Royal Bank of Canada (NYSE:RY) Q1 2015 Earnings Conference Call - Preliminary Transcript

Feb 24, 2015 • 04:00 pm ET


Royal Bank of Canada (NYSE:RY) Q1 2015 Earnings Conference Call - Preliminary Transcript


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Mark Hughes

names that could be under pressure if oil prices remain at current levels for a further sustained period. And we're closely monitoring those companies for any early warning signs. We're also monitoring retail portfolios, and this allows us to proactively reach out to clients and engage in the discussion if we see early signs of financial stress. Beyond active monitoring, we have stress tested both our wholesale and retail portfolios giving a $45 oil price for a sustained period of time, a significant increase In Canadian unemployment and interest rates, and a national downturn in the real estate market, as well as a recession in [Phonetic]Alberta, under this very extreme scenario, we have determined that the potential losses would still be manageable and within our risk appetite. Turning to slide 20, gross impaired loans and new impaired loan formations increased this quarter, largely due to the two international Wealth Management accounts I mentioned earlier, as well as foreign exchange. Turning to slide 21, in the first quarter average market risk Value at Risk increase $7 million to $33 million due to the implementation of funding valuation adjustments or FDA at the end of the prior quarter, and the impact of the depreciating Canadian dollar. Our first quarter average market risk stress bar was $107 million of $29 million from the prior quarter largely due to the implementation of FDA. While stress bar was elevated in the first quarter compared to recent historical levels. It has since retired to a more normalized level, we had three days of trading losses in the quarter with none of the losses exceeding bar. Overall, I am pleased with our credit performance this quarter and I am comfortable with how we're managing our businesses from a risk perspective, given the macroeconomic headwinds. With that operator, we're ready for a Q&A.