Royal Bank of Canada (NYSE:RY) Q1 2018 Earnings Conference Call - Preliminary Transcript

Feb 22, 2018 • 04:00 pm ET


Royal Bank of Canada (NYSE:RY) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Good morning, ladies and gentlemen. Welcome to the RBC 2018 First Quarter Results Conference Call. I would now like to turn the meeting over to Mr. Dave Mun, Senior Vice President and Head of Investor Relations. Please go ahead, Mr. Mun.

David Mun

Thanks, operator, and good morning, everyone. Speaking today will be Dave McKay, President and Chief Executive Officer, Rod Bolger, Chief Financial Officer, and Mark Hughes, Chief Risk Officer. We'll open the call for questions following their comments. In previous calls, we've run out of time for everyone's questions, so to give everyone a chance to ask a question, we really ask that you keep it to one question and then requeue. Joining us in the room today are our business heads: Neil McLaughlin, Group Head of Pers

Nal and Commercial Banking, Doug Guzman, Group Head of Wealth Management and Insurance, and Doug McGregor, Group Head of Capital Markets and Investor and Treasury Services. Graham Hepworth, our Deputy Chief Risk Officer, is also with us today. As noted on Slide 2, our comments may contain forward-looking statements which involve applying assumptions and have inherent risks and uncertainties. Actual results could differ materially.

With that, I'll turn it over to Dave.

David McKay

Thanks, Dave, and good morning, everyone. I don't think we've ever had to compete with a Team Canada Olympics hockey game before, so thanks, everyone, for joining us this morning. We've got both angles covered, though, as we've got lots of ads on the Olympics if you're watching that coverage at the same time.

I'm not sure how Team Canada started, but RBC had a strong start to the year with robust client activity across our businesses. We saw strong volume growth and investment appetite in our retail businesses and good origination and lending activity in capital markets. Supported by rising interest rates and equity markets, we generated strong revenue growth. This led to $3 billion of net income in the first quarter while we absorbed a writedown related to the US tax reform. Excluding this writedown, we generated $3.2 billion. Overall, we believe the tax reform will be positive for the broader US economy and our businesses.

Our strategy for sustainable growth is built on prudently managing risks and effectively deploying capital to deliver premium returns through the cycle. We did so this quarter with an ROE of 17.4%. We invested in organic growth in each business while buying back 9 million shares and maintaining a strong C21 ratio of 11%. In addition, I'm pleased to announce a $0.03 increase to our dividend this morning, bringing our quarterly dividend to $0.94 per share.

Our strong performance gives us the flexibility to invest more in technology and positions RBC for the future. We're using our resources to help advance Canada's competitive position. This includes researching new banking models and developing data and machine learning capabilities at our Borealis AI research facilities. We're also opening a cybersecurity lab at the University of Waterloo as part of our commitment to develop talented researchers