Royal Bank of Canada Reports Fourth Quarter and 2020 Results

All amounts are in Canadian dollars and are based on our audited Annual and unaudited Interim Consolidated Financial Statements for the year and quarter ended October 31, 2020 and related notes prepared in accordance with International Financial Reporting Standards (IFRS). Our 2020 Annual Report (which includes our audited Annual Consolidated Financial Statements and accompanying Management's Discussion & Analysis), our 2020 Annual Information Form and our Supplementary Financial Information are available on our website at: http://www.rbc.com/investorrelations.

2020 Net Income
$11.4 Billion
Down 11% YoY 

2020 Diluted EPS1
$7.82
Down 11% YoY 

2020 PCL2
$4.4 Billion
Up $2.5BN YoY
PCL on loans ratio
prudently increased 32
bps3
 

2020 ROE4 
14.2%
Down from 16.8% last
year

CET1 Ratio
12.5%
Robust capital levels,
up 40 bps YoY
 

TORONTO, Dec. 2, 2020 /CNW/ - Royal Bank of Canada (TSX: RY) (NYSE: RY) today reported net income of $11,437 million for the year ended October 31, 2020, down $1,434 million or 11% from the prior year. Diluted EPS was $7.82, down 11% over the same period. Our consolidated results reflect higher PCL (increased by $2.5 billion from the prior year), as we prudently built reserves given the unprecedented challenges brought on by the COVID-19 pandemic, in addition to the impact of lower interest rates. Lower results in Personal & Commercial Banking and Wealth Management were partially offset by robust earnings in Capital Markets, as well as higher results in Investor & Treasury Services and Insurance.

The PCL on loans ratio of 63 bps increased by 32 bps from the prior year, largely resulting from higher provisions on performing loans due to the impact of the COVID-19 pandemic. The PCL on impaired loans ratio was 24 bps, down 3 bps from the prior year. Our capital position remained robust, with a Common Equity Tier 1 (CET1) ratio of 12.5%, up 40 bps from the prior year (pre-pandemic levels). We also had a strong average Liquidity Coverage Ratio (LCR) of 145%.

"In what has been an unparalleled year due to the global pandemic, RBC demonstrated the strength and resilience of our franchise. The combination of prudent risk management, a strong balance sheet and diversified business model, and our Purpose-led approach to supporting employees, clients and communities, defined our success in a challenging operating environment," said Dave McKay, RBC President and Chief Executive Officer. "Looking ahead, while it is difficult to predict how the coming year will unfold, RBC has the strength, stability and operational resilience to face a range of scenarios, and to continue creating long-term sustainable value. I want to sincerely thank all RBCers for their unwavering support of our clients, communities and each other."

2020 Full Year Business Segment Performance

  • 21% lower earnings in Personal & Commercial Banking, mainly due to higher PCL, primarily attributable to the impact of the COVID-19 pandemic on performing loans. The net increase in costs associated with the COVID-19 pandemic, including additional staff-related costs, also contributed to the decrease. Earnings also reflected a decline in net interest income, as strong average volume growth (+6% in loans and +14% in deposits in Canadian Banking) was more than offset by the impact of lower interest rates and competitive pricing pressures. In addition, we continued our investment in digital solutions to improve our clients' experience and deliver personalized advice as the pandemic amplified client preferences for digital offerings.

  • 15% lower earnings in Wealth Management, primarily due to a gain in the prior year on the sale of the private debt business of BlueBay ($134 million after-tax), a decline in net interest income from lower interest rates partially offset by volume growth, and higher staff-related costs. Lower income from sweep deposits also contributed to the decrease. These factors were partially offset by an increase in earnings from higher average fee-based client assets, primarily reflecting net sales and market appreciation, net of the associated variable compensation.

  • 3% earnings growth in Insurance, largely due to higher favourable investment-related experience, partially offset by unfavourable annual actuarial assumption updates.

  • 13% earnings growth in Investor & Treasury Services, as the prior year included severance and related costs ($83 million after-tax) associated with the repositioning of the business. The repositioning combined with the impact of ongoing efficiency initiatives also resulted in lower staff-related costs in the current year. These factors were partially offset by lower client deposit revenue due to margin compression primarily driven by lower interest rates.

  • 4% earnings growth in Capital Markets, largely due to higher fixed income trading revenue across all regions as elevated market volatility drove increased client activity, and higher debt origination across most regions as the low interest rate environment drove increased primary issuance. Higher equity trading revenue primarily in the U.S. also contributed to the increase. These factors were partially offset by higher PCL mainly attributable to the impact of the COVID-19 pandemic on performing assets, higher taxes due to an increase in the proportion of earnings from higher tax rate jurisdictions, and higher compensation on improved results.

_______________________________

1 Earnings per share (EPS).

2 Provision for credit losses (PCL).

3 Basis points (bps).

4 Return on equity (ROE). This measure does not have a standardized meaning under GAAP. For further information, refer to the Key Performance and non-GAAP measures section on page 12 of this Earnings Release.

Q4 2020 Performance
Earnings of $3,246 million were up $40 million or 1% from a year ago, due to higher results in Capital Markets, Corporate Support and Investor & Treasury Services. These were largely offset by lower earnings in Wealth Management, Personal & Commercial Banking and Insurance. Q4 2019 results included a gain on the sale of the private debt business of BlueBay ($134 million after-tax) in Wealth Management. This gain was largely offset by higher severance and related costs ($83 million after-tax) associated with the repositioning of our Investor & Treasury Services business, as well as by an unfavourable accounting adjustment ($41 million after-tax) in Corporate Support included in the prior year.

Earnings were up $45 million or 1% from last quarter, due to higher earnings in Personal & Commercial Banking, Insurance and Investor & Treasury Services. These were partially offset by lower earnings in Capital Markets, Corporate Support and Wealth Management.











Q4 2020
compared to
Q4 2019

Net income of $3,246 million

1%

Diluted EPS of $2.23

2%

ROE of 16.0%

20 bps

CET1 ratio of 12.5%

40 bps











Q4 2020
compared to
Q3 2020

Net income of $3,246 million

1%

Diluted EPS of $2.23

1%

ROE of 16.0%

30 bps

CET1 ratio of 12.5%

50 bps






Q4 2020 Business Segment Performance

Personal & Commercial Banking

Net income of $1,502 million decreased $116 million or 7% from a year ago, primarily attributable to lower spreads, largely reflecting the impact of lower interest rates. An increase in technology and related costs and lower card service revenue also contributed to the decrease. These factors were partially offset by average volume growth of 12% in Canadian Banking and lower PCL.

Compared to last quarter, net income increased $135 million or 10%, primarily due to lower PCL, average volume growth of 3% in Canadian Banking and lower staff-related costs. These factors were partially offset by lower spreads, lower card service revenue, an increase in technology and related costs, including digital initiatives, and the timing of professional fees.

Wealth Management

Net income of $546 million decreased $183 million or 25% from a year ago, largely due to a gain in the prior year on the sale of the private debt business of BlueBay of $134 million (after-tax). A decline in net interest income also contributed to the decrease, as average volume growth was more than offset by the impact of lower interest rates. These factors were partially offset by earnings from higher average fee-based client assets, primarily reflecting net sales and market appreciation, net of the associated variable compensation costs.

Compared to last quarter, net income decreased $16 million or 3%. An increase in revenue from higher average fee-based client assets, net of the associated variable compensation costs, and lower PCL were largely offset by unfavourable changes in the net impact of our U.S. share-based compensation plans and the fair value of seed capital investments. In combination with higher technology and related costs and the impact of foreign exchange translation, these factors drove a decrease in net income. Net interest income also contributed to the decrease as average volume growth was more than offset by the impact of lower interest rates.            

Insurance

Net income of $254 million decreased $28 million or 10% from a year ago, primarily due to unfavourable annual actuarial assumption updates. The impact from lower favourable longevity reinsurance contracts and reinsurance contract renegotiations also contributed to the decrease. These factors were partially offset by lower claims costs and higher favourable investment-related experience.

Compared to last quarter, net income increased $38 million or 18%, primarily due to improved travel and disability claims experience, as well as the impact of longevity reinsurance contracts in the current quarter. Higher benefits from favourable reinsurance contract renegotiations also contributed to the increase. These factors were partially offset by unfavourable annual actuarial assumption updates in the current quarter primarily related to mortality experience.

Investor & Treasury Services

Net income of $91 million increased $46 million from a year ago, as the prior year included severance and related costs associated with the repositioning of the business ($83 million after-tax). These factors were partially offset by lower revenue from funding and liquidity, client deposits and our asset services business.

Compared to last quarter, net income increased $15 million or 20%, mainly driven by higher funding and liquidity revenue, primarily reflecting the impact of interest rate movements in the prior quarter, partially offset by lower revenue from our asset services business due to reduced client activity. 

Capital Markets

Net income of $840 million increased $256 million or 44% from a year ago, largely driven by higher revenue in Global Markets reflecting favourable market conditions, and Corporate and Investment Banking, mainly due to higher debt and equity origination across most regions. Lower compensation also contributed to the increase. These factors were partially offset by higher taxes due to an increase in the proportion of earnings from higher tax rate jurisdictions.

Compared to last quarter, net income decreased $109 million or 11%, mainly driven by lower fixed income trading revenue across most regions relative to the prior quarter which benefitted from significant client activity amid elevated market volatility. This was partially offset by lower compensation on decreased results.

Corporate Support

Net income was $13 million in the current quarter, mainly due to asset/liability management activities, partially offset by net unfavourable tax adjustments. Net income was $31 million last quarter, primarily due to asset/liability management activities, partially offset by net unfavourable tax adjustments and residual unallocated costs. Net loss was $52 million in the same quarter last year, largely due to the impact of an unfavourable accounting adjustment.

Capital, Liquidity and Credit Quality

Capital – As at October 31, 2020, our Basel III CET1 ratio was 12.5%, up 50 bps from last quarter, mainly reflecting strong internal capital generation, lower RWA (primarily market risk) and favourable pension & post-employment benefit impact, partially offset by net credit downgrades.

Liquidity – For the quarter ended October 31, 2020, average LCR was 145%, which translates into a surplus of approximately $112 billion, compared to 154% and a surplus of approximately $127 billion in the prior quarter. While average LCR remains at higher than normal levels due to sustained increases in client deposits driven largely due to industry-wide impacts of the pandemic and associated actions taken by central banks, it has declined quarter over quarter due to liquidity optimization actions taken by management.

Credit Quality
Q4 2020 vs. Q4 2019
Total PCL was $427 million. PCL on loans of $398 million decreased $107 million or 21% from a year ago, primarily due to lower provisions in Personal & Commercial Banking and Capital Markets, partially offset by higher provisions in Wealth Management. The PCL on loans ratio of 23 bps decreased 9 bps, and the PCL on impaired loans ratio was 15 bps.

PCL on other financial assets was $29 million, compared to $(6) million in the prior year, largely reflecting higher provisions in Capital Markets due to the impact of the COVID-19 pandemic.

PCL on loans in Personal & Commercial Banking decreased $74 million or 19%, largely due to lower provisions on impaired loans in our Canadian Banking retail and commercial portfolios, mainly due to the impact of the COVID-19 related government support and payment deferral programs, resulting in a decrease of 14 bps in the impaired loans ratio. This was partially offset by higher provisions on performing loans in our Canadian Banking commercial portfolios, primarily due to the evolving impact of the COVID-19 pandemic.

PCL on loans in Wealth Management increased $17 million or 50%, largely reflecting higher provisions on performing loans in U.S. Wealth Management (including City National) due to the evolving impact of the COVID-19 pandemic. This was partially offset by lower provisions and higher recoveries on impaired loans in U.S. Wealth Management (including City National), mainly in the consumer discretionary and investments sectors, respectively, resulting in a decrease of 21 bps in the impaired loans ratio.

PCL on loans in Capital Markets decreased $48 million or 62%, mainly relating to provisions on performing loans as the current quarter largely reflected favourable changes in macroeconomic factors.

Q4 2020 vs. Q3 2020
Compared to last quarter, total PCL decreased $248 million or 37%. PCL on loans decreased $280 million or 41%, primarily due to lower provisions in Personal & Commercial Banking, Capital Markets and Wealth Management. The PCL on loans ratio of 23 bps was down 17 bps and the PCL on impaired loans ratio was down 8 bps from last quarter.

PCL on other financial assets of $29 million increased $32 million, largely reflecting higher provisions in Capital Markets.  

PCL on loans in Personal & Commercial Banking decreased $207 million or 39%, as higher provisions on performing loans in our Canadian Banking commercial portfolios were more than offset by lower provisions in our Canadian Banking retail portfolios, largely due to higher unfavourable changes in our credit quality outlook in the prior quarter. Lower provisions on impaired loans in our Canadian Banking portfolios, mainly due to the impact of the COVID-19 related government support and payment deferral programs, also contributed to the decrease.

PCL on loans in Wealth Management decreased $25 million or 33%, primarily in U.S. Wealth Management (including City National) as the current quarter reflected provisions on impaired loans in a few sectors offset by a recovery in the investments sector, while the prior quarter reflected higher provisions on impaired loans, largely in the industrial products and investments sectors.

PCL on loans in Capital Markets decreased $50 million or 63%, primarily relating to provisions on performing loans as the prior quarter reflected higher unfavourable changes in our credit quality outlook, partially offset by lower repayments in the current quarter.

Digitally Enabled Relationship Bank

90-day Active Mobile users increased 12% from a year ago to 5.0 million, resulting in a 37% increase in mobile sessions. Digital adoption increased to 54.0%.


  Selected financial and other highlights



As at or for the three months ended

For the year ended

(Millions of Canadian dollars, except per share, number of and percentage amounts) (1)


October 31
2020


July 31 

2020


October 31 

2019


October 31
2020


October 31 

2019


Total revenue

$

11,092

$

12,920

$

11,370

$

47,181

$

46,002


Provision for credit losses (PCL)


427


675


499


4,351


1,864


Insurance policyholder benefits, claims and acquisition expense (PBCAE)


461


1,785


654


3,683


4,085


Non-interest expense


6,058


6,380


6,319


24,758


24,139


Income before income taxes


4,146


4,080


3,898


14,389


15,914

Net income

$

3,246

$

3,201

$

3,206

$

11,437

$

12,871

Segments - net income












Personal & Commercial Banking

$

1,502

$

1,367

$

1,618

$

5,087

$

6,402


Wealth Management


546


562


729


2,155


2,550


Insurance


254


216


282


831


806


Investor & Treasury Services


91


76


45


536


475


Capital Markets 


840


949


584


2,776


2,666


Corporate Support


13


31


(52)


52


(28)

Net income

$

3,246

$

3,201

$

3,206

$

11,437

$

12,871

Selected information












Earnings per share (EPS)

- basic


$

2.23

$

2.20

$

2.19

$

7.84

$

8.78



- diluted



2.23


2.20


2.18


7.82


8.75


Return on common equity (ROE) (2), (3)


16.0%


15.7%


16.2%


14.2%


16.8%


Average common equity (2)

$

78,800

$

79,350

$

76,600

$

78,800

$

75,000


Net interest margin (NIM) - on average earning assets, net


1.52%


1.49%


1.60%


1.55%


1.61%


PCL on loans as a % of average net loans and acceptances


0.23%


0.40%


0.32%


0.63%


0.31%


PCL on performing loans as a % of average net loans and acceptances


0.08%


0.17%


0.05%


0.39%


0.04%


PCL on impaired loans as a % of average net loans and acceptances


0.15%


0.23%


0.27%


0.24%


0.27%


Gross impaired loans (GIL) as a % of loans and acceptances


0.47%


0.57%


0.46%


0.47%


0.46%


Liquidity coverage ratio (LCR) (4)


145%


154%


127%


145%


127%

Capital ratios and Leverage ratio












Common Equity Tier 1 (CET1) ratio


12.5%


12.0%


12.1%


12.5%


12.1%


Tier 1 capital ratio


13.5%


13.3%


13.2%


13.5%


13.2%


Total capital ratio


15.5%


15.3%


15.2%


15.5%


15.2%


Leverage ratio


4.8%


4.8%


4.3%


4.8%


4.3%

Selected balance sheet and other information (5)












Total assets

$

1,624,548

$

1,683,134

$

1,428,935

$

1,624,548

$

1,428,935


Securities, net of applicable allowance


275,814


290,513


249,004


275,814


249,004


Loans, net of allowance for loan losses


660,992


655,941


618,856


660,992


618,856


Derivative related assets


113,488


157,378


101,560


113,488


101,560


Deposits


1,011,885


1,017,158


886,005


1,011,885


886,005


Common equity


80,719


78,821


77,816


80,719


77,816


Total risk-weighted assets


546,242


551,421


512,856


546,242


512,856


Assets under management (AUM)


843,600


841,200


762,300


843,600


762,300


Assets under administration (AUA) (6)


5,891,200


5,872,900


5,678,000


5,891,200


5,678,000

Common share information












Shares outstanding (000s)

- average basic



1,422,578


1,422,705


1,432,685


1,423,915


1,434,779



- average diluted



1,426,466


1,427,777


1,438,257


1,428,770


1,440,682



- end of period



1,422,473


1,422,200


1,430,096


1,422,473


1,430,096


Dividends declared per common share

$

1.08

$

1.08

$

1.05

$

4.29

$

4.07


Dividend yield (7)


4.4%


4.8%


4.0%


4.7%


4.1%


Dividend payout ratio


48%


49%


48%


55%


46%


Common share price (RY on TSX) (8)

$

93.16

$

92.40

$

106.24

$

93.16

$

106.24


Market capitalization (TSX) (8)


132,518


131,411


151,933


132,518


151,933

Business information (number of)












Employees (full-time equivalent) (FTE)


83,842


83,734


82,801


83,842


82,801


Bank branches


1,329


1,330


1,327


1,329


1,327


Automated teller machines (ATMs)


4,557


4,561


4,600


4,557


4,600

Period average US$ equivalent of C$1.00 (9)

$

0.756

$

0.737

$

0.755

$

0.744

$

0.752

Period-end US$ equivalent of C$1.00

$

0.751

$

0.747

$

0.759

$

0.751

$

0.759



(1)

Effective November 1, 2019, we adopted IFRS 16 Leases. Results from periods prior to November 1, 2019 are reported in accordance with IAS 17 Leases in our 2020 Annual Report. For further details on the impacts of the adoption of IFRS 16 including the description of accounting policies selected, refer to Note 2 of our 2020 Annual Consolidated Financial Statements.

(2)

Average amounts are calculated using methods intended to approximate the average of the daily balances for the period. This includes average common equity used in the calculation of ROE. For further details, refer to the Key performance and non-GAAP measures section of this Earnings Release.

(3)

These measures may not have a standardized meaning under generally accepted accounting principles (GAAP) and may not be comparable to similar measures disclosed by other financial institutions. For further details, refer to the Key performance and non-GAAP measures section of this Earnings Release.

(4)

LCR is the average for the three months ended for each respective period and is calculated in accordance with the Office of the Superintendent of Financial Institutions' (OSFI) Liquidity Adequacy Requirements (LAR) guidance as updated in accordance with the regulatory guidance issued in fiscal 2020. For further details, refer to the Liquidity and funding risk section of our 2020 Annual Report.

(5)

Represents period-end spot balances.

(6)

AUA includes $15.6 billion and $6.7 billion (July 31, 2020 – $16.2 billion and $6.7 billion, October 31, 2019 – $15.5 billion and $8.1 billion) of securitized residential mortgages and credit card loans, respectively.

(7)

Defined as dividends per common share divided by the average of the high and low share price in the relevant period.

(8)

Based on TSX closing market price at period-end.

(9)

Average amounts are calculated using month-end spot rates for the period.

 



  Personal & Commercial Banking



As at or for the three months ended


October 31 

July 31 

October 31 

(Millions of Canadian dollars, except percentage amounts and as otherwise noted)

2020

2020

2019


Net interest income

$

3,114

$

3,079

$

3,238


Non-interest income


1,259


1,269


1,330

Total revenue


4,373


4,348


4,568


PCL on performing assets


135


247


50


PCL on impaired assets


181


280


337

PCL


316


527


387


Non-interest expense


2,030


1,985


2,007

Income before income taxes


2,027


1,836


2,174

Net income

$

1,502

$

1,367

$

1,618

Revenue by business








Canadian Banking

$

4,165

$

4,135

$

4,321


Caribbean & U.S. Banking


208


213


247

Selected balances and other information








ROE


26.0%


23.4%


27.0%


NIM


2.59%


2.60%


2.82%


Efficiency ratio (1)


46.4%


45.7%


43.9%


Operating leverage


(5.4)%


(5.7)%


3.7 %


Average total assets

$

503,200

$

494,800

$

477,900


Average total earning assets, net


478,500


470,300


456,100


Average loans and acceptances, net


482,000


473,400


458,900


Average deposits


481,300


465,100


405,200


AUA (2), (3)


292,800


293,100


283,800


Average AUA


297,600


286,000


281,800


AUM (3)


5,300


5,200


5,000


PCL on impaired loans as a % of average net loans and acceptances


0.15%


0.24%


0.29%

Other selected information - Canadian Banking








Net income

$

1,474

$

1,330

$

1,555


NIM


2.56%


2.58%


2.76%


Efficiency ratio


44.9%


43.9%


42.0%


Operating leverage


(6.8)%


(5.5)%


4.3 %



(1)

Calculated as non-interest expense divided by total revenue.

(2)

AUA includes securitized residential mortgages and credit card loans as at October 31, 2020 of $15.6 billion and $6.7 billion, respectively (July 31, 2020 – $16.2 billion and $6.7 billion, October 31, 2019 – $15.5 billion and $8.1 billion).

(3)

Represents period-end spot balances.

Q4 2020 vs. Q4 2019
Net income decreased $116 million or 7% from a year ago, primarily attributable to lower spreads, an increase in technology and related costs, and lower card service revenue. These factors were partially offset by average volume growth of 12% in Canadian Banking and lower PCL.

Total revenue decreased $195 million or 4%, mainly due to lower spreads, largely due to the impact of lower interest rates, a decrease in card service revenue and lower service charges. These factors were partially offset by average volume growth in Canadian Banking of 5% in loans and 19% in deposits.

Net interest margin was down 23 bps compared to the same quarter last year, mainly due to lower interest rates.

PCL decreased $71 million or 18%, largely due to lower provisions on impaired loans in our Canadian Banking portfolios, resulting in a decrease of 14 bps in the impaired loans ratio. This was partially offset by higher provisions on performing loans in our Canadian Banking portfolios, primarily due to the evolving impact of the COVID-19 pandemic. For further details on PCL, refer to Capital, Liquidity and Credit quality in the Q4 2020 Business Segment Performance section of this Earnings Release.  

Non-interest expense increased $23 million or 1%, mainly attributable to an increase in technology and related costs, including digital initiatives, as well as incremental COVID-19 related operating costs. These factors were partially offset by lower discretionary spend.

Q4 2020 vs. Q3 2020
Net income increased $135 million or 10% from last quarter, primarily due to lower PCL, average volume growth of 3% in Canadian Banking and lower staff-related costs. These factors were partially offset by lower spreads, lower card service revenue, an increase in technology and related costs, including digital initiatives, and the timing of professional fees.



  Wealth Management




As at or for the three months ended



October 31 

July 31 

October 31 

(Millions of Canadian dollars, except number of and percentage amounts and as otherwise noted)

2020

2020

2019


Net interest income

$

686

$

699

$

745


Non-interest income


2,382


2,465


2,442

Total revenue


3,068


3,164


3,187


PCL on performing assets


51


31


(1)


PCL on impaired assets


-


43


35

PCL


51


74


34


Non-interest expense


2,312


2,361


2,262

Income before income taxes


705


729


891

Net income

$

546

$

562

$

729

Revenue by business








Canadian Wealth Management

$

835

$

806

$

823


U.S. Wealth Management (including City National)


1,539


1,659


1,556


   U.S. Wealth Management (including City National) (US$ millions)


1,165


1,222


1,175


Global Asset Management


608


606


713


International Wealth Management


86


93


95

Selected balances and other information








ROE


13.0%


13.3%


19.5%


NIM


2.50%


2.58%


3.30%


Pre-tax margin (1)


23.0%


23.0%


28.0%

Selected average balance sheet information








Average total assets

$

126,300

$

124,900

$

103,900


Average total earning assets, net


109,300


107,800


89,500


Average loans and acceptances, net


81,000


81,300


66,700


Average deposits


132,100


131,100


100,700

Other information








AUA - total (2)


1,100,000


1,097,100


1,062,200


        - U.S. Wealth Management (including City National) (2)


583,800


584,500


543,300


        - U.S. Wealth Management (including City National) (US$ millions) (2)


438,200


436,400


412,600


AUM (2)


836,400


834,100


755,700


Average AUA


1,107,700


1,082,000


1,055,700


Average AUM


839,600


815,000


753,300


PCL on impaired loans as a % of average net loans and acceptances


0.00%


0.21%


0.21%


Number of advisors (3)


5,428


5,376


5,296



For the three months ended

Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items

Q4 2020 vs

Q4 2020 vs

(Millions of Canadian dollars, except percentage amounts)

Q4 2019

Q3 2020

Increase (decrease):






Total revenue

$

7

$

(41)


Non-interest expense


6


(33)


Net income


-


(5)

Percentage change in average US$ equivalent of C$1.00


0%


3%

Percentage change in average British pound equivalent of C$1.00


(4)%


(1)%

Percentage change in average Euro equivalent of C$1.00


(6)%


(1)%



(1)

Pre-tax margin is defined as Income before income taxes divided by Total revenue.

(2)

Represents period-end spot balances.

(3)

Represents client-facing advisors across all our wealth management businesses.

Q4 2020 vs. Q4 2019
Net income decreased $183 million or 25% from a year ago, largely due to a gain in the prior year on the sale of the private debt business of BlueBay of $134 million (after-tax), as well as lower net interest income. These factors were partially offset by earnings from higher average fee-based client assets, net of the associated variable compensation costs.

Total revenue decreased $119 million or 4%, mainly due to a gain in the prior year on the sale of the private debt business of BlueBay of $151 million, as well as a decline in net interest income as average volume growth was more than offset by the impact of lower interest rates. These factors were partially offset by higher average fee-based client assets, primarily reflecting net sales and market appreciation. 

PCL increased $17 million or 50%, largely reflecting higher provisions on performing loans in U.S. Wealth Management (including City National). This was partially offset by lower provisions and higher recoveries on impaired loans in U.S. Wealth Management (including City National), driving a decrease of 21 bps in the impaired loans ratio. For further details on PCL, refer to Capital, Liquidity and Credit quality in the Q4 2020 Business Segment Performance section of this Earnings Release.

Non-interest expense increased $50 million or 2%, largely due to higher variable compensation commensurate with increased commissionable revenue.

Q4 2020 vs. Q3 2020
Net income decreased $16 million or 3% from last quarter. An increase in revenue from higher average fee-based client assets, net of the associated variable compensation costs, and lower PCL were largely offset by unfavourable changes in the net impact of our U.S. share-based compensation plans and the fair value of seed capital investments. In combination with higher technology and related costs and the impact of foreign exchange translation, these factors drove a decrease in net income. Net interest income also contributed to the decrease as average volume growth was more than offset by the impact of lower interest rates.



  Insurance





As at or for the three months ended




October 31 

July 31 


October 31 

(Millions of Canadian dollars, except percentage amounts)

2020

2020


2019


Non-interest income









Net earned premiums

$

986

$

974

$

944



Investment income, gains/(losses) on assets supporting insurance policyholder liabilities (1)


(71)


1,196


168



Fee income


43


42


41

Total revenue


958


2,212


1,153


PCL


(1)


-


-


Insurance policyholder benefits and claims (1)


391


1,715


572


Insurance policyholder acquisition expense


70


70


82


Non-interest expense


151


140


153

Income before income taxes


347


287


346

Net income

$

254

$

216

$

282

Revenue by business








Canadian Insurance

$

299

$

1,636

$

609


International Insurance


659


576


544

Selected balances and other information








ROE


42.5%


35.9%


50.3%


Premiums and deposits (2)

$

1,129

$

1,131

$

1,105


Fair value changes on investments backing policyholder liabilities (1)


(235)


997


(28)



(1)

Includes unrealized gains and losses on investments backing policyholder liabilities attributable to fluctuation of assets designated as fair value through profit or loss (FVTPL). The investments which support actuarial liabilities are predominantly fixed income assets designated as FVTPL. Consequently, changes in the fair values of these assets are recorded in Insurance premiums, investment and fee income in the Consolidated Statements of Income and are largely offset by changes in the fair value of the actuarial liabilities, the impact of which is reflected in Insurance policyholder benefits, claims and acquisition expense.

(2)

Premiums and deposits include premiums on risk-based insurance and annuity products, and individual and group segregated fund deposits, consistent with insurance industry practices.

Q4 2020 vs. Q4 2019
Net income decreased $28 million or 10% from a year ago, primarily due to unfavourable annual actuarial assumption updates. The impact from lower favourable longevity reinsurance contracts and reinsurance contract renegotiations also contributed to the decrease. These factors were partially offset by lower claims costs and higher favourable investment-related experience.

Total revenue decreased $195 million or 17%, mainly due to the change in fair value of investments backing policyholder liabilities, which is largely offset in PBCAE as indicated below, and lower realized investment gains. These factors were partially offset by business growth, primarily in International Insurance, which is largely offset in PBCAE as indicated below.

PBCAE decreased $193 million or 30%, mainly reflecting the change in fair value of investments backing policyholder liabilities, higher favourable investment-related experience and lower claims costs. These factors were partially offset by unfavourable annual actuarial assumption updates in the current year largely related to mortality experience, lower favourable longevity reinsurance contracts, business growth, and the lower impact from reinsurance contract renegotiations.

Non-interest expense decreased $2 million or 1%.

Q4 2020 vs. Q3 2020
Net income increased $38 million or 18% from last quarter, primarily due to improved travel and disability claims experience as well as the impact of longevity reinsurance contracts in the current quarter. Higher benefits from favourable reinsurance contract renegotiations also contributed to the increase. These factors were partially offset by unfavourable annual actuarial assumption updates in the current quarter primarily related to mortality experience.


  Investor & Treasury Services




As at or for the three months ended




October 31 

July 31 


October 31 

(Millions of Canadian dollars, except percentage amounts)

2020

2020


2019


Net interest income

$

108

$

89

$

37


Non-interest income


413


395


529

Total revenue


521


484


566


PCL on performing assets


(4)


(4)


(1)


PCL on impaired assets


-


-


-

PCL


(4)


(4)


(1)


Non-interest expense


407


388


508

Income before income taxes


118


100


59

Net income

$

91

$

76

$

45

Selected balances and other information








ROE


10.1%


8.4%


4.8%


Average deposits

$

187,000

$

195,700

$

175,200



Average client deposits


63,300


65,800


57,600



Average wholesale funding deposits


123,700


129,900


117,600


AUA (1)


4,483,500


4,468,100


4,318,100


Average AUA


4,588,400


4,375,800


4,296,300




For the three months ended

Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items

Q4 2020 vs

Q4 2020 vs

(Millions of Canadian dollars, except percentage amounts)

Q4 2019

Q3 2020

Increase (decrease):






Total revenue

$

13

$

2


Non-interest expense


15


2


Net income


(1)


-

Percentage change in average US$ equivalent of C$1.00


0%


3%

Percentage change in average British pound equivalent of C$1.00


(4)%


(1)%

Percentage change in average Euro equivalent of C$1.00


(6)%


(1)%


(1)  Represents period-end spot balances.

Q4 2020 vs. Q4 2019
Net income increased $46 million from a year ago, as the prior year included severance and related costs associated with the repositioning of the business. These factors were partially offset by lower revenue from funding and liquidity, client deposits and our asset services business.

Total revenue decreased $45 million or 8%, mainly due to lower funding and liquidity revenue largely driven by elevated enterprise liquidity partially offset by higher gains from the disposition of securities, and lower client deposit revenue as the growth in client deposit volumes was more than offset by margin compression. Lower revenue from our asset services business driven by reduced client activity also contributed to the decrease. These factors were partially offset by the impact of foreign exchange translation.

Non-interest expense decreased $101 million or 20% as the prior year included severance and related costs associated with the repositioning of the business. Lower staff-related costs reflecting the benefit from ongoing efficiency initiatives also contributed to the decrease. These factors were partially offset by the impact of foreign exchange translation and higher costs in support of efficiency and technology initiatives.

Q4 2020 vs. Q3 2020
Net income increased $15 million or 20% from last quarter, mainly driven by higher funding and liquidity revenue primarily reflecting the impact of interest rate movements in the prior quarter, partially offset by lower revenue from our asset services business due to reduced client activity.


  Capital Markets



As at or for the three months ended




October 31 


July 31 


October 31 

(Millions of Canadian dollars, except percentage amounts)


2020


2020


2019


Net interest income (1)

$

1,183

$

1,335

$

1,063


Non-interest income (1)


1,092


1,413


924

Total revenue (1)


2,275


2,748


1,987


PCL on performing assets


(3)


12


18


PCL on impaired assets


68


66


60

PCL


65


78


78


Non-interest expense


1,165


1,471


1,308

Income before income taxes


1,045


1,199


601

Net income

$

840

$

949

$

584

Revenue by business








Corporate and Investment Banking

$

1,088

$

1,080

$

934


Global Markets


1,333


1,774


1,095


Other


(146)


(106)


(42)

Selected balances and other information








ROE


14.4%


15.7%


10.0%


Average total assets

$

709,000

$

777,400

$

696,100


Average trading securities


106,700


102,700


103,800


Average loans and acceptances, net


101,500


116,400


98,100


Average deposits


74,400


77,200


76,800


PCL on impaired loans as a % of average net loans and acceptances


0.27%


0.25%


0.24%



(1)

The taxable equivalent basis (teb) adjustment for the three months ended October 31, 2020 was $127 million (July 31, 2020 – $126 million, October 31, 2019 - $112 million).

Q4 2020 vs. Q4 2019
Net income increased $256 million or 44% from a year ago, largely driven by higher revenue in Global Markets and Corporate and Investment Banking, as well as lower compensation. These factors were partially offset by higher taxes due to an increase in the proportion of earnings from higher tax rate jurisdictions.

Total revenue increased $288 million or 14%, mainly due to higher equity trading revenue primarily in the U.S. reflecting favourable market conditions and increased client activity, as well as higher debt origination across most regions. Higher fixed income trading revenue largely in the U.S. driven by increased client activity, and higher equity origination across most regions also contributed to the increase.

PCL decreased $13 million or 17%, mainly due to lower provisions on performing loans, partially offset by higher provisions on other financial assets. For further details on PCL, refer to Capital, Liquidity and Credit quality in the Q4 2020 Business Segment Performance section of this Earnings Release.

Non-interest expense decreased $143 million or 11%, primarily driven by lower compensation.

Q4 2020 vs. Q3 2020
Net income decreased $109 million or 11% from last quarter, mainly driven by lower fixed income trading revenue across most regions relative to the prior quarter which benefitted from significant client activity amid elevated market volatility. This was partially offset by lower compensation on decreased results.


  Corporate Support                                                                                                                      



As at or for the three months ended




October 31 


July 31 


October 31 

(Millions of Canadian dollars)


2020


2020


2019


Net interest income (loss) (1)

$

(81)

$

(63)

$

28


Non-interest income (loss) (1)


(22)


27


(119)

Total revenue (1)


(103)


(36)


(91)


PCL


-


-


1


Non-interest expense


(7)


35


81

Income (loss) before income taxes (1)


(96)


(71)


(173)


Income taxes (recoveries) (1)


(109)


(102)


(121)

Net income (loss)

$

13

$

31

$

(52)


(1) Teb adjusted.

Due to the nature of activities and consolidation adjustments reported in this segment, we believe that a comparative period analysis is not relevant. The following identifies material items affecting the reported results in each period.

Total revenue and income taxes (recoveries) in each period in Corporate Support include the deduction of the teb adjustments related to the gross-up of income from Canadian taxable corporate dividends and the U.S. tax credit investment business recorded in Capital Markets. The amount deducted from revenue was offset by an equivalent increase in income taxes (recoveries).

The teb amount for the three months ended October 31, 2020 was $127 million, $126 million last quarter and $112 million in the same quarter last year. For further discussion, refer to the How we measure and report our business segments section of our 2020 Annual Report.

The following identifies the material items, other than the teb impacts noted previously, affecting the reported results in each period.

Q4 2020
Net income was $13 million in the current quarter, mainly due to asset/liability management activities, partially offset by net unfavourable tax adjustments.

Q3 2020
Net income was $31 million last quarter, primarily due to asset/liability management activities, partially offset by net unfavourable tax adjustments and residual unallocated costs.

Q4 2019
Net loss was $52 million in the same quarter last year, largely due to the impact of an unfavourable accounting adjustment.

Key performance and non-GAAP measures

We measure and evaluate the performance of our consolidated operations and each business segment using a number of financial metrics, such as net income and ROE. ROE does not have a standardized meaning under GAAP. We use ROE, at both the consolidated and business segment levels, as a measure of return on total capital invested in our business.


  Calculation of ROE


For the three months ended

For the year ended


October 31, 2020

October 31, 2020

(Millions of Canadian dollars, except

percentage amounts)

Personal & 

Commercial 

 Banking 

Wealth 

Management 

Insurance 

Investor & 

Treasury 

Services 

Capital 

Markets 

Corporate 

Support 







Total 

Total 

Net income available to common

















   shareholders

$

1,482

$

531

$

252

$

89

$

819

$

-

$

3,173

$

11,164

Total average common equity (1), (2)

$

22,700

$

16,200

$

2,350

$

3,450

$

22,700

$

11,400

$

78,800

$

78,800

ROE (3)


26.0%


13.0%


42.5%


10.1%


14.4%

n.m.


16.0%


14.2%



(1)

Total average common equity represents rounded figures.

(2)

The amounts for the segments are referred to as attributed capital.

(3)

ROE is based on actual balances of average common equity before rounding.

n.m. 

not meaningful

Additional information about these and other key performance and non-GAAP measures can be found under the Key performance and non-GAAP measures section of our 2020 Annual Report.


  Consolidated Balance Sheets



As at



October 31 


July 31 

October 31 

(Millions of Canadian dollars)


2020 (1)


2020 (2)


2019 (1)









Assets







Cash and due from banks

$

118,888

$

119,181

$

26,310









Interest-bearing deposits with banks


39,013


40,640


38,345









Securities








Trading


136,071


145,533


146,534


Investment, net of applicable allowance


139,743


144,980


102,470




275,814


290,513


249,004









Assets purchased under reverse repurchase agreements and securities borrowed


313,015


308,215


306,961









Loans








Retail


457,976


443,845


426,086


Wholesale


208,655


217,605


195,870




666,631


661,450


621,956


Allowance for loan losses


(5,639)


(5,509)


(3,100)




660,992


655,941


618,856









Segregated fund net assets


1,922


1,908


1,663

Other








Customers' liability under acceptances


18,507


18,239


18,062


Derivatives


113,488


157,378


101,560


Premises and equipment


7,934


8,175


3,191


Goodwill 


11,302


11,356


11,236


Other intangibles  


4,752


4,640


4,674


Other assets


58,921


66,948


49,073




214,904


266,736


187,796

Total assets

$

1,624,548

$

1,683,134

$

1,428,935









Liabilities and equity







Deposits








Personal

$

343,052

$

337,196

$

294,732


Business and government


624,311


640,284


565,482


Bank


44,522


39,678


25,791




1,011,885


1,017,158


886,005









Segregated fund net liabilities


1,922


1,908


1,663

Other








Acceptances


18,618


18,348


18,091


Obligations related to securities sold short


29,285


36,841


35,069


Obligations related to assets sold under repurchase agreements and securities loaned


274,231


273,768


226,586


Derivatives


109,927


155,479


98,543


Insurance claims and policy benefit liabilities


12,215


12,421


11,401


Other liabilities 


69,831


70,938


58,137




514,107


567,795


447,827









Subordinated debentures


9,867


9,899


9,815

Total liabilities


1,537,781


1,596,760


1,345,310









Equity attributable to shareholders








Preferred shares and other equity instruments


5,945


7,447


5,707


Common shares


17,499


17,481


17,587


Retained earnings


59,806


57,805


55,981


Other components of equity


3,414


3,535


4,248




86,664


86,268


83,523

Non-controlling interests


103


106


102

Total equity


86,767


86,374


83,625

Total liabilities and equity

$

1,624,548

$

1,683,134

$

1,428,935



(1)

Derived from audited financial statements.

(2)

Derived from unaudited financial statements.

 


  Consolidated Statements of Income



For the three months ended


For the year ended


October 31 

July 31 

October 31 


October 31 

October 31 

(Millions of Canadian dollars, except per share amounts)

2020 (1)

2020 (1)

2019 (1)


2020 (2)

2019 (2)














Interest and dividend income













Loans

$

5,522

$

5,603

$

6,186


$

23,420

$

24,863


Securities


1,335


1,681


1,659



6,488


6,827


Assets purchased under reverse repurchase agreements and securities borrowed


550


617


2,268



4,668


8,960


Deposits and other


56


55


329



307


683




7,463


7,956


10,442



34,883


41,333














Interest expense













Deposits and other


1,588


1,838


3,175



8,783


12,988


Other liabilities


811


917


2,066



4,985


8,231


Subordinated debentures


54


62


90



280


365




2,453


2,817


5,331



14,048


21,584

Net interest income


5,010


5,139


5,111



20,835


19,749














Non-interest income













Insurance premiums, investment and fee income


958


2,212


1,153



5,361


5,710


Trading revenue


224


623


116



1,239


995


Investment management and custodial fees


1,577


1,489


1,477



6,101


5,748


Mutual fund revenue


961


915


932



3,712


3,628


Securities brokerage commissions


320


341


323



1,439


1,305


Service charges


456


430


493



1,842


1,907


Underwriting and other advisory fees


578


570


428



2,319


1,815


Foreign exchange revenue, other than trading


233


246


242



1,012


986


Card service revenue


211


259


252



969


1,072


Credit fees


361


296


344



1,321


1,269


Net gains on investment securities


23


11


16



90


125


Share of profit in joint ventures and associates


20


20


26



77


76


Other


160


369


457



864


1,617



6,082


7,781


6,259



26,346


26,253

Total revenue


11,092


12,920


11,370



47,181


46,002

Provision for credit losses


427


675


499



4,351


1,864

Insurance policyholder benefits, claims and acquisition expense


461


1,785


654



3,683


4,085














Non-interest expense













Human resources


3,587


4,032


3,720



15,252


14,600


Equipment


508


469


452



1,907


1,777


Occupancy


431


415


424



1,660


1,635


Communications


254


233


296



989


1,090


Professional fees


385


337


382



1,330


1,305


Amortization of other intangibles


330


325


309



1,273


1,197


Other


563


569


736



2,347


2,535




6,058


6,380


6,319



24,758


24,139

Income before income taxes


4,146


4,080


3,898



14,389


15,914

Income taxes


900


879


692



2,952


3,043

Net income

$

3,246

$

3,201

$

3,206


$

11,437

$

12,871

Net income attributable to:













Shareholders

$

3,247

$

3,197

$

3,201


$

11,432

$

12,860


Non-controlling interests


(1)


4


5



5


11



$

3,246

$

3,201

$

3,206


$

11,437

$

12,871

Basic earnings per share (in dollars)

$

2.23

$

2.20

$

2.19


$

7.84

$

8.78

Diluted earnings per share (in dollars)


2.23


2.20


2.18



7.82


8.75

Dividends per common share (in dollars)


1.08


1.08


1.05



4.29


4.07



(1)

Derived from unaudited financial statements.

(2)

Derived from audited financial statements.

 


  Consolidated Statements of Comprehensive Income


For the three months ended


For the year ended

October 31 

July 31 

October 31 


October 31 

October 31 

(Millions of Canadian dollars)


2020 (1)


2020 (1)


2019 (1)



2020 (2)


2019 (2)















Net income

$

3,246

$

3,201

$

3,206


$

11,437

$

12,871















Other comprehensive income (loss), net of taxes












Items that will be reclassified subsequently to income:













Net change in unrealized gains (losses) on debt securities and loans at fair value














 through other comprehensive income














Net unrealized gains (losses) on debt securities and loans at fair value through other














   comprehensive income


33


749


(26)



(24)


192



Provision for credit losses recognized in income


(9)


(1)


(2)



13


(14)



Reclassification of net losses (gains) on debt securities and loans at fair value through other














   comprehensive income to income


(40)


(48)


(58)



(161)


(133)





(16)


700


(86)



(172)


45


Foreign currency translation adjustments














Unrealized foreign currency translation gains (losses)


(426)


(2,112)


180



810


65



Net foreign currency translation gains (losses) from hedging activities


191


716


(121)



(397)


5



Reclassification of losses (gains) on foreign currency translation to income


-


(21)


-



(21)


2



Reclassification of losses (gains) on net investment hedging activities to income


-


21


(1)



21


1





(235)


(1,396)


58



413


73


Net change in cash flow hedges














Net gains (losses) on derivatives designated as cash flow hedges


44


88


57



(1,145)


(559)



Reclassification of losses (gains) on derivatives designated as cash flow hedges to income


85


(113)


(47)



72


(135)





129


(25)


10



(1,073)


(694)

Items that will not be reclassified subsequently to income:













Remeasurements of employee benefit plans


498


(554)


125



(68)


(942)


Net fair value change due to credit risk on financial liabilities designated as at fair value














through profit or loss


(152)


(664)


(41)



(263)


51


Net gains (losses) on equity securities designated at fair value through other comprehensive














income


4


3


(2)



28


25




350


(1,215)


82



(303)


(866)

Total other comprehensive income (loss), net of taxes


228


(1,936)


64



(1,135)


(1,442)

Total comprehensive income (loss)

$

3,474

$

1,265

$

3,270


$

10,302

$

11,429

Total comprehensive income attributable to:













Shareholders

$

3,476

$

1,264

$

3,266


$

10,295

$

11,419


Non-controlling interests


(2)


1


4



7


10




$

3,474

$

1,265

$

3,270


$

10,302

$

11,429



(1)

Derived from unaudited financial statements.

(2)

Derived from audited financial statements.

 

Consolidated Statements of Changes in Equity





For the three months ended October 31, 2020 (1)









Treasury -
preferred
shares and
other equity
instruments





Other components of equity











Preferred
shares and
other equity
instruments



Treasury -
common
shares



FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components
of equity

Equity
attributable to
shareholders

Non-
controlling
interests







Common
shares

Retained
earnings

Total equity

(Millions of Canadian dollars)

Balance at beginning of period

$

7,448

$

17,610

$

(1)

$

(129)

$

57,805

$

(123)

$

4,866

$

(1,208)

$

3,535

$

86,268

$

106

$

86,374

Changes in equity


























Issues of share capital and other equity instruments


-


18


-


-


(1)


-


-


-


-


17


-


17


Common shares purchased for cancellation


-


-


-


-


-


-


-


-


-


-


-


-


Redemption of preferred shares and other equity



























instruments


(1,500)


-


-


-


-


-


-


-


-


(1,500)


-


(1,500)


Sales of treasury shares and other equity instruments


-


-


22


658


-


-


-


-


-


680


-


680


Purchases of treasury shares and other equity



























instruments


-


-


(24)


(658)


-


-


-


-


-


(682)


-


(682)


Share-based compensation awards


-


-


-


-


(2)


-


-


-


-


(2)


-


(2)


Dividends on common shares


-


-


-


-


(1,539)


-


-


-


-


(1,539)


-


(1,539)


Dividends on preferred shares and distributions on



























other equity instruments


-


-


-


-


(74)


-


-


-


-


(74)


(2)


(76)


Other


-


-


-


-


20


-


-


-


-


20


1


21


Net income


-


-


-


-


3,247


-


-


-


-


3,247


(1)


3,246


Total other comprehensive income (loss), net of taxes


-


-


-


-


350


(16)


(234)


129


(121)


229


(1)


228

Balance at end of period

$

5,948

$

17,628

$

(3)

$

(129)

$

59,806

$

(139)

$

4,632

$

(1,079)

$

3,414

$

86,664

$

103

$

86,767

































For the three months ended October 31, 2019 (1)









Treasury -
preferred
shares and
other equity
instruments





Other components of equity











Preferred
shares and
other equity
instruments



Treasury -
common
shares



FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components of
equity

Equity
attributable to
shareholders

Non-
controlling
interests







Common
shares

Retained
earnings

Total equity

(Millions of Canadian dollars)

Balance at beginning of period

$

5,706

$

17,652

$

(1)

$

(59)

$

54,692

$

119

$

4,162

$

(16)

$

4,265

$

82,255

$

99

$

82,354

Changes in equity


























Issues of share capital and other equity instruments


-


49


-


-


-


-


-


-


-


49


-


49


Common shares purchased for cancellation


-


(56)


-


-


(418)


-


-


-


-


(474)


-


(474)


Redemption of preferred shares and other equity



























instruments


-


-


-


-


-


-


-


-


-


-


-


-


Sales of treasury shares and other equity instruments


-


-


37


1,500


-


-


-


-


-


1,537


-


1,537


Purchases of treasury shares and other equity



























instruments


-


-


(35)


(1,499)


-


-


-


-


-


(1,534)


-


(1,534)


Share-based compensation awards


-


-


-


-


(8)


-


-


-


-


(8)


-


(8)


Dividends on common shares


-


-


-


-


(1,503)


-


-


-


-


(1,503)


-


(1,503)


Dividends on preferred shares and distributions on



























other equity instruments


-


-


-


-


(64)


-


-


-


-


(64)


(1)


(65)


Other


-


-


-


-


(1)


-


-


-


-


(1)


-


(1)


Net income


-


-


-


-


3,201


-


-


-


-


3,201


5


3,206


Total other comprehensive income (loss), net of taxes


-


-


-


-


82


(86)


59


10


(17)


65


(1)


64

Balance at end of period

$

5,706

$

17,645

$

1

$

(58)

$

55,981

$

33

$

4,221

$

(6)

$

4,248

$

83,523

$

102

$

83,625


 (1) Derived from unaudited financial statements.

 





For the year ended October 31, 2020 (1)









Treasury -
preferred
shares and
other equity
instruments





Other components of equity











Preferred
shares and
other equity
instruments



Treasury -
common
shares



FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components
of equity

Equity
attributable to
shareholders

Non-
controlling
interests







Common
shares

Retained
earnings

Total equity

(Millions of Canadian dollars)

Balance at beginning of period

$

5,706

$

17,645

$

1

$

(58)

$

55,981

$

33

$

4,221

$

(6)

$

4,248

$

83,523

$

102

$

83,625

Transition adjustment


-


-


-


-


(107)


-


-


-


-


(107)


-


(107)

Adjusted balance at beginning of period

$

5,706

$

17,645

$

1

$

(58)

$

55,874

$

33

$

4,221

$

(6)

$

4,248

$

83,416

$

102

$

83,518

Changes in equity


























Issues of share capital and other equity instruments


1,750


80


-


-


(5)


-


-


-


-


1,825


-


1,825


Common shares purchased for cancellation


-


(97)


-


-


(717)


-


-


-


-


(814)


-


(814)


Redemption of preferred shares and other equity



























instruments


(1,508)


-


-


-


-


-


-


-


-


(1,508)


-


(1,508)


Sales of treasury shares and other equity instruments


-


-


110


4,668


-


-


-


-


-


4,778


-


4,778


Purchases of treasury shares and other equity



























instruments


-


-


(114)


(4,739)


-


-


-


-


-


(4,853)


-


(4,853)


Share-based compensation awards


-


-


-


-


(3)


-


-


-


-


(3)


-


(3)


Dividends on common shares


-


-


-


-


(6,111)


-


-


-


-


(6,111)


-


(6,111)


Dividends on preferred shares and distributions on



























other equity instruments


-


-


-


-


(268)


-


-


-


-


(268)


(6)


(274)


Other


-


-


-


-


(93)


-


-


-


-


(93)


-


(93)


Net income


-


-


-


-


11,432


-


-


-


-


11,432


5


11,437


Total other comprehensive income (loss), net of taxes


-


-


-


-


(303)


(172)


411


(1,073)


(834)


(1,137)


2


(1,135)

Balance at end of period

$

5,948

$

17,628

$

(3)

$

(129)

$

59,806

$

(139)

$

4,632

$

(1,079)

$

3,414

$

86,664

$

103

$

86,767

































For the year ended October 31, 2019 (1)









Treasury -
preferred
shares and
other equity
instruments





Other components of equity











Preferred
shares and
other equity
instruments



Treasury -
common
shares



FVOCI

securities

and loans

Foreign
currency
translation

Cash flow
hedges

Total other
components
of equity

Equity
attributable to
shareholders

Non-
controlling
interests







Common
shares

Retained
earnings

Total equity

(Millions of Canadian dollars)

Balance at beginning of period

$

6,306

$

17,635

$

3

$

(18)

$

51,018

$

(12)

$

4,147

$

688

$

4,823

$

79,767

$

94

$

79,861

Changes in equity


























Issues of share capital and other equity instruments


350


136


-


-


-


-


-


-


-


486


-


486


Common shares purchased for cancellation


-


(126)


-


-


(904)


-


-


-


-


(1,030)


-


(1,030)


Redemption of preferred shares and other equity



























instruments


(950)


-


-


-


-


-


-


-


-


(950)


-


(950)


Sales of treasury shares and other equity instruments


-


-


182


5,340


-


-


-


-


-


5,522


-


5,522


Purchases of treasury shares and other equity



























instruments


-


-


(184)


(5,380)


-


-


-


-


-


(5,564)


-


(5,564)


Share-based compensation awards


-


-


-


-


(23)


-


-


-


-


(23)


-


(23)


Dividends on common shares


-


-


-


-


(5,840)


-


-


-


-


(5,840)


-


(5,840)


Dividends on preferred shares and distributions on



























other equity instruments


-


-


-


-


(269)


-


-


-


-


(269)


(2)


(271)


Other


-


-


-


-


5


-


-


-


-


5


-


5


Net income


-


-


-


-


12,860


-


-


-


-


12,860


11


12,871


Total other comprehensive income (loss), net of taxes


-


-


-


-


(866)


45


74


(694)


(575)


(1,441)


(1)


(1,442)

Balance at end of period

$

5,706

$

17,645

$

1

$

(58)

$

55,981

$

33

$

4,221

$

(6)

$

4,248

$

83,523

$

102

$

83,625


(1) Derived from audited financial statements.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. We may make forward-looking statements in this Earnings Release, in other filings with Canadian regulators or the SEC, in other reports to shareholders, and in other communications, including statements by our President and Chief Executive Officer. Forward-looking statements in this document include, but are not limited to, statements relating to our financial performance objectives, vision and strategic goals, and the potential continued impacts of the coronavirus (COVID-19) pandemic on our business operations, and financial results, condition and objectives and on the global economy and financial market conditions. The forward-looking information contained in this Earnings Release is presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "believe", "expect", "foresee", "forecast", "anticipate", "intend", "estimate", "goal", "plan" and "project" and similar expressions of future or conditional verbs such as "will", "may", "should", "could" or "would".

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors – many of which are beyond our control and the effects of which can be difficult to predict – include: credit, market, liquidity and funding, insurance, operational, regulatory compliance (which could lead to us being subject to various legal and regulatory proceedings, the potential outcome of which could include regulatory restrictions, penalties and fines), strategic, reputation, legal and regulatory environment, competitive and systemic risks and other risks discussed in the risk sections and Significant developments: COVID-19 section of our annual report for the fiscal year ended October 31, 2020 (the 2020 Annual Report); including business and economic conditions, information technology and cyber risks, Canadian housing and household indebtedness, geopolitical uncertainty, privacy, data and third party related risks, regulatory changes, environmental and social risk (including climate change), and digital disruption and innovation, culture and conduct, the business and economic conditions in the geographic regions in which we operate, the effects of changes in government fiscal, monetary and other policies, tax risk and transparency, environmental and social risk, and the emergence of widespread health emergencies or public health crises such as pandemics and epidemics, including the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business operations, and financial results, condition and objectives.

We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Material economic assumptions underlying the forward-looking statements contained in this Earnings Release are set out in the Economic, market and regulatory review and outlook section and for each business segment under the Strategic priorities and Outlook headings in our 2020 Annual Report. Except as required by law, we do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf.   

Additional information about these and other factors can be found in the risk sections and Significant developments: COVID-19 section of our 2020 Annual Report.

Information contained in or otherwise accessible through the websites mentioned does not form part of this Earnings Release. All references in this Earnings Release to websites are inactive textual references and are for your information only.

ACCESS TO QUARTERLY RESULTS MATERIALS
Interested investors, the media and others may review this quarterly Earnings Release, quarterly results slides, supplementary financial information and our 2020 Annual Report at rbc.com/investorrelations.

Quarterly conference call and webcast presentation
Our quarterly conference call is scheduled for December 2, 2020 at 8:00 a.m. (EST) and will feature a presentation about our fourth quarter and 2020 results by RBC executives. It will be followed by a question and answer period with analysts. Interested parties can access the call live on a listen-only basis at rbc.com/investorrelations/quarterly-financial-statements.html or by telephone (416-340-2217, 866-696-5910, passcode 9602843#). Please call between 7:50 a.m. and 7:55 a.m. (EST).

Management's comments on results will be posted on our website shortly following the call. A recording will be available by 5:00 p.m. (EST) from December 2, 2020 until February 23, 2021 at rbc.com/investorrelations/quarterly-financial-statements.html or by telephone (905-694-9451 or 800-408-3053, passcode 5433178#).

ABOUT RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 86,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada's biggest bank, and one of the largest in the world based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our 17 million clients in Canada, the U.S. and 34 other countries. Learn more at rbc.com.‎

We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/community-social-impact.

Trademarks used in this earnings release include the LION & GLOBE Symbol, ROYAL BANK OF CANADA and RBC which are trademarks of Royal Bank of Canada used by Royal Bank of Canada and/or by its subsidiaries under license. All other trademarks mentioned in this earnings release, which are not the property of Royal Bank of Canada, are owned by their respective holders.

SOURCE Royal Bank of Canada

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