Royal Bank of Canada

Transcription

Royal Bank of Canada
UBS Best of Americas Conference
Gord Nixon
President and Chief Executive Officer
September 6, 2012
Financial information is presented in Canadian dollars on a continuing operations basis, and is based on International
1
Financial Reporting Standards (IFRS), unless otherwise noted. All financials prior to 2011 are based on Canadian GAAP.
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 presentation and in the accompanying management’s comments and responses to questions during the September
6, UBS Best of Americas Conference (the UBS presentation), in other filings with Canadian regulators or the SEC, in reports to shareholders and in
other communications. Forward-looking statements in this presentation include, but are not limited to, statements relating to our vision, aspiration, and
strategic goals. The forward-looking information contained in this presentation 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, and our
vision, aspiration, 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 forwardlooking statements. These factors – many of which are beyond our control and the effects of which can be difficult to predict – include: credit, market,
operational, and liquidity and funding risks, and other risks discussed in the Risk management sections of our Q3 2012 Report to Shareholders and
our 2011 Annual Report; general business, economic and financial market conditions in Canada, the United States and certain other countries in which
we conduct business, including the effects of the European sovereign debt crisis; changes in accounting standards, policies and estimates, including
changes in our estimates of provisions, allowances and valuations; the effects of changes in government fiscal, monetary, economic and other
policies; changes to and new interpretations of risk-based capital and liquidity guidelines; the impact of changes in laws and regulations, including
relating to the payments system in Canada, consumer protection measures and the Dodd-Frank Wall Street Reform and Consumer Protection Act and
the regulations issued and to be issued there under; the effects of competition in the markets in which we operate; our ability to attract and retain
employees; judicial or regulatory judgments and legal proceedings; the accuracy and completeness of information concerning our clients and
counterparties; our ability to successfully execute our strategies and to complete and integrate strategic acquisitions and joint ventures successfully;
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. 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 the Overview of other risks sections of our 2011
Annual Report and the Risk management section of our Q3 2012 Report to Shareholders.
Information contained in or otherwise accessible through the websites mentioned does not form part of this Summit presentation. All references in this
Summit presentation to websites are inactive textual references and are for your information only.
RBC | UBS BEST OF AMERICAS CONFERENCE
2
Contents
1 RBC Overview
2 Canadian Strategy
3 U.S. & International Strategy
3 3
RBC – Among the Top 20 largest banks globally
Market Capitalization U.S.$ billions (1)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
ICBC
Wells Fargo
China Construction Bank
HSBC
JP Morgan
Agricultural Bank of China
Bank of China
Commonwealth Bank of Aus.
Citigroup
Bank of America
RBC
Westpac Banking
TD
Banco Santander
Aust and NZ Banking Group
Itau Unibanco
American Express
Mitsubishi UFJ Financial
U.S. Bancorp
Sberbank
U.S. $81B
(1) Source: Bloomberg, August 31, 2012.
50
100
150
200
250
4
Our strategy
9 In Canada, to be the undisputed leader in financial services
9 Globally, to be a leading provider of capital markets and
wealth management solutions
Strategic
Goals
9 In targeted markets, to be a leading provider of select
financial services complementary to our core strengths
Extending our lead in Canada and growing globally
5
RBC – Strong financial profile
Net Income
Return on Equity
($ billions)
(%)
7.0
2011
CGAAP
2009
IFRS
2010
2011
YTD 2012
IFRS
CGAAP
IFRS
(1)
$2.00
$2.00
2009
2010
2007
$1.44
2006
$1.18
2005
Q3/12
$1.01
2011
2004
2010
CGAAP
$0.86
13.0
2003
13.0
$2.00
($/Share)
13.3
2008
(%)
$1.82
Dividend History
2002
2009
19.7
Tier 1 Capital Ratio (1)
$0.76
13.0
YTD 2012
20.3
16.5
$1.68
2010
17.9
YTD
2012
2009
5.7
$2.08
5.7
2011
5.7
Announced a quarterly dividend increase in Q3 of $.03 or 5%,
to $.60 per share, our third increase in the past 15 months
Presented on a consolidated operations basis; 2009 through 2011 calculated under Basel II;
Q1/12 onward calculated under Basel 2.5.
6
RBC’s key strengths
Earnings by business segment(1)(2)
Revenue by geography(1)
Average Q4 2011 to Q3 2012
Average Q4 2011 to Q3 2012
22%
17%
57%
10%
68%
15%
10%
1%
Canadian Banking
Capital Markets
Insurance
Wealth Management
Canada
U.S.
International
International Banking
9 Diversified business mix, with the right balance of retail and wholesale
9 Over two-thirds of revenue from Canada
9 Strategic approach in key businesses in the U.S. and select international markets
(1)
(2)
Amounts represent continuing operations and exclude Corporate Support. For further information, see our Q3 2012 Report to Shareholders.
Results exclude the $213 million after-tax loss related to our acquisition of the other 50% interest in RBC Dexia. For further information, refer to the Key
corporate events section of the Q3 2012 Report to Shareholders. These are non-GAAP measures, for further details refer to slide 29.
7
Contents
1 RBC Overview
2 Canadian Strategy
8 8
Canadian economy
G7 Real GDP Growth (2)
Strong economic fundamentals (1)
Proactively responded to financial crisis with
strong fiscal stimulus and monetary policy
0.8%
Canada

1.8%
US
Lowest net debt-to-GDP ratio among the G-7
1.4%
2.2%
1.9%
UK

0.7%
1.4%
France
Highest annual GDP growth rate from 1999 to
2011 among G7 peers
Germany

Japan
Fiscal surpluses for 11 straight years, pre-crisis
Italy

(% 1999 – 2011)
Government Net Debt (2)

Stable inflation that has remained within the target
range of 1-3%
(% of nominal GDP, 2012)
135.2%
102.3%
84.2% 83.7% 83.2%
54.1%
Japan
Italy
France
U.S.
U.K.
35.4%
Germany
#1 for soundness of banks for the 5th consecutive
year (World Economic Forum, 2012)
Canada

Canada has benefited from prudent fiscal policy
(1)
(2)
Statistics Canada, RBC Economics Research;
IMF World Economic Output Database, September 2011. Data from 2010 onward are IMF estimates.
9
Canadian Banking
9 Building on leading market positions
–
Proven track record of outperformance
9 Extending sales power
–
Unparalleled distribution network and superior cross sell ability
9 Reducing costs and reinvesting for the future
–
Simplifying processes and building end-to-end efficiencies
Driving growth and extending our lead while improving efficiencies
10
Continuing to outperform our peers
Q3/12 Net Income
Q3/12 Volume Growth
($millions)
($billions)
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
8.4% YoY
$120
$42
$100
$80
17% YoY
(1)
$1,035
8% YoY
5.8% YoY
$60
$ 608
$40
$21
$20
$0
RBC
Peer Average
(2)
RBC
(2)
Peer Average
Capturing a disproportionate share of market growth
(1)
(2)
Q3 2012 excludes a favourable adjustment related to a change in estimate of mortgage prepayment of $92 million
($125 million before tax). This is a non-GAAP measure. For more information see slide 29.
Peers include: BMO, BNS, CIBC and TD. Based on company reports for Q3 2012. BNS excludes $32 million (after-tax) gain
on sale of non-strategic leasing business.
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Strength in innovation and technology
• Retail bank is transforming banking to a
multichannel advice centre
• Innovative alliances with strong partners
• Industry-leading mobile app and digital solutions
• Coming soon: “virtual wallet” for mobile phones
Differentiating the client experience
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Driving strong operating efficiency
Efficiency Ratio (%)
56.1%
CGAAP IFRS
56.5%
51.4%
50.9%
49.6%
49.3%
47.8%
Peer
Average(1)
49.8%
49%
47.3%
45.4%
44.8% (2)
2007
2008
2009
2010
2011
Q3/12
Investing to drive further efficiencies and transforming our cost base
(1)
(2)
Peers include: BNS, BMO, TD and CIBC. Based on company reports.
This is a non-GAAP measure. Non-adjusted efficiency ratio is 43%. For more information see slide 29.
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Insurance – Canada
9 Deepening client relationships
– Meeting customers’ unique needs with a broad suite
of products and services
9 Simplifying the way we do business
– Recently achieved highest ever marks for Likelihood
to Recommend and Ease of Doing Business(1)
– Automated our underwriting department to improve
speed, accuracy and consistency
9 Driving efficiencies and strengthening distribution
– Increasing sales through our retail Insurance stores
with over 50 stores across Canada
– Leveraging our relationships with brokers, travel
agents and our banking partners to expand our reach
One of the largest Canadian bank owned insurance companies
(1)
Customer satisfaction survey - as per internal tracking.
14
Wealth Management – Canada
Fee Based Assets per Advisor
Growth in Long Term Fund Assets
($millions)
(%)
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
70
Over 2.3X the
peer average
$42
55
40
25
$18
10
9 Ranked # 1 among bank-owned
brokerage firms
6th year in a row
2012 Brokerage
Report Card
Jun-12
Feb-11
Oct-09
Jun-08
Feb-07
Oct-05
Jun-04
Peer Average
Oct-01
RBC
Feb-03
(5)
(1)
9 Top Lipper Award winner
5 of the last 6 years
The leading wealth and asset manager in Canada
(1)
Peers include: BNS, BMO, TD and CIBC. Data from Investor Economics.
15
Capital Markets – Successfully repositioning the business
Capital Markets Revenue by Business (1)
Capital Markets Loan Book (2)
(Average Q4 2011 – Q3 2012)
($ billions, average wholesale loans and acceptances)
35.6
41%
59%
Global Markets
31.4
29.6
24.6
24.6
2010
2011
Corporate & Investment Banking
Q1 2012
Q2 2012
Q3 2012
Capital Markets Inventory of Trading Securities
RBC Value at Risk (VaR)
($ billions, average)
(C$ millions)
147
138
151
85
75
137
131
65
121
121
55
118
113
45
35
25
15
May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul10
10
10 10
11 11
11
11
11 11
12
12
12 12
2009 2010 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12
(1)
Excludes Other.
RBC | UBS BEST OF AMERICAS CONFERENCE (2) Excludes letters of credit and guarantees.
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Capital Markets – Canada
Top Investment Banks – Canadian Market(1)
1H12
Rank
Investment Bank
Share (%)
1
RBC Capital Markets
14.4
2
3
4
5
6
7
8
9
10
Scotiabank
TD Securities
BMO Capital Markets
CIBC World Markets
National Bank Financial
Bank of America
GMP Capital Inc
Canaccord Genuity
Citi
11.7
10.3
8.9
8.0
6.7
3.1
2.9
2.3
2.0
Best Canadian
Investment Bank(2)
5th year in a row
Top Ranking in Greenwich
Quality Index(2)
Canadian Fixed Income
#1 for overall franchise quality
across sales, trading and research
Focused on extending our lead in Canada
(1)
RBC | UBS BEST OF AMERICAS CONFERENCE (2)
Data from Dealogic. Investment Banking includes Debt Capital Markets, Equity Capital Markets, Loans and M&A
transactions; Dealogic Revenue Analytics employed where fees are undisclosed.
Euromoney - July 2012, Greenwich Associates - August 2012.
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Contents
1 RBC Overview
2 Canadian Strategy
18 18
Capital Markets – U.S.
RBC Capital Markets
Geographic Revenue Mix(1)
(Average Q4 2011 – Q3 2012)
38%
45%
14%
3%
United States
Canada
Europe
Asia and Other
Top Global Investment Banks(2)
1H 2012
Rank
1
2
3
4
5
6
7
8
9
Bank
Share
(%)
JPMorgan
BoA
Goldman Sachs
Morgan Stanley
Deutsche Bank
Credit Suisse
Citi
Barclays
UBS
7.6
6.2
5.7
5.5
5.2
5.2
5.1
4.6
3.0
10
RBC Capital Markets
2.5
11
12
13
14
15
Wells Fargo
HSBC
RBS
BNP Paribas
Nomura
2.1
1.6
1.5
1.3
1.5
Up 2 spots from 1H 2011
Gaining momentum in the world’s largest market
(1)
(2)
Excludes certain market and credit related items. For further information see slide 30 of our Q3 2012 results presentation.
Data from Dealogic. Investment Banking includes Debt Capital Markets, Equity Capital Markets, Loans and M&A transaction;
Dealogic Revenue Analytics employed where fees are undisclosed.
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Capital Markets – International
U.K. / Europe
Equity and debt origination, M&A and
research with fixed income and FX sales
& trading capabilities
Covering key sectors including, energy,
mining, infrastructure, industrials,
financials, and business services
Asia Pacific
Hong Kong-based fixed income distribution and
FX sales & trading
Investment bank in Sydney with M&A, debt and
equity, supported by our loan book in mining,
energy and infrastructure
North American focus with select global reach
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Wealth Management – U.S.
2001-2010
Meaningful U.S. presence
Built our U.S. business through
acquisitions and recruitment
7th largest full service advisory firm
–
Improving performance though 2015
(1)
Growing “share of wallet” and
increasing revenue per advisor
Over $185 billion in AUA
Meeting clients’ international needs with
offices in NYC, Houston and Miami
Correspondent and advisor services to
over 200 broker dealers and
independent RIAs (2)
Improving operational efficiencies
Moving from transaction based to
a more fee-based revenue model
Driving advisor productivity and business efficiency
(1)
(2)
7th largest by financial advisors (~2,000) in over 42 states.
Registered Investment Advisor
21
Wealth Management – International
Global Asset Management
U.K. , Chanel Islands and Caribbean
Leveraging BlueBay to build a global
asset manager
Looking for similar strategic
acquisitions to further expand asset
management capabilities
Building on our leadership in international
trust solutions to grow our Global Trust
business
Expanding our U.K. wealth management by
leveraging Global Trust, Global Asset
Management and RBC Capital Markets
Latin America
Offices in Brazil, Chile and
Uruguay
High growth potential in a
competitive market place
EMEA
Strong offshore business
based in Switzerland, with
offices in Madrid and Dubai
Expanding distribution
strength and market footprint
Asia
Offices in Hong Kong, Singapore,
Beijing, Brunei
Building scalable infrastructure to
support future growth
Building a U.K. presence and laying the groundwork in emerging markets
22
Investor Services – a top 10 global custodian
1H12
Rank
1
2
3
4
5
6
7
8
9
10
Global Custodian
BNY Mellon
JP Morgan
State Street
Citi
BNP Paribas
HSBC
AUC USD$B
(As of Q2/12)
27,064
17,665
16,387
12,200
6,379
5,400
4,564
4,241
3,029
Northern Trust (1)
SocGen
CACEIS
RBC Investor Services
9 Broad base of global institutional clients
9 Globally integrated suite of products
9 Award-winning customer service
9 Backed by the strength and stability of RBC
2,746
9 Custodian of the year – Canada
9 Fund Administrator of the Year
9 # 1 Overall global custodian in the world
9 ‘Top Ratings’ for Europe,
North America and Global
Highly complementary to our wealth management and capital markets businesses
(1) Northern Trust includes USD 411 billion in AUC for personal business segment. Source: Competitor Financials & websites.
23
Canadian leader with select global reach
9 Strong financial position to invest for future growth and return
capital to our shareholders
9 Leveraging our leadership in Canada to build competitive
businesses in select geographies
9 Diversified model with the right mix of retail and wholesale
businesses
Well positioned to continue delivering long term value to our shareholders
24
Q&A
25 25
Appendix
26 26
CanadianBanking
Canadian Banking
Revenue by Business
2012YTD
Netincomeof
$3,058million
(C$ Millions)
11,199
10,555
9,586
9,890
1,830
2,128
2,441
2,457
2,257
8,795
2,238
2,152
6,192
5,760
5,305
5,315
1,732
2,750
2,557
4,911
3,664
2,662
3,044
2,663
2008
2009
2010
2011
CGAAP
Q3 2012 Domestic Market Share
and Rankings (2)
Product
Market Share Rank
Consumer Lending
23.7%
#2
Personal Core Deposits
19.7%
#2
Personal Investments
14.1%
#1
Business Loans (average)
26.0%
#1
Business Deposits & Investments
24.1%
#1
2012 YTD
IFRS
Cards and Payment Solutions
Personal Financial Services
Business Financial Services
Net Income
9 Buildingonleadingmarketpositions
9 Extendingsalespower
9 Eliminatingcostsandreinvestingforthefuture
Profitably gaining market share
(1)
Market share is calculated using most current data available from OSFI (M4), Investment Funds Institute of Canada (IFIC) and Canadian Bankers Association (CBA). OSFI, IFIC and
Consumer Lending CBA data is at June 2012 and June 2011, Business Loans CBA data is at March 2012 and March 2011. For more information see our Q3 2012 presentation.
27
Insurance
Insurance
Revenue by Business
Premiums & Deposits
(C$ Millions)
(C$ Millions)
4,489
4,475
2012YTD
NetIncomeof
$520million
4,457
4,063
3,799
1,733
1,399
3,861
3,880
2008
2009
4,701
3,634
1,799
1,423
2,664
2,756
2,676
527
491
600
2009
2010
2011
CGAAP
Canadian Insurance
2,376
2012 YTD
IFRS
International & Other Insurance
2010
CGAAP
2011
2012 YTD
IFRS
Net Income
9 Canadianmarketleaderinlivingbenefitsandtravelinsurancewithasuperior
breadthofproducts
9 Excellentdistributionchannelsanddeepeningclientrelationships
9 Pursuingselectinternationalgrowthopportunitiesinreinsurance
Enhancing our comprehensive suite of products and services
28
WealthManagement
Wealth Management
Revenue by Business
Consistent Growth in Assets
(C$ Billions)
(C$ Millions)
4,708
3,987
4,080
4,188
650
634
737
2012YTD
Netincomeof
$556million
1,036
560
534
527
522
502
495
562
3,574
828
1,812
1,949
2,081
223
1,468
1,525
262
246
1,724
1,502
1,365
325
322
313
306
1,948
1,278
665
2008
811
583
669
2009
2010
2011
2012 YTD
CGAAP
WM-Canada
2008
IFRS
U.S. & Int’l WM
GAM
2009
2010
2011
Q1/12
CGAAP
Net Income
Q2/12
Q3/12
IFRS
AUA
AUM
9 Buildingaglobalhighperformingassetmanager
9 ExpandingHighNetWorthandUltraHighNetWorthmarketshare
9 LeveragingRBCandRBCWealthManagementstrengthsandcapabilities
Building a leading global wealth and asset manager
29
CapitalMarkets
Capital Markets
Financial Results
Revenue by Business(1) Revenue by Geography(1)
(C$ Millions)
2012YTD
NetIncomeof
$1,383million
6,923
5,887
Average of the trailing 4 quarters
Average of the trailing 4 quarters
5,725
5,065
38%
3,935
17%
41%
59%
2008
45%
1,768
1,647
1,456
2009
2010
2011
1,170
2012 YTD
IFRS
CGAAP
Revenue
Global Markets
Corporate & Investment Banking
United States
Canada
International
Net Income
9 ExtendingourleadershippositioninCanada
9 ExpandingandstrengtheningclientrelationshipsintheU.S.
9 BuildingonourcorestrengthsandcapabilitiesinEuropeandAsiaPacific
The premier Canadian investment bank with select global reach
RBC | UBS BEST OF AMERICAS CONFERENCE (1) Excludes the “Other” business.
30
International Banking
Revenue by Business
(C$ Millions)
1,567
1,527
1,503
710
657
741
817
846
826
2012YTD
NetIncome
of$10million(1)
1,097
478
RBC Investor Services
9
Completed the acquisition of the remaining 50%
ownership of RBC Dexia on July 27
9
Rebranded as RBC Investor Services
RBC Caribbean
9
123
92
142
2009
2010
2011
2nd largest bank by assets in the English Caribbean

619
Providing products and solutions through 123 branches in 19
countries and territories
U.S. Cross-border banking
CGAAP
Banking
2012 YTD
9
Launched in March 2012 to serve 160,000 cross-border
clients in the U.S.
IFRS
Investor Services
Net Income
9 RBCInvestorServices:Broadeningsuiteofproductofferingstofurthercementahightouch
approachwhiledeliveringagloballyintegratedclientexperience
9 RBCCaribbean:Integratingoperationswhilebuildingastrongfranchise
9 U.S.Crossborder:Developingmultipleproductstoservetargetedmarketsegments
A diverse, global portfolio serving clients in over 100 countries
(1) 2012 YTD net income excludes losses associated with the purchase of the remaining 50% stake in RBC Investor Services
of $213 million after-tax.
31
Note to users
We use a variety of financial measures to evaluate our performance. In addition to GAAP prescribed
measures, we use certain non-GAAP measures we believe provide useful information to investors
regarding our financial condition and result of operations. Readers are cautioned that non-GAAP
measures, such as results excluding the loss on RBC Dexia, Canadian Banking adjusted results and
ratios, and Capital Markets geographic revenue excluding certain items do not have any standardized
meanings prescribed by GAAP, and therefore are unlikely to be comparable to similar measures
disclosed by other companies.
Additional information about our non-GAAP measures can be found under the “Financial Performance
and Non-GAAP measures” sections of our Q3 2012 Report to Shareholders, our Q3 2012
Supplementary Financial Information and the “Key performance and Non-GAAP measures” sections in
our 2011 Annual Report.
Definitions can be found under our “Glossary” sections in our Q3 2012 Supplementary Financial
Information and our 2011 Annual Report.
Investor Relations Contacts
Amy Cairncross, VP & Head
Karen McCarthy, Director
Robert Colangelo, Associate Director
(416) 955-7803
(416) 955-7809
(416) 955-2049
www.rbc.com/investorrelations
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