income before income taxes

307

802

1,053

Net income

215

663

822

Revenue by business

Canadian Wealth Management

1,127

1,111

1,095

U.S. Wealth Management (including City National)

1,867

1,969

2,068

U.S. Wealth Management (including City National) (US$ millions)

1,369

1,477

1,529

Global Asset Management

674

635

644

International Wealth Management

338

324

169

Investor Services (3)

182

363

311

Key ratios

ROE

3.4 %

10.8 %

14.8 %

NIM (2)

2.91 %

2.48 %

2.86 %

Pre-tax margin (4)

7.3 %

18.2 %

24.6 %

Selected balance sheet information

Average total assets

177,600

191,900

185,300

Average total earning assets, net

156,000

167,400

164,900

Average loans and acceptances, net

114,200

112,400

111,900

Average deposits (3)

156,600

154,300

195,300

Other information

AUA (3), (5)

3,981,500

4,043,600

5,294,800

U.S. Wealth Management (including City National) (5)

752,700

756,300

700,100

U.S. Wealth Management (including City National) (US$ millions) (5)

542,800

573,500

513,700

Investor Services (5)

2,488,600

2,544,500

3,906,900

AUM (5)

1,058,900

1,086,800

991,500

Average AUA (3)

4,056,200

4,987,300

5,454,500

Average AUM

1,070,100

1,074,600

942,000

PCL on impaired loans as a % of average net loans and acceptances

0.24 %

0.13 %

0.04 %

Number of employees (FTE)

25,196

25,537

26,150

Number of advisors (6)

6,169

6,239

6,158

Adjusted results (7)

Total revenue – adjusted

4,430

4,402

4,287

Income before income taxes – adjusted

549

802

1,053

Net income – adjusted

392

663

822

U.S. Wealth Management (including City National) revenue – adjusted

2,109

1,969

2,068

U.S. Wealth Management (including City National) revenue (US$ millions) – adjusted

1,544

1,477

1,529

Key ratios – adjusted (7)

ROE – adjusted

6.3 %

10.8 %

14.8 %

Pre-tax margin – adjusted

12.4 %

18.2 %

24.6 %

For the three months ended

Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items

Q4 2023 vs

(Millions of Canadian dollars, except percentage amounts)

Q4 2022

Q3 2023

Increase (decrease):

Total revenue

PCL

Non-interest expense

Net income

(11)

Percentage change in average US$ equivalent of C$1.00

(1) %

(2) %

Percentage change in average British pound equivalent of C$1.00

(8) %

0 %

Percentage change in average Euro equivalent of C$1.00

(8) %

0 %

(1)

(2)

Amounts for the three months ended July 31, 2023 have been revised from those previously presented.

(3)

On July 3, 2023, we completed the partial sale of RBC Investor Services operations. The completion of the sale of the business of the U.K. branch of RBC Investor Services Trust and the RBC Investor Services business in Jersey remains subject to customary closing conditions, including regulatory approvals. For further details, refer to Note 6 of our 2023 Annual Consolidated Financial Statements.

(4)

Pre-tax margin is defined as Income before income taxes divided by Total revenue.

(5)

Represents period-end spot balances.

(6)

Represents client-facing advisors across all our Wealth Management businesses.

(7)

These are non-GAAP measures and non-GAAP ratios. During the year ended October 31, 2023, we recognized impairment losses of $177 million (pre-tax $242 million) on our interest in an associated company. For further details on this specified item, including a reconciliation, refer to the Key performance and non-GAAP measures section of this Earnings Release.

Q4 2023 vs. Q4 2022
Net income decreased $607 million or 74% from a year ago, mainly due to the impact of the specified item relating to impairment losses on our interest in an associated company, higher staff costs and professional fees, largely reflecting continued investments in the operational infrastructure of City National, and the impact of legal provisions. These factors were partially offset by higher average fee-based client assets reflecting market appreciation and net sales. Adjusted net income19 decreased $430 million or 52%.18

Total revenue decreased $99 million or 2%, mainly due to the impact of the specified item relating to impairment losses on our interest in an associated company and reduced revenue following the partial sale of RBC Investor Services operations in the current year. These factors were partially offset by an increase in fee-based revenue, largely reflecting market appreciation and net sales and the inclusion of RBC Brewin Dolphin. Adjusted total revenue19 increased $143 million or 3%.

PCL increased $70 million, primarily in U.S. Wealth Management (including City National), largely due to higher provisions on impaired loans in the real estate and related and telecom and media sectors, which contributed to an increase of 20 bps in the PCL on impaired loans ratio.

Non-interest expense increased $577 million or 18%, primarily due to higher staff costs and professional fees, largely reflecting continued investments in the operational infrastructure of City National. The impact of legal provisions and the inclusion of RBC Brewin Dolphin and related costs also contributed to the increase. These factors were partially offset by reduced expenses following the partial sale of RBC Investor Services operations.

Q4 2023 vs. Q3 2023
Net income decreased $448 million or 68% from last quarter, mainly due to the impact of the specified item relating to impairment losses on our interest in an associated company, the impact of legal provisions and the gain on the partial sale of RBC Investor Services operations in the prior quarter. These factors were partially offset by higher net interest income driven by higher interest rates. Adjusted net income19 decreased $271 million or 41%.

Insurance

As at or for the three months ended

October 31

July 31

October 31

(Millions of Canadian dollars, except percentage amounts and as otherwise noted)

2023

2022

Non-interest income

Net earned premiums

1,121

1,773

908

Investment income, gains/(losses) on assets supporting insurance policyholder liabilities (1)

(593)

(334)

Fee income

Total revenue

589

1,848

644

PCL

–

Insurance policyholder benefits and claims (1)

1,295

Insurance policyholder acquisition expense

Non-interest expense

173

165

157

Income before income taxes

324

304

371

Net income

289

227

268

Revenue by business

Canadian Insurance

(89)

1,184

(130)

International Insurance

678

664

774

Key ratios

ROE

51.3 %

40.7 %

46.7 %

Selected balance sheet information

Average total assets

23,900

24,100

22,000

Other information

Premiums and deposits (2)

1,297

1,974

1,071

Insurance claims and policy benefit liabilities

11,966

12,700

11,511

Fair value changes on investments backing policyholder liabilities (1)

(667)

(99)

(440)

Number of employees (FTE)

2,781

2,887

2,731

(1)

Includes unrealized gains and losses on investments backing policyholder liabilities attributable to fluctuation of assets designated as fair value through profit or loss (FVTPL). The investments which support actuarial liabilities are predominantly fixed income assets designated as FVTPL. Consequently, changes in the fair values of these assets are recorded in Insurance premiums, investment and fee income in the Consolidated Statements of Income and are largely offset by changes in the fair value of the actuarial liabilities, the impact of which is reflected in Insurance policyholder benefits, claims and acquisition expense (PBCAE).

(2)

Premiums and deposits include premiums on risk-based individual and group insurance and annuity products as well as segregated fund deposits, consistent with insurance industry practices.

Q4 2023 vs. Q4 2022
Net income increased $21 million or 8% from last year, mainly due to improved claims experience, a premium adjustment in the prior year, benefits from favourable reinsurance contract renegotiations and business growth. These factors were partially offset by lower favourable investment-related experience and higher capital funding costs.

Total revenue decreased $55 million or 9%, primarily reflecting the change in fair value of investments backing policyholder liabilities, which is largely offset in PBCAE as indicated below. This factor was partially offset by business growth across most products, including group annuity sales, and a premium adjustment in the prior year.

PBCAE decreased $24 million or 21%, primarily reflecting the change in fair value of investments backing policyholder liabilities, which is largely offset in revenue, improved claims experience and benefits from favourable reinsurance contract renegotiations. These factors were partially offset by lower favourable investment-related experience, business growth including group annuity sales and lower favourable annual actuarial assumption updates.

Non-interest expense increased $16 million or 10%, largely due to higher staff-related costs, including severance, and ongoing technology investments.

______________________

These are non-GAAP measures. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section on pages 11 to 13 of this Earnings Release.

Q4 2023 vs. Q3 2023
Net income increased $62 million or 27% from last quarter, mainly due to favourable annual actuarial assumption updates and improved claims experience. These factors were partially offset by lower favourable investment-related experience.

Capital Markets

As at or for the three months ended

October 31

July 31

October 31

(Millions of Canadian dollars, except percentage amounts and as otherwise noted)

2023

2022 (1)

Net interest income (2)

729

907

1,099

Non-interest income (2)

1,835

1,772

1,406

Total revenue (2)

2,564

2,679

2,505

PCL on performing assets

PCL on impaired assets

112

158

PCL

137

209

Non-interest expense

1,678

1,620

1,679

Income before income taxes

749

850

793

Net income

987

949

727

Revenue by business

Corporate & Investment Banking

1,414

1,275

1,299

Global Markets

1,251

1,484

1,317

Other

(101)

(80)

(111)

Key ratios

ROE

14.1 %

13.4 %

10.0 %

Selected balance sheet information

Average total assets

1,140,600

1,089,500

1,126,400

Average trading securities

187,400

157,400

137,900

Average loans and acceptances, net

143,100

143,600

141,100

Average deposits

277,900

285,500

296,700

Other information

Number of employees (FTE)

7,253

7,775

7,017

Credit information

PCL on impaired loans as a % of average net loans and acceptances

0.31 %

0.44 %

0.03 %

For the three months ended

Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items

Q4 2023 vs

(Millions of Canadian dollars, except percentage amounts)

Q4 2022

Q3 2023

Increase (decrease):

Total revenue

PCL

Non-interest expense

Net income

Percentage change in average US$ equivalent of C$1.00

(1) %

(2) %

Percentage change in average British pound equivalent of C$1.00

(8) %

0 %

Percentage change in average Euro equivalent of C$1.00

(8) %

0 %

(1)

(2)

The taxable equivalent basis (teb) adjustment for the three months ended October 31, 2023 was $117 million (July 31, 2023 – $113 million, October 31, 2022 – $142 million).

Q4 2023 vs. Q4 2022
Net income increased $260 million or 36% from a year ago, primarily due to lower taxes reflecting changes in earnings mix and higher revenue in Corporate & Investment Banking. These factors were partially offset by higher PCL and lower revenue in Global Markets.

Total revenue increased $59 million or 2%, mainly due to higher fixed income trading revenue, largely in the U.S., higher debt and equity origination across most regions, the impact of foreign exchange translation, as well as higher loan syndication activity in the U.S. These factors were partially offset by lower equity trading and foreign exchange trading revenue across all regions.

PCL increased $104 million, primarily reflecting higher provisions on impaired loans across most sectors, resulting in an increase of 28 bps in the PCL on impaired loans ratio.

Non-interest expense remained relatively flat, reflecting lower compensation costs as the prior year included higher true-ups related to our variable compensation plans. This was partially offset by the impact of foreign exchange translation and ongoing technology investments. Non-interest expense also reflects the inclusion of severance.

Q4 2023 vs. Q3 2023
Net income increased $38 million or 4% from last quarter, mainly due to lower taxes reflecting changes in earnings mix and lower PCL, mainly on impaired loans. Higher loan syndication activity, largely in the U.S., also contributed to the increase. These factors were partially offset by lower fixed income and equity trading revenue across most regions.

Corporate Support

As at or for the three months ended

October 31

July 31

October 31

(Millions of Canadian dollars)

2023

2022

Net interest income (loss) (1), (2)

482

270

Non-interest income (loss) (1), (2), (3)

(515)

(273)

(381)

Total revenue (1), (3)

(33)

(3)

(288)

PCL

–

Non-interest expense (3)

133

259

(69)

Income (loss) before income taxes (1)

(166)

(262)

(219)

Income taxes (recoveries) (1)

(715)

(161)

(145)

Net income (loss)

549

(101)

(74)

(1)

Teb adjusted.

(2)

Amounts for the three months ended July 31, 2023 have been revised from those previously presented.

(3)

Revenue for the three months ended October 31, 2023 included losses of $150 million (July 31, 2023 – gains of $129 million, October 31, 2022 – losses of $98 million) on economic hedges of our U.S. Wealth Management (including City National) share-based compensation plans, and non-interest expense included $(128) million (July 31, 2023 – $118 million, October 31, 2022 – $(81) million) of share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. Wealth Management (including City National) share-based compensation plans.

Due to the nature of activities and consolidation adjustments reported in this segment, we believe that a comparative period analysis is not relevant.

Total revenue and Income taxes (recoveries) in each period in Corporate Support include the deduction of the teb adjustments related to the gross-up of income from Canadian taxable corporate dividends and the U.S. tax credit investment business recorded in Capital Markets. The amount deducted from revenue was offset by an equivalent increase in Income taxes (recoveries).

The teb amount for the three months ended October 31, 2023 was $117 million, compared to $113 million in the prior quarter and $142 million in the same quarter last year. For further discussion, refer to the How we measure and report our business segments section of our 2023 Annual Report.

The following identifies the material items, other than the teb impacts noted previously, affecting the reported results in each period.

Q4 2023
Net income was $549 million, primarily due to a specified item relating to certain deferred tax adjustments of $578 million, as well as a favourable impact from tax-related items. These factors were partially offset by the after-tax impact of transaction and integration costs of $167 million relating to the planned acquisition of HSBC Canada, which is treated as a specified item.

Q3 2023
Net loss was $101 million, primarily due to transaction and integration costs of $84 million relating to the planned acquisition of HSBC Canada, which is treated as a specified item.

Q4 2022
Net loss was $74 million, primarily due to residual unallocated items and unfavourable tax adjustments.

For further details on specified items, refer to the Key performance and non-GAAP measures section of this Earnings Release.

Key performance and non-GAAP measures

Performance measures
We measure and evaluate the performance of our consolidated operations and each business segment using a number of financial metrics, such as net income and ROE. Certain financial metrics, including ROE, do not have a standardized meaning under generally accepted accounting principles (GAAP) and may not be comparable to similar measures disclosed by other financial institutions.

Return on common equity
We use ROE, at both the consolidated and business segment levels, as a measure of return on total capital invested in our business. Management views the business segment ROE measure as a useful measure for supporting investment and resource allocation decisions because it adjusts for certain items that may affect comparability between business segments and certain competitors.

Our consolidated ROE calculation is based on net income available to common shareholders divided by total average common equity for the period. Business segment ROE calculations are based on net income available to common shareholders divided by average attributed capital for the period. For each segment, average attributed capital includes the capital required to underpin various risks as described in the Capital management section and amounts invested in goodwill and intangibles.

The attribution of capital involves the use of assumptions, judgments and methodologies that are regularly reviewed and revised by management as deemed necessary. Changes to such assumptions, judgments and methodologies can have a material effect on the business segment ROE information that we report. Other companies that disclose information on similar attributions and related return measures may use different assumptions, judgments and methodologies.

The following table provides a summary of our ROE calculations:

Calculation of ROE

For the three months ended

For the year ended

October 31, 2023

(Millions of Canadian dollars, except

percentage amounts)

Personal &

Commercial

Banking

Wealth

Management

Insurance

Capital

Markets

Corporate

Support

Total

Net income available to common

shareholders

2,070

200

287

970

535

4,062

14,623

Total average common equity (1), (2)

30,700

23,600

2,250

27,250

22,050

105,850

102,800

ROE (3)

26.7 %

3.4 %

51.3 %

14.1 %

n.m.

15.2 %

14.2 %

(1)

Total average common equity represents rounded figures.

(2)

The amounts for the segments are referred to as attributed capital.

(3)

ROE is based on actual balances of average common equity before rounding.

n.m. not meaningful

Non-GAAP measures
We believe that certain non-GAAP measures (including non-GAAP ratios) are more reflective of our ongoing operating results and provide readers with a better understanding of management’s perspective on our performance. These measures enhance the comparability of our financial performance for the three months and year ended October 31, 2023 with the corresponding periods in the prior year and the three months ended July 31, 2023. Non-GAAP measures do not have a standardized meaning under GAAP and may not be comparable to similar measures disclosed by other financial institutions.

The following discussion describes the non-GAAP measures we use in evaluating our operating results.

Pre-provision, pre-tax earnings
Pre-provision pre-tax earnings is calculated as income (Q4 2023: $4,131 million; Q3 2023: $3,872 million; Q4 2022: $3,882 million; 2023: $14,866 million; 2022: $15,807 million) before income taxes (Q4 2023: $(60) million; Q3 2023: $761 million; Q4 2022: $979 million; 2023: $3,600 million; 2022: $4,302 million) and PCL (Q4 2023: $720 million; Q3 2023: $616 million; Q4 2022: $381 million; 2023: $2,468 million; 2022: $484 million). We use pre-provision, pre-tax earnings to assess our ability to generate sustained earnings growth outside of credit losses, which are impacted by the cyclical nature of the credit cycle.

Adjusted results
We believe that providing adjusted results and certain measures excluding the impact of the specified items discussed below and amortization of acquisition-related intangibles enhance comparability with prior periods and enables readers to better assess trends in the underlying businesses. Specified items impacting our results for the three months and year ended October 31, 2023 and the three months ended July 31, 2023 are:

Impairment losses: reflects impairment losses on our interest in an associated company in the fourth quarter of 2023Certain deferred tax adjustments: reflects the recognition of deferred tax assets relating to realized losses in City National associated with the intercompany sale of certain debt securities in the fourth quarter of 2023Canada Recovery Dividend (CRD) and other tax related adjustments: reflects the impact of the CRD and the 1.5% increase in the Canadian corporate tax rate applicable to fiscal 2022, net of deferred tax adjustments, which were announced in the Government of Canada’s 2022 budget and enacted in the first quarter of 2023Transaction and integration costs relating to our planned acquisition of HSBC Bank Canada (HSBC Canada)

Additional information about ROE and other key performance and non-GAAP measures can be found under the Key performance and non-GAAP measures section of our 2023 Annual Report.

Consolidated results, reported and adjusted

The following table provides a reconciliation of adjusted results to our reported results and illustrates the calculation of adjusted measures presented. The adjusted results and measures presented below are non-GAAP measures or ratios.

As at or for the three months ended

For the year ended

October 31

July 31

October 31

(Millions of Canadian dollars, except per share, number of and percentage amounts)

2023

2022 (1)

2023

2022 (1)

Total revenue

13,026

14,489

12,567

56,129

48,985

PCL

720

616

381

2,468

484

Non-interest expense

8,143

7,861

7,209

31,173

26,609

Income before income taxes

4,071

4,633

4,861

18,466

20,109

Income taxes

(60)

761

979

3,600

4,302

Net income

4,131

3,872

3,882

14,866

15,807

Net income available to common shareholders

4,062

3,812

3,809

14,623

15,547

Average number of common shares (thousands)

1,399,337

1,393,515

1,386,925

1,391,020

1,403,654

Basic earnings per share (in dollars)

2.90

2.74

2.75

10.51

11.08

Average number of diluted common shares (thousands)

1,400,465

1,394,939

1,388,548

1,392,529

1,406,034

Diluted earnings per share (in dollars)

2.90

2.73

2.74

10.50

11.06

ROE (2)

15.2 %

14.6 %

15.6 %

14.2 %

16.4 %

Effective income tax rate

-1.5 %

16.4 %

20.1 %

19.5 %

21.4 %

Total adjusting items impacting net income (before-tax)

537

191

963

256

Specified item: HSBC Canada transaction and integration costs (3)

203

110

–

380

–

Specified item: Impairment losses on our interest in an associated company (4)

242

–

242

–

Amortization of acquisition-related intangibles (5)

341

256

Total income taxes for adjusting items impacting net income

703

(254)

Specified item: CRD and other tax related adjustments (3), (6)

–

(1,050)

–

Specified item: Certain deferred tax adjustments (3)

578

–

578

–

Specified item: Impairment losses on our interest in an associated company (4)

–

Specified item: HSBC Canada transaction and integration costs (3)

–

Amortization of acquisition-related intangibles (5)

Adjusted results (7)

Income before income taxes – adjusted

4,608

4,824

4,929

19,429

20,365

Income taxes – adjusted

643

807

995

3,346

4,367

Net income – adjusted

3,965

4,017

3,934

16,083

15,998

Net income available to common shareholders – adjusted

3,896

3,957

3,861

15,840

15,738

Average number of common shares (thousands)

1,399,337

1,393,515

1,386,925

1,391,020

1,403,654

Basic earnings per share (in dollars) – adjusted

2.78

2.84

2.78

11.39

11.21

Average number of diluted common shares (thousands)

1,400,465

1,394,939

1,388,548

1,392,529

1,406,034

Diluted earnings per share (in dollars) – adjusted

2.78

2.84

2.78

11.38

11.19

ROE – adjusted

14.6 %

15.1 %

15.8 %

15.4 %

16.6 %

Adjusted effective income tax rate

14.0 %

16.7 %

20.2 %

17.2 %

21.4 %

(1)

There were no specified items for the three months and year ended October 31, 2022.

(2)

ROE is based on actual balances of average common equity before rounding.

(3)

These amounts have been recognized in Corporate Support.

(4)

During the fourth quarter of 2023, we recognized impairment losses on our interest in an associated company. This amount has been recognized in Wealth Management.

(5)

Represents the impact of amortization of acquisition-related intangibles (excluding amortization of software), and any goodwill impairment.

(6)

The impact of the CRD and other tax related adjustments does not include $0.2 billion recognized in other comprehensive income.

(7)

Effective the second quarter of 2023, we included HSBC Canada transaction and integration costs and amortization of acquisition-related intangibles as adjusting items for non-GAAP measures and non-GAAP ratios. Therefore, comparative adjusted results have been revised from those previously presented to conform to our basis of presentation for this non-GAAP measure.

Segment results, reported and adjusted

The following table provides a reconciliation of Wealth Management adjusted results to our reported results. The adjusted results and measures presented below are non-GAAP measures or ratios.

Wealth Management

For the three months ended

For the year ended

October 31 2023 (1)

Item excluded

Specified

(Millions of Canadian dollars, except percentage amounts and as otherwise noted)

As reported

item (2)

Adjusted

As reported

item (2)

Adjusted

Total revenue

4,188

242

4,430

17,544

242

17,786

PCL

132

–

132

328

–

328

Non-interest expense

3,749

–

3,749

14,128

–

14,128

Net income before income taxes

307

242

549

3,088

242

3,330

Net income

215

177

392

2,427

177

2,604

Net income available to common shareholders

200

177

377

2,372

177

2,549

Total average common equity (3), (4)

23,600

24,050

Revenue by business

U.S. Wealth Management (including City National)

1,867

242

2,109

7,969

242

8,211

U.S. Wealth Management (including City National) (US$ millions)

1,369

175

1,544

5,908

175

6,083

Key ratios

ROE (5)

3.4 %

6.3 %

9.9 %

10.6 %

Pre-tax margin (6)

7.3 %

12.4 %

17.6 %

18.7 %

(1)

There were no specified items for the three months and year ended October 31, 2022.

(2)

Impairment losses on our interest in an associated company.

(3)

Total average common equity represents rounded figures.

(4)

The amounts for the segments are referred to as attributed capital.

(5)

ROE is based on actual balances of average common equity before rounding.

(6)

Pre-tax margin is defined as Income before income taxes divided by Total revenue.

Consolidated Balance Sheets

As at

October 31

July 31

October 31

(Millions of Canadian dollars)

2023 (1)

2023 (2)

2022 (1)

Assets

Cash and due from banks

61,989

80,358

72,397

Interest-bearing deposits with banks

71,086

87,650

108,011

Securities

Trading

190,151

176,603

148,205

Investment, net of applicable allowance

219,579

196,022

170,018

409,730

372,625

318,223

Assets purchased under reverse repurchase agreements and securities borrowed

340,191

347,151

317,845

Loans

Retail

569,951

561,212

549,751

Wholesale

287,826

278,997

273,967

857,777

840,209

823,718

Allowance for loan losses

(5,004)

(4,495)

(3,753)

852,773

835,714

819,965

Segregated fund net assets

2,760

2,921

2,638

Other

Customers’ liability under acceptances

21,695

19,365

17,827

Derivatives

142,450

115,914

154,439

Premises and equipment

6,749

6,793

7,214

Goodwill

12,594

12,299

12,277

Other intangibles

5,907

5,892

6,083

Other assets

77,068

71,052

80,300

266,463

231,315

278,140

Total assets

2,004,992

1,957,734

1,917,219

Liabilities and equity

Deposits

Personal

441,946

434,047

404,932

Business and government

745,075

736,730

759,870

Bank

44,666

44,894

44,012

1,231,687

1,215,671

1,208,814

Segregated fund net liabilities

2,760

2,921

2,638

Other

Acceptances

21,745

19,407

17,872

Obligations related to securities sold short

33,651

36,653

35,511

Obligations related to assets sold under repurchase agreements and securities loaned

335,238

334,465

273,947

Derivatives

142,629

117,244

153,491

Insurance claims and policy benefit liabilities

11,966

12,700

11,511

Other liabilities

96,170

95,042

95,235

641,399

615,511

587,567

Subordinated debentures

11,386

11,202

10,025

Total liabilities

1,887,232

1,845,305

1,809,044

Equity attributable to shareholders

Preferred shares and other equity instruments

7,314

7,330

7,318

Common shares

19,167

18,512

16,984

Retained earnings

84,328

82,011

78,037

Other components of equity

6,852

4,481

5,725

117,661

112,334

108,064

Non-controlling interests

111

Total equity

117,760

112,429

108,175

Total liabilities and equity

2,004,992

1,957,734

1,917,219

(1)

Derived from audited financial statements.

(2)

Derived from unaudited financial statements.

Consolidated Statements of Income

For the three months ended

For the year ended

October 31

July 31

October 31

(Millions of Canadian dollars, except per share amounts)

2023 (1)

2022 (1)

2023 (2)

2022 (2)

Interest and dividend income

Loans

11,863

11,219

8,540

43,463

26,565

Securities

4,580

3,751

2,465

14,512

7,062

Assets purchased under reverse repurchase agreements and securities borrowed

6,428

6,063

2,941

22,164

5,447

Deposits and other

1,631

1,801

952

6,852

1,697

24,502

22,834

14,898

86,991

40,771

Interest expense

Deposits and other

10,476

9,775

5,197

36,679

10,751

Other liabilities

7,299

6,599

3,308

24,517

7,015

Subordinated debentures

185

174

111

666

288

17,960

16,548

8,616

61,862

18,054

Net interest income

6,542

6,286

6,282

25,129

22,717

Non-interest income

Insurance premiums, investment and fee income

589

1,848

644

5,675

3,510

Trading revenue

408

485

451

2,392

926

Investment management and custodial fees

2,106

2,099

1,900

8,344

7,610

Mutual fund revenue

1,014

1,034

1,010

4,063

4,289

Securities brokerage commissions

363

362

349

1,463

1,481

Service charges

548

529

512

2,099

1,976

Underwriting and other advisory fees

563

472

481

2,005

2,058

Foreign exchange revenue, other than trading

248

289

266

1,292

1,038

Card service revenue

302

334

310

1,240

1,203

Credit fees

411

342

337

1,489

1,512

Net gains (losses) on investment securities

(23)

193

Income (loss) from joint ventures and associates

(223)

(37)

(219)

110

Other

153

419

964

512

6,484

8,203

6,285

31,000

26,268

Total revenue

13,026

14,489

12,567

56,129

48,985

Provision for credit losses

720

616

381

2,468

484

Insurance policyholder benefits, claims and acquisition expense

1,379

116

4,022

1,783

Non-interest expense

Human resources

4,701

4,794

4,383

18,971

16,528

Equipment

612

611

571

2,381

2,099

Occupancy

404

411

401

1,634

1,554

Communications

348

324

319

1,271

1,082

Professional fees

706

592

472

2,223

1,511

Amortization of other intangibles

369

354

1,487

1,369

Other

1,003

760

709

3,206

2,466

8,143

7,861

7,209

31,173

26,609

Income before income taxes

4,071

4,633

4,861

18,466

20,109

Income taxes

(60)

761

979

3,600

4,302

Net income

4,131

3,872

3,882

14,866

15,807

Net income attributable to:

Shareholders

4,129

3,870

3,876

14,859

15,794

Non-controlling interests

4,131

3,872

3,882

14,866

15,807

Basic earnings per share (in dollars)

2.90

2.74

2.75

10.51

11.08

Diluted earnings per share (in dollars)

2.90

2.73

2.74

10.50

11.06

Dividends per common share (in dollars)

1.35

1.28

5.34

4.96

(1)

Derived from unaudited financial statements.

(2)

Derived from audited financial statements.

Consolidated Statements of Comprehensive Income

For the three months ended

For the year ended

October 31

July 31

October 31

(Millions of Canadian dollars)

2023 (1)

2022 (1)

2023 (2)

2022 (2)

Net income

4,131

3,872

3,882

14,866

15,807

Other comprehensive income (loss), net of taxes

Items that will be reclassified subsequently to income:

Net change in unrealized gains (losses) on debt securities and loans at fair value

through other comprehensive income

Net unrealized gains (losses) on debt securities and loans at fair value through other

comprehensive income

(541)

(85)

(849)

(14)

(2,241)

Provision for credit losses recognized in income

(11)

(3)

(14)

(16)

Reclassification of net losses (gains) on debt securities and loans at fair value through other

comprehensive income to income

(21)

(131)

(12)

(549)

(109)

(830)

(159)

(2,269)

Foreign currency translation adjustments

Unrealized foreign currency translation gains (losses)

3,444

(1,878)

3,878

2,148

5,091

Net foreign currency translation gains (losses) from hedging activities

(1,383)

722

(1,292)

(1,208)

(1,449)

Reclassification of losses (gains) on foreign currency translation to income

–

(160)

–

(160)

(18)

Reclassification of losses (gains) on net investment hedging activities to income

–

146

–

146

2,061

(1,170)

2,586

926

3,641

Net change in cash flow hedges

Net gains (losses) on derivatives designated as cash flow hedges

797

963

216

1,634

Reclassification of losses (gains) on derivatives designated as cash flow hedges to income

(7)

–

146

194

864

963

362

1,828

Items that will not be reclassified subsequently to income:

Remeasurement gains(losses) on employee benefit plans (3)

(132)

147

(344)

821

Net gains(losses) from fair value changes due to credit risk on financial liabilities designated at fair

value through profit or loss

299

(388)

390

(576)

1,747

Net gains (losses) on equity securities designated at fair value through other comprehensive

income

–

(3)

193

(241)

479

(876)

2,618

Total other comprehensive income (loss), net of taxes

2,569

(1,517)

3,198

253

5,818

Total comprehensive income (loss)

6,700

2,355

7,080

15,119

21,625

Total comprehensive income attributable to:

Shareholders

6,693

2,356

7,068

15,110

21,604

Non-controlling interests

(1)

6,700

2,355

7,080

15,119

21,625

(1)

Derived from unaudited financial statements.

(2)

Derived from audited financial statements.

(3)

Includes $(9) million that was reclassified from other comprehensive income to retained earnings for the three months ended July 31, 2023 and the year ended October 31, 2023.

Consolidated Statements of Changes in Equity

For the three months ended October 31, 2023 (1)

Treasury –
preferred
shares and
other equity
instruments

Other components of equity

Preferred
shares and
other equity
instruments

Treasury –
common
shares

FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components
of equity

Equity
attributable to
shareholders

Non-
controlling
interests

Common
shares

Retained
earnings

Total equity

(Millions of Canadian dollars)

Balance at beginning of period

7,323

18,670

(158)

82,011

(1,967)

4,556

1,892

4,481

112,334

112,429

Changes in equity

Issues of share capital and other equity instruments

–

728

–

728

–

728

Common shares purchased for cancellation

–

Redemption of preferred shares and other equity

instruments

–

Sales of treasury shares and other equity instruments

–

699

–

753

–

753

Purchases of treasury shares and other equity

instruments

–

(70)

(772)

–

(842)

–

(842)

Share-based compensation awards

–

Dividends on common shares

–

(1,893)

–

(1,893)

–

(1,893)

Dividends on preferred shares and distributions on

other equity instruments

–

(67)

–

(67)

(3)

(70)

Other

–

(45)

–

(45)

–

(45)

Net income

–

4,129

–

4,129

4,131

Total other comprehensive income (loss), net of taxes

–

193

(549)

2,056

864

2,371

2,564

2,569

Balance at end of period

7,323

19,398

(9)

(231)

84,328

(2,516)

6,612

2,756

6,852

117,661

117,760

For the three months ended October 31, 2022 (1)

Treasury –
preferred
shares and
other equity
instruments

Other components of equity

Preferred
shares and
other equity
instruments

Treasury –
common
shares

FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components
of equity

Equity
attributable to
shareholders

Non-
controlling
interests

Common
shares

Retained
earnings

Total
equity

(Millions of Canadian dollars)

Balance at beginning of period

7,323

17,367

(275)

76,466

(1,527)

3,108

1,431

3,012

103,898

100

103,998

Changes in equity

Issues of share capital and other equity instruments

–

Common shares purchased for cancellation

–

(98)

–

(884)

–

(982)

–

(982)

Redemption of preferred shares and other equity

instruments

–

Sales of treasury shares and other equity instruments

–

1,034

–

1,084

–

1,084

Purchases of treasury shares and other equity instruments

instruments

–

(60)

(1,093)

–

(1,153)

–

(1,153)

Share-based compensation awards

–

Dividends on common shares

–

(1,774)

–

(1,774)

–

(1,774)

Dividends on preferred shares and distributions on

other equity instruments

–

(67)

–

(67)

(1)

(68)

Other

–

(59)

–

(59)

–

(59)

Net income

–

3,876

–

3,876

3,882

Total other comprehensive income (loss), net of taxes

–

479

(830)

2,580

963

2,713

3,192

3,198

Balance at end of period

7,323

17,318

(5)

(334)

78,037

(2,357)

5,688

2,394

5,725

108,064

111

108,175

(1)

Derived from unaudited financial statements.

For the year ended October 31, 2023 (1)

Treasury –
preferred
shares and
other equity
instruments

Other components of equity

Preferred
shares and
other equity
instruments

Treasury –
common
shares

FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components
of equity

Equity
attributable to
shareholders

Non-
controlling
interests

Common
shares

Retained
earnings

Total equity

(Millions of Canadian dollars)

Balance at beginning of period

7,323

17,318

(5)

(334)

78,037

(2,357)

5,688

2,394

5,725

108,064

111

108,175

Changes in equity

Issues of share capital and other equity instruments

–

2,080

–

2,081

–

2,081

Common shares purchased for cancellation

–

Redemption of preferred shares and other equity

instruments

–

Sales of treasury shares and other equity instruments

–

515

3,659

–

4,174

–

4,174

Purchases of treasury shares and other equity

instruments

–

(519)

(3,556)

–

(4,075)

–

(4,075)

Share-based compensation awards

–

Dividends on common shares

–

(7,443)

–

(7,443)

–

(7,443)

Dividends on preferred shares and distributions on

other equity instruments

–

(236)

–

(236)

(21)

(257)

Other

–

(18)

–

(18)

–

(18)

Net income

–

14,859

–

14,859

14,866

Total other comprehensive income (loss), net of taxes

–

(876)

(159)

924

362

1,127

251

253

Balance at end of period

7,323

19,398

(9)

(231)

84,328

(2,516)

6,612

2,756

6,852

117,661

117,760

For the year ended October 31, 2022 (1)

Treasury –
preferred
shares and
other equity
instruments

Other components of equity

Preferred
shares and
other equity
instruments

Treasury –
common
shares

FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components
of equity

Equity
attributable to
shareholders

Non-
controlling
interests

Common
shares

Retained
earnings

Total equity

(Millions of Canadian dollars)

Balance at beginning of period

6,723

17,728

(39)

(73)

71,795

(88)

2,055

566

2,533

98,667

98,762

Changes in equity

Issues of share capital and other equity instruments

750

–

(1)

–

848

–

848

Common shares purchased for cancellation

–

(509)

–

(4,917)

–

(5,426)

–

(5,426)

Redemption of preferred shares and other equity

instruments

(150)

–

(5)

–

(155)

–

(155)

Sales of treasury shares and other equity instruments

–

552

4,922

–

5,474

–

5,474

Purchases of treasury shares and other equity

instruments

–

(518)

(5,183)

–

(5,701)

–

(5,701)

Share-based compensation awards

–

Dividends on common shares

–

(6,946)

–

(6,946)

–

(6,946)

Dividends on preferred shares and distributions on

other equity instruments

–

(247)

–

(247)

(5)

(252)

Other

–

(56)

–

(56)

–

(56)

Net income

–

15,794

–

15,794

15,807

Total other comprehensive income (loss), net of taxes

–

2,618

(2,269)

3,633

1,828

3,192

5,810

5,818

Balance at end of period

7,323

17,318

(5)

(334)

78,037

(2,357)

5,688

2,394

5,725

108,064

111

108,175

(1)

Derived from audited financial statements.

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 document, in other filings with Canadian regulators or the SEC, in reports to shareholders, and in other communications. In addition, our representatives may communicate forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements in this document include, but are not limited to, statements relating to our financial performance objectives, vision and strategic goals, the expected closing of the transaction involving HSBC Bank Canada, the expected closing of the transaction involving the U.K. branch of RBC Investor Services Trust and the RBC Investor Services business in Jersey, and includes statements made by our President and Chief Executive Officer. The forward-looking statements contained in this document represent the views of management and are 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, as well as our financial performance objectives, vision, strategic goals and priorities and anticipated financial performance, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as “believe”, “expect”, “suggest”, “seek”, “foresee”, “forecast”, “schedule”, “anticipate”, “intend”, “estimate”, “goal”, “commit”, “target”, “objective”, “plan”, “outlook”, “timeline” and “project” and similar expressions of future or conditional verbs such as “will”, “may”, “might”, “should”, “could”, “can” or “would” or negative or grammatical variations thereof.

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature, 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, that our financial performance, environmental & social or other objectives, vision and strategic goals will not be achieved, and that our actual results may differ materially from such predictions, forecasts, projections, expectations or conclusions.

We caution readers not to place undue reliance on our forward-looking 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, but are not limited to: credit, market, liquidity and funding, insurance, operational, regulatory compliance (which could lead to us being subject to various legal and regulatory proceedings, the potential outcome of which could include regulatory restrictions, penalties and fines), strategic, reputation, legal and regulatory environment, competitive, model, systemic risks and other risks discussed in the risk sections of our annual report for the fiscal year ended October 31, 2023 (the 2023 Annual Report), including business and economic conditions in the geographic regions in which we operate, Canadian housing and household indebtedness, information technology, cyber and third-party risks, geopolitical uncertainty, environmental and social risk (including climate change), digital disruption and innovation, privacy and data related risks, regulatory changes, culture and conduct risks, the effects of changes in government fiscal, monetary and other policies, tax risk and transparency, and our ability to anticipate and successfully manage risks arising from all of the foregoing factors. Additional factors that could cause actual results to differ materially from the expectations in such forward-looking statements can be found in the risk sections of our 2023 Annual Report, as may be updated by subsequent quarterly reports.

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, as well as the inherent uncertainty of forward-looking statements. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the Economic, market and regulatory review and outlook section and for each business segment under the Strategic priorities and Outlook sections in our 2023 Annual Report, as such sections may be updated by subsequent quarterly reports. 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 sections of our 2023 Annual Report, as may be updated by subsequent quarterly reports. Information contained in or otherwise accessible through the websites mentioned does not form part of this document. All references in this document 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 2023 Annual Report at rbc.com/investorrelations.

Quarterly conference call and webcast presentation
Our quarterly conference call is scheduled for November 30, 2023 at 8:30 a.m. (EST) and will feature a presentation about our fourth quarter and 2023 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 rbc.com/investorrelations/quarterly-financial-statements.html or by telephone (416-340-2217 or 866-696-5910, passcode: 3725409#). Please call between 8:20 a.m. and 8:25 a.m. (EST).

Management’s comments on results will be posted on our website shortly following the call. A recording will be available by 5:00 p.m. (EST) from November 30, 2023 until February 27, 2024 at rbc.com/investorrelations/quarterly-financial-statements.html or by telephone (905-694-9451 or 800-408-3053, passcode: 3344559#).

ABOUT RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 94,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada’s biggest bank and one of the largest in the world, based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our more than 17 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.

We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/community-social-impact.

® Registered Trademarks of Royal Bank of Canada.

SOURCE Royal Bank of Canada

ROYAL BANK OF CANADA REPORTS FOURTH QUARTER AND 2023 RESULTS

Featured:

Elsewhere:

ROYAL BANK OF CANADA REPORTS FOURTH QUARTER AND 2023 RESULTS

You may also like

Featured:

Elsewhere: