Company Reports

Wide-moat-rated Royal Bank of Canada reported decent first-quarter earnings that were largely in line with our expectations, as solid Canadian banking results were offset by higher expenses and credit costs. Adjusted net income, which accounts for both transaction expenses related to the acquisition of HSBC Canada and the CAD 1.05 billion Canadian recovery dividend payment made last year, decreased 5% from last year to CAD 4.1 billion. These results translate to an adjusted return on equity of 14.9%, which is somewhat below the firm's medium-term target of 16%. As we incorporate these results, we do not plan to materially alter our CAD 134/USD 101 per share fair value estimate for Royal Bank of Canada. We see the shares as fairly valued.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Wide-moat-rated Royal Bank of Canada, or RBC, reported decent fourth-quarter results. Adjusted earnings per share came in at CAD 2.78, flat year over year. Provisioning increased 16% quarter over quarter, which is in line with our expectations of increasing credit costs for all Canadian banks in the coming quarters. The current results do not fundamentally change our view on RBC or our CAD 130/USD 95 fair value estimates.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Wide-moat-rated Royal Bank of Canada reported decent fiscal third-quarter results. Adjusted earnings per share came in at CAD 2.84, representing growth of 11% year over year, although adjusted EPS has been stuck in the roughly CAD 2.70-CAD 3.00 range for several years now. Results generally fit within our overall expectations, as we have been looking for a slowdown in loan growth, an increase in credit costs, and some pressure on net interest income growth. As such, we do not expect to make material changes to our forecasts, and we are maintaining our CAD 130/$95 fair value estimate.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Wide-moat-rated Royal Bank of Canada reported OK fiscal second-quarter earnings. Adjusted earnings per share were CAD 2.65, representing a decline of 11% year over year and a decline of 15% quarter over quarter. Results generally fit within the overall pattern we expect for the Canadian banks this year, as we looked for slowing loan growth, an increase in credit strain, and some pressure on net interest income growth.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Wide-moat Royal Bank of Canada, or RBC, reported OK fiscal first-quarter earnings. Adjusted earnings per share were CAD 3.10, an increase of 8% year over year and 2% quarter over quarter. RBC recently acquired wealth manager Brewin Dolphin in September, which helped boost results. Results showed net interest income starting to stall out, a pattern we see across the industry, while expenses rose faster than expected, up 13% year over year excluding Brewin Dolphin. This is likely to be the highest expense growth rate we will see this quarter among the Canadian banks. Management is recommitting to reducing expense growth for the rest of the year, however, it seems that even with a slowdown in growth, expenses are set to exceed our previous expectations. This was similar in theme to last quarter, where expenses surprised to the upside. With inflation beginning to recede, we’re hoping these sorts of expense risks will also start to recede, but we aren’t completely out of the woods yet.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Wide-moat-rated Royal Bank of Canada, or RBC, reported decent fiscal fourth-quarter earnings. Adjusted earnings per share were CAD 2.78, representing an increase of 2% year over year and 9% quarter over quarter. Results came in stronger than expected for revenue but weaker than expected for expenses.

Royal Bank of Canada announced that it will acquire HSBC Canada, the Canadian operations of HSBC Group, for CAD 13.5 billion in cash. HSBC has been selling off some of its other foreign units over the years and it was known that HSBC Canada was on the block. We think it's clear that a domestic Canadian bank would be a more cost-efficient owner of this franchise, given clear opportunities for cost cutting. It is very hard for foreign banks to compete effectively in Canada and scale up in any significant way. This was clear to us as RBC plans to cut CAD 740 million of expenses, or roughly 55% of HSBC's estimated 2024 expense base.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Wide-moat Royal Bank of Canada reported mixed fiscal third-quarter results. Adjusted earnings per share came in at CAD 2.55, representing a decline of 15% year over year as well as quarter over quarter. The biggest point of weakness was fees, particularly in the more market- and activity-sensitive investment banking, trading, and wealth businesses. This is a pattern we have already seen start to play out for the U.S. banks, and we expect to see similar trends as the rest of the Canadian banks report. On the positive side, balance sheet growth was exceptional, with loans up 3% quarter over quarter, and the bank's net interest margin expanded 7 basis points sequentially. This led to a 12% quarter-over-quarter increase in net interest income, far ahead of our expectations. While volume drove the majority of the increase in NII, higher U.S. interest-rate exposure and some decent gains in Canada for NIM should help NII continue to grow for the bank.

Royal Bank of Canada is one of the two largest banks in Canada by assets and one of six that collectively hold roughly 90% of the nation's banking deposits. The bank derives two thirds of its revenue from Canada, with the rest primarily coming from the United States. It has done an admirable job of expanding its nonbank lines of business, running efficient banking operations, and generating some of the best returns for shareholders in the industry. We believe RBC should remain one of the dominant Canadian banks for years to come, even as a more difficult macro backdrop pressures earnings growth in the medium term.

Wide-moat-rated Royal Bank of Canada reported decent fiscal second-quarter earnings. Adjusted earnings per share were CAD 2.99, ahead of the CapIQ consensus of CAD 2.68 and representing year-over-year growth of 7%. The bank recorded a net provisioning benefit of CAD 342 million, and this was arguably the key reason for the earnings beat. We would expect these numbers to start normalizing higher eventually, but predicting the timing of such a normalization in credit remains difficult.

Wide-moat rated Royal Bank of Canada reported solid fiscal first-quarter earnings. Adjusted earnings per share were CAD 2.87, coming in above the Factset consensus estimate for CAD 2.70. The bank’s results were strong across the board, producing a return on equity of 17%, with net interest income up 5% year over year, fees up 12% (after adjustments), and expenses only up 1%. This led to 7% growth in diluted EPS year over year. Expense expectations are still for something close to 4% growth for the year, which is what we have penciled in. We also have additional net interest income growth in our projections, driven by rate hikes throughout the year. Fees are coming in a bit stronger than we may have foreseen, but given generally how close the rest of the results are with our projections, we do not plan any material changes to our fair value estimate of CAD 141/USD 110.

Wide-moat rated Royal Bank of Canada reported solid fiscal fourth-quarter earnings. Adjusted earnings per share were CAD 2.71, coming in slightly below Factset consensus estimates for CAD 2.81. It was a small miss, and given that loan loss reserves are still moving around, we wouldn’t read into it too much. In fact, we were generally encouraged by results and management’s commentary on the call. Net interest income was relatively stagnant quarter over quarter, however, we expect this to change in 2022 as rate hikes in Canada and the U.S. are very likely to play out, and we also expect some decent loan growth in 2022. Further, management admitted that it only included two rate hikes from Canada and zero hikes from the U.S. in its own internal projections, which we think should be easy to beat. We expect we’ll start to lap 2020’s NII level in 2022 given this setup.