Royal Bank Of Canada

Good morning, our participants. Please stand by. Your conference is ready to begin. Good morning, ladies and gentlemen. Welcome to the RBC's conference call for the first quarter 2021 financial results. Please be advised that this call is being recorded. I would like to turn the meeting over to Nadine Ahn, Head of Investors Relations. Please go ahead, Ms. Ahn.

Thank you and good morning, everyone. Speaking today will be Dave McKay, President and Chief Executive Officer, Rod Bolger, Chief Financial Officer, and Graham Hepworth, Chief Risk Officer. Also joining us today to answer your questions, Neal McLaughlin, Group Head, Personal and Commercial Banking, Doug Guzman, Group Head, Wealth Management, Insurance, and INTS, and Derek Nelner, Group Head, Capital Markets. As noted on slide one, our comments may contain forward-looking statements. which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I'd also remind listeners that the bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. To give everyone a chance to ask questions, we ask that you limit your questions and then review. With that, I'll turn it over to Dave.

Thanks, Nadine, and good morning, everyone. Thanks for joining us today, and we hope you and your loved ones are keeping safe and well. Today we reported very strong earnings of $3.8 billion, with earnings per share up 11% year over year. Our results are a testament to our diversified business model and revenue streams. We benefited from higher fee-based revenue in our capital markets and wealth management businesses, and strong client-driven volume growth in both Canadian banking and Citi Nationals. Expenses remained well controlled and top of mind, even as we increasingly saw heightened client activity levels across the bank. We also saw small release of reserves this quarter, which Graham will speak to later. These factors partly offset the impact of the 150 basis points of rate cuts in March of last year, which negatively impacted our earnings by approximately $400 million. Strong volume growth, elevated client activity, and our diversified business model allowed us to earn through this significant headwind. Our strategy is also delivering results in the U.S., where we are capitalizing on our investments across capital markets and wealth management. This quarter, we reported record results in our U.S. operations, generating over $2.5 billion in revenue and over $650 million in earnings. Our robust capital ratio of 12.5% was flat quarter over quarter, as record internal capital generation was effectively deployed to drive strong organic growth across our businesses, while also paying $1.5 billion in dividends. Our CT1 ratio provides a significant $19 billion surplus over the current OSFI minimum. Furthermore, our ACL on loans is over $2 billion higher than pre-pandemic levels in Q1 2020. We remain well positioned to continue funding organic growth opportunities that create value for our clients. I will now speak to how we see the macro environment unfolding. As we approach a year into the global pandemic, we are encouraged by both the number and efficacy of vaccines. This, in addition to significant pent-up demand, rising prospects of further stimulus programs, Expectations of a gradual easing of lockdown measures and pledges of continued low interest rates to support a sustained economic recovery. Recent data shows CEO confidence of corporate America has reached a 17-year high. We're also seeing the benefits of increasing public-private partnerships in the U.S. as companies are engaging with governments to distribute vaccines effectively in a timely manner. Canadian housing activity also remains elevated. While rising permit issuances building up the new construction pipeline, we expect a lack of supply, low interest rates, elevated savings rates, continuing work from home arrangements, and a potential resumption of immigration to underpin continued demand. While the timing and path of vaccination programs has been uncertain and uneven so far, particularly in Canada, we expect an accelerated pace of vaccination distribution over the coming months to drive a strong economic recovery through 2021, resulting in GDP growth of 4% to 5% across North America. Against this macro backdrop, we will continue our unwavering support for our clients as global economies pivot to recovery. I now want to speak to the strong volume growth and increased momentum across our largest businesses. Part of our competitive advantage is how we leverage our scale investments in technology, and our talented teams to deliver differentiated value and experiences to our clients. Our premier global capital markets platform crossed a record $1 billion in quarterly net income driven by very strong performance in global markets underpinned by robust equity trading and continued strength in credit trading. Corporate investment banking surpassed $1 billion in revenue for a third straight quarter, benefiting from a constructive environment for new issuance and mergers and acquisitions. We continue to be awarded significant mandates by some of the largest global clients, including serving as M&A advisor to Blackstone and providing fully committed financing for their recently announced $6 billion acquisition of Signature Aviation. Canadian banking recorded strong volume growth year over year, adding over $100 billion of average volumes across lending and deposit products. While expanded central bank balance sheets, government support, and reduced spending have added significant liquidity to the system and increased the savings rate of Canadians, we have also seen market share gains of over 50 basis points in personal core deposits over the last two years, which is a reflection of our technology investments, client support, and distribution strength. We have similarly added 100 basis points of market share in residential mortgages over the last two years. Our strong mortgage growth has been partly underpinned by the reengineering of the entire end-to-end process over a number of years, from adjudication to fulfillment to retention, which reached an all-time high of 94% this quarter. We've also seen elevated activity in our wealth management businesses, which have remained resilient over the turbulence of the last 12 months. Our diversified RBC global asset management system assets under management or AUM grew by $60 billion from last year to a new high of 540 billion as more clients chose RBC as a trusted steward for their investments. Our retail funds captured over 25% of industry-wide Canadian net sales over the last 12 months, adding to our leading 32% market share amongst bank-owned fund companies. Along with market appreciation, Our recent growth has been the result of investment outperformance, with over 80% of AUM outperforming the benchmark on a three-year basis. Assets under administration or AUA in Canadian wealth management crossed $450 billion for the first time. Strong net sales and industry-leading recruiting efforts added to our number one high net worth and ultra high net worth market share in Canada, which is built on the trust of our clients. Similarly, U.S. Wealth Management, the seventh largest wealth advisory firm in the U.S., surpassed $460 billion U.S. dollars in AUA for the first time, benefiting from our proven ability to bring in both net sales and attract experienced advisors to meet the needs of our clients. Citi National continues to report double-digit loan and deposit growth as we continue to execute on our Organic Plus growth strategy. Our expanded jumbo mortgage platform is yielding results, growing over 15% year-over-year. Our market share gains across our businesses are not only a reflection of our scale, but also our continued investments in technology and client-facing colleagues. We've seen an acceleration of digital trends as Canadians are increasingly reaching for their phone to fulfill their banking needs. Our active mobile user base increased 12% year-over-year to over 5 million this quarter, as mobile sessions crossed 100 million for the first time. New clients to RBC can now complete a full end-to-end account open in minutes on the RBC mobile app. And now over 50% of personal deposit counts are opened through our mobile browser. Since the launch of Nomi in 2017, our mobile clients have benefited from actively reading more than 1.5 billion financial insights, using its predictive analytics to help manage their finances. Over the years, we've also made significant investments beyond digital functionalities and into digital businesses. MyAdvisor, our digital platform for clients to activate their personalized financial plans, was launched in 2017 and now has 2.3 million clients online. And AUM at InvestEase, our robo-advisor, has continued to trend higher. Our success in commercial banking has also been underpinned by multi-year investments in cash management solutions and technology, where we expect InsightEdge, fueled by our data analytic capabilities, to be a key differentiator. AIDEN, our AI-based electronic trading platform in capital markets, continued to gain traction during these volatile times. The number of shares and notional volumes traded on this platform are up over 45% and 75% year-over-year, respectively. Investments in sales power have also been a key driver in the growth of our personal and commercial franchises, with our mortgage specialists, advisors, and commercial account managers benefiting from the investments that we've made in technology. And similarly, we've made investments in the bench strength of managing directors in capital markets, which helps us deepen client relationships and win key mandates. Despite the significant increase in capital ratios, we delivered a premium ROE of over 18% this quarter. We are focused on the continued creation of long-term shareholder value. Going forward, our priorities have not changed with respect to deploying capital. We remain focused on building on our momentum and driving a creative, organic growth In capital markets, we will continue to deepen client relationships and further diversify our revenue stream towards less capital-intensive investment banking advisory revenue. We will also look to further strengthen senior coverage teams in key sectors. In Canadian banking, we expect continued high single-digit mortgage growth and significant pent-up demand to drive a consumer-led recovery. And with commercial utilization rates below pre-pandemic levels, higher Canadian commercial volumes could further support the acceleration of economic activity. Continuing our innovative approach to loyalty-linked partnerships with leading Canadian partners such as Petro Canada, RBC and Rexall recently announced a new strategic partnership that will allow our clients to earn and receive even more value and savings while accessing Rexall's health and wellness resources. And as we see increased online shopping, RBC has launched PayPlan, offering Canadians yet another solution for purchases at participating retailers and merchants throughout Canada. In our U.S. wealth management platform, we expect to see further benefits from our recent expansion into new geographies, investments in our treasury management platform, and the hiring of experienced private bankers and financial advisors. We are also expanding and deepening our existing client relationships through the interconnectedness of our businesses, Over 65% of Canadian wealth management clients now have a Canadian banking product, and we expect this to continue to grow over time as we expand the continuum of offerings to our retail and wealth clients. Also, 19% of our Canadian banking clients have all four of transaction accounts, credit cards, investments, and borrowing products with RBCs. We're also looking to increase the collaboration between our capital markets and wealth management franchises to provide a broader set of capabilities to both sets of clients, including acting as book runners for debt and equity issuances. Citi National has seen almost $2 billion of mortgage flow through our U.S. wealth management channels, benefiting from our team of bankers covering RBC wealth management offices in key markets. Looking forward, Citi National is looking to make a focused push into mid-market lending in the U.S. Not only am I proud of what we delivered, but also how we continue to deliver on our purpose of helping clients thrive and communities prosper. In wealth management, alongside our existing RBC Vision ESG funds, the RBC iShares brand has launched new ESG-focused ETFs. And RBC Capital Markets is playing a leading role in helping clients meet their goals and objectives, serving as exclusive financial advisor to both ENI, SPA, and to Greencoat UK Wind on acquisitions of offshore wind farms and demonstration of our growing role in Europe related to renewable power. RBC Capital Markets also acted as joint book runner on Enbridge's $1 billion sustainably linked revolving credit facility, the first such issuance by an energy borrower in the North American market. Also, I'm proud to share RBC has received this year's Global Catalyst Award an honor recognizing businesses dedicated to increasing the representation of women in leadership and promoting equal access to career opportunities. RBC is also recognized as an ESG leader by third-party rating agencies with a high 86 percentile ranking on priority ESG indices. And as a reminder, today we're kicking off our first ever RBC Capital Markets Global ESG Conference. So to sum up, Our scale, innovation, and talent are our competitive advantage as we create even more value for our clients. We continue to execute on our strategy with purpose to prudently invest in sustainable growth and strong returns for shareholders. I'll now turn it over to Rod.