Royal Bank of Canada Q4 FY2024 earnings call

• Acquisition of HSBC Canada positions RBC as bank of choice for newcomers and commercial clients. HSBC Canada adjusted earnings have run rate savings over $400M. Confident in achieving $740M expense synergy, majority in Personal Banking.
• Personal Banking: Strong deposit growth, focus on client acquisition, deepening relationships, and technology investment. Mortgage business investing in digital renewal processes.
• Commercial Banking: Strong loan and deposit growth, efficient ratio 34%, pre-provision pre-tax earnings up 36% excluding HSBC Canada.
• Wealth Management: Added net new assets, City National improving profitability. Global Asset Management assets under management up $139B.
• Capital Markets: Record fourth quarter revenue, pre-provision pre-tax earnings up 14% year-over-year.
• Insurance: High ROE earnings, growth in segregated funds and individual life and health products.

Personal Banking: Earnings of $1.6 billion. Personal Banking Canada net income rose 10% year-over-year, with organic net interest income up 9% and organic noninterest income up 11%. Commercial Banking: Net income was $774 million, up 16% year-over-year. Pre-provision pre-tax earnings were up 36% year-over-year excluding HSBC Canada. Wealth Management: NIAT was $969 million. Added over $15 billion in net new assets across North American Wealth Advisory and Global Asset Management. City National generated US$91 million. Capital Markets: Pre-provision pre-tax earnings were $1 billion, up 14% year-over-year. Insurance: Net income was $162 million, up 67% year-over-year.

• Net interest income excluding trading revenue expected to grow mid- to high-single-digit in 2025.
• Committed to delivering ROE over 16%, underpinned by earnings growth and accretive capital deployment.
• Announced $0.06 quarterly dividend increase, will use buybacks tactically when opportunities arise.

• Macroeconomic uncertainties in Canada: weaker consumer spending, rising unemployment, protectionism.
• Potential impact of U.S. fiscal policy on monetary actions.
• Credit risks: rising delinquencies in mortgages and unsecured portfolios, net credit downgrades and moderate increase in delinquency rates.

Q: On ROE and capital requirements, how to think about 16%+ ROE?

A: Confident in delivering 16%+ ROE with initiatives like HSBC integration, City National improvement, and capital accretion.

Q: On residential mortgage impairments, cause and outlook?

A: Peak renewal period driving delinquencies, clients well positioned, PCLs expected to tick up but not material write-offs.

Q: On HSBC revenue synergies, any details?

A: Close to disclosing targets and timelines, qualitative progress in client retention, advisor productivity, and balance retention.

Q: On tariff risk, impact on bank?

A: Not overreacting, expect political leaders to find better path, no major changes to business plans.

Q: On NIM outlook and credit guidance?

A: NIM ex trading expected mid- to high-single-digit growth, PCLs peaking in second half with unemployment peaking in first half.