Royal Bank Of Canada

Good morning, ladies and gentlemen. Welcome to RBC's conference call for the third 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 Investor 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 for your questions, Neil 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 would 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 recue. With that, I'll turn it over to Dave.

Thanks, Nadine, and good morning, everyone. Today we reported earnings of $4.3 billion, driven in part by strong client activity as we continue to attract new clients and deepen existing relationships across our market-leading franchises. Our performance reflects disciplined execution of our strategy, strong expense control, volume growth, higher fee-based client assets, and record investment banking revenue. This was partly offset by expected normalization in global markets revenue and continued pressures from low interest rates. We also saw improvements in our macroeconomic outlook and credit quality, resulting in significant release of reserves which Graham will speak to later. PCL unimpaired loans and new GIL formations remain at cyclical lows as our well-diversified portfolios continue to perform in these uncertain times underpinned by strong underwriting and well-defined risk appetite. Our CT1 ratio increased 80 basis points to 13.6%, net of 15 billion of RWA growth. This was to support client demand and business growth across our platform. We leveraged our franchise and balance sheet strength to generate strong organic growth and an ROE of 19.6% this quarter or 19.2% year-to-date, well above our global peers. We continue to create long-term sustainable value for our shareholders in support of our 17 million clients. as underscored by our 12% year-over-year growth in book value per share. And even though regulatory restrictions remain, we paid $1.5 billion in common dividends to our shareholders, the majority of which are based in Canada. I will now offer some perspective on the macro environment, which we view with cautious optimism in the near term, but see growing in strength into 2022. We remain cognizant of the near-term challenges to global growth posed by new variants, an inconsistent global vaccine rollout, supply chain disruption, rising geopolitical risks, and continued global travel restrictions. However, we are encouraged by the economy progressing as it reopens based on trends we are seeing in credit card spend on both goods and services and business investment in term assets and in working capital. While the momentum that is building could moderate in the near term by rising virus cases, even with 75% of the eligible Canadian population being vaccinated, we believe the foundation of the economy remains solid and will manage through the threat of the Delta variant. As I noted last quarter, we are well positioned to leverage the scale and embedded profitability in our core franchises to significantly grow earnings in a more favorable economic scenario which would include rising interest rates, higher credit card revolve rates and growth in business lending. With or without a rate hike, our diversified business model and scale by geography, channel, product or service is poised to generate strong growth, particularly asset growth, through cycles and with a consistent risk appetite. Our success comes from our investments in significant client, data and geographic scale. This combined with our cross-sellability, brand and people have produced premium growth in average earning assets and market share gains in our core products. In Canadian banking, we added a market leading $37 billion in mortgages year over year, including over $9 billion this quarter. And we expect strong mortgage growth to continue, albeit at a lower rate than we've seen over an exceptional last 12 months. We are seeing green shoots of growth in our higher-yielding Canadian credit card and commercial loan portfolios, both up quarter over quarter. In the U.S., we are seeing particular strength at Citi National, where we've added $15 billion U.S. dollars in loans over the last two years, including over $5 billion U.S. dollars in mortgages. The recent launch of a new strategy supporting mid-corporate-sized companies across the United States is also proving to be successful. already booking over $1 billion in new commitments over the last few months. On the other side of the balance sheet, our long-term strategy to grow our core deposit business and provide exceptional service and advice continues to succeed. Over the last year, we added $43 billion of personal and business deposits in Canadian banking and a further $14 billion in deposits at Citi National. Our North American wealth management businesses have also been generating strong growth in fee-based client assets, both sequentially and a year-over-year basis. Canadian banking assets under administration were up over $63 billion, or 22% year-over-year, partly benefiting from strong equity markets and an increased client preference for investments, which I will speak to shortly. Furthermore, Canadian wealth management AUA increased 23% or $95 billion from last year, crossing $500 billion in client assets for the first time. RBC Global Asset Management had $35 billion in total net sales over the last 12 months, increasing assets under management 13% or over $67 billion year-over-year to record levels. And in U.S. wealth management, We added over $115 billion U.S. dollars of AUA, growing client assets 27% year-over-year and surpassing $550 billion U.S. dollars for the first time. We're continuing to invest in our people to capture a greater share of growth, adding managing directors and core investment banking verticals such as technology, healthcare, and aerospace. We're also adding ultra-high net worth private banking teams in City National on the East Coast along with an expanded presence in our core California markets. In Canadian banking, our team has added 1,700 employees year-over-year to capture strong client activity in mortgages, commercial banking, and investments. Another differentiated element of our strategy is building ecosystems that go beyond banking to enable RBC to participate in a broader part of the client journey and value chain. One example is an increasingly competitive Canadian commercial and small business segment. Several of these capabilities are made in RBC proprietary solutions. Owner, an RBC venture, has helped 45,000 entrepreneurs launch their businesses online, including 20,000 year-to-date. With RBC Insight Edge, our business clients can leverage aggregated data to gain relevant insights into their markets to enable them to attract more customers. We continue to make investments in building a digital platform with enriched payments and cash management capabilities for our business clients. RBC PayEdge helps our clients save time and money with a secure solution for their account payable process. We also launched RBCX, a platform to help entrepreneurs scale up their ideas through access to partnerships, capital, and advice in the tech, clean tech, and life science verticals. And to further support the Canadian tech ecosystem, RBC recently announced the Calgary Innovation Hub, while also signing on to become the anchor financial sponsor for Hub 350, a new technology park near Ottawa. And both RBC PayPlan and Amply allow us to increasingly partner with merchants across Canada to provide even more value for our retail and business clients. We have expanded our slate of partners, who continue to be a differentiator for RBC. And with the recent addition of DoorDash and FinanceIT, it will help attract new clients and create more value for existing clients. I've spoken a lot this morning about our asset generating opportunities. Also core to our client strategies is a fundamental belief in reciprocity, which rewards clients for the depth and breadth of their relationship with us. Last quarter, we provided a number of metrics highlighting our multi-product relationships, The recent launch of RBC Vantage further incentivizes the consolidation of our strong client relationships. And Vantage adds a further retail banking value proposition to our existing investment capabilities such as MyAdvisor, Direct Investing, and InvestEase. This expanded continuum of offerings allows us to support our clients with advice and solutions to help them make the best decision based on the prevailing macro backdrop. The continued low interest rate environment is making it increasingly attractive for our Canadian banking clients to shift out of lower yielding GICs and savings accounts and putting their money to work into investment products such as mutual funds. The related fee-based revenue along with higher client savings and card payments rates have been positive for credit quality and risk-adjusted revenue metrics, helping offset margin pressure. And even as we invest in our core client franchises to achieve premium asset growth, we remain committed to managing our costs as we have done in the past. This includes implementing a zero-based budgeting methodology where we judiciously and consistently reevaluate every cost and activity across the bank. To sum up, our diversified business model, scale, financial discipline, risk management culture, and robust capital position continues to provide the foundation for delivering differentiated client and shareholder value over the long term. And we will continue to grow in an inclusive and sustainable way that enables our clients to thrive and our communities to prosper. I will now turn it over to Rod.