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Dec. 1, 2021, 6:00 a.m. EST

Royal Bank of Canada Reports Fourth Quarter and 2021 Results

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TORONTO, Dec. 1, 2021 (Canada NewsWire via COMTEX) -- 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, 2021 and related notes prepared in accordance with International Financial Reporting Standards (IFRS). Our 2021 Annual Report (which includes our audited Annual Consolidated Financial Statements and accompanying Management's Discussion & Analysis), our 2021 Annual Information Form and our Supplementary Financial Information are available on our website at: http://www.rbc.com/investorrelations .







        
        
               2021 Net Income             2021 Diluted
                                                    EPS(1)
                    2021 PCL(2)
                    2021 ROE4
                    CET1 Ratio5
                               $16.1 Billion          $11.06           $(753) Million                 18.6%                  13.7 %
                  Up 40% YoY                 Up 41% YoY      PCL on loans ratio down   Up from 14.2% last   Robust capital levels,
                                                                                              year                    up
                                                                  73 bps(3) YoY                                  120 bps YoY
        
            ---
        
        


Royal Bank of Canada (RY on TSX and NYSE) today reported net income of $16.1 billion for the year ended October 31, 2021, up $4.6 billion or 40% from the prior year. Our results this year included releases of provisions on performing loans of $1.4 billion, primarily driven by improvements in our macroeconomic and credit quality outlook. In comparison, the prior year reflected elevated provisions on performing loans of $2.6 billion due to the impact of the COVID-19 pandemic. Diluted EPS[6]was $11.06, up 41% from the prior year.

Earnings in Personal & Commercial Banking and Capital Markets were up from last year, largely due to the favourable impact of lower PCL. Higher results in Wealth Management and Insurance also contributed to the increase in net income. These factors were partially offset by lower earnings in Investor & Treasury Services.

Pre-provision, pre-tax earnings(6) of $19.9 billion were up 6% from a year ago, mainly reflecting strong client-driven growth in volumes and fee-based assets, constructive markets, record investment banking revenue, and prudent management of discretionary spend. These factors were partially offset by lower spreads largely reflecting the impact of low interest rates, higher expenses driven by higher variable compensation and continued investments in our franchises, and lower trading revenue.

The PCL on loans ratio of (10) bps decreased by 73 bps from the prior year, due to lower provisions in Personal & Commercial Banking, Capital Markets and Wealth Management. The PCL on impaired loans ratio was 10 bps, down 14 bps from the prior year.

Our capital position remained robust, with a Common Equity Tier 1 (CET1) ratio of 13.7%, up 120 bps from the prior year. In addition, this year we returned $6.2 billion to our shareholders through common dividends. And today, we declared a quarterly dividend of $1.20 per share reflecting an increase of $0.12 or 11%. Also, we announced our intention, subject to the approval of the Office of the Superintendent of Financial Institutions (OSFI) and the TSX, to commence a normal course issuer bid and to repurchase for cancellation up to 45 million common shares.







        
                                    "In a year defined by the continued
                                     effects of the pandemic, RBC
                                     employees around the world
                                     demonstrated incredible resilience,
                                     and a commitment to helping our
                                     clients thrive and communities
                                     prosper. Across our businesses, we
                                     saw elevated growth in client
                                     activity and our teams responded
                                     with differentiated ideas and
                                     offerings to meet our clients' needs
                                     and create long-term value. As a
                                     result, our overall performance in
                                     2021 reflected strong earnings,
                                     premium shareholder performance, and
                                     highlighted our ability to
                                     successfully navigate a complex
                                     operating environment while
                                     continuing to invest in talent and
                                     innovations to support future
                                     growth. We are pleased to increase
                                     our quarterly dividend by 11% and
                                     announced today our intention to
                                     repurchase up to 45 million common
                                     shares, in line with our commitment
                                     to driving long-term value for our
                                     shareholders."
            - Dave McKay, RBC President and Chief
             Executive Officer
        
            ---
        
        


2021 Full-Year Business Segment Performance







        
            --  54% earnings growth in Personal & Commercial Banking, primarily
                attributable to lower PCL. Earnings growth also reflected
                strong average volume growth of 10% (+7% in loans and +13% in
                deposits) in Canadian Banking, including record levels of
                mortgage originations. Higher non-interest income including
                strong growth in mutual fund balances and significant client
                activity in our Direct Investing business, also contributed to
                the increase. These factors were partially offset by lower
                spreads, mainly due to lower interest rates and changes in
                product mix. We continued to invest in digital solutions to
                further enhance the client experience and deliver
                differentiated advice, products and services.
            --  22% earnings growth in Wealth Management, mainly due to higher
                average fee-based client assets reflecting market appreciation
                from a strong rebound in equity markets, as well as net sales
                driven by the quality of our advice, the breadth of our
                investment and holistic wealth planning solutions and clients'
                trust in our brand. Strong average volume growth of 10% in
                loans and 17% in deposits, largely in U.S. Wealth Management
                (including City National), also contributed to the increase.
                These factors were partially offset by higher variable
                compensation and the impact of lower spreads, mainly due to
                lower interest rates and changes in average earning assets mix.
            --  7% earnings growth in Insurance, largely due to favourable
                annual actuarial assumption updates and lower claims costs.
                These factors were partially offset by lower favourable
                investment-related experience, including the impact of realized
                investment gains in the prior year, as well as a lower impact
                from reinsurance contract renegotiations.
            --  18% lower earnings in Investor & Treasury Services, primarily
                due to lower client deposit revenue largely driven by lower
                interest rates. Lower funding and liquidity revenue also
                contributed to the decrease, mainly reflecting net favourable
                impacts from market volatility and interest rate movements in
                the prior year, as well as the impact of lower interest rates
                and lower gains from the disposition of securities, partially
                offset by a greater impact in the prior year from elevated
                enterprise liquidity.
            --  51% earnings growth in Capital Markets, primarily driven by
                lower PCL. Record revenue in Corporate and Investment Banking
                also contributed to the increase as strong deal flow was
                underpinned by M&A, loan syndication and Equity Capital Markets
                fee pools reaching all-time highs during the fiscal year. These
                factors were partially offset by higher taxes reflecting an
                increase in the proportion of earnings from higher tax rate
                jurisdictions, as well as lower revenue in Global Markets
                largely due to spread compression in repo and secured financing
                products and reduced client activity in our Fixed income,
                currencies and commodities business.
        
        
        








        
        
             ___________________________
        
        
        
             1
                    Earnings per share (EPS).
        
        
        
        
                        (2)
                    Provision for credit losses (PCL).
        
        
        
        
                        3
                    Basis points (bps).
        
        
        
        
                        4               Return on equity (ROE). For further information, refer to the Key
                                            performance and non-GAAP measures section on page 11 of this
                                            Earnings Release.
        
        
        
        
                        5               This ratio is calculated by dividing Common Equity Tier 1 (CET1)
                                            by risk-weighted assets, in accordance with OSFI's Basel III
                                            Capital Adequacy Requirements guideline.
        
        
        
        
                        6               Pre-provision, pre-tax earnings is calculated as income (2021:
                                            $16,050 million; 2020: $11,437 million) before income taxes
                                            (2021: $4,581 million; 2020: $2,952 million) and PCL (2021: -
                                            $753 million; 2020: $4,351 million). This is a non-GAAP
                                            measure. For further information, refer to the Key performance
                                            and non-GAAP measures section on page 11 of this Earnings
                                            Release.
        
        
        


Q4 2021 Performance

Earnings of $3.9 billion were up $646 million or 20% from a year ago, largely due to lower PCL. Higher earnings in Personal & Commercial Banking reflected robust volume growth, and in Capital Markets were driven by strong M&A activity. Solid earnings growth in Investor & Treasury Services, Insurance and Wealth Management also contributed to the increase. Pre-provision, pre-tax earnings(7) of $4.8 billion were up 4% from a year ago.

Earnings were down $404 million or 9% from last quarter due to lower earnings in Capital Markets, Wealth Management and Personal & Commercial Banking. These results were partially offset by higher earnings in Insurance and Investor & Treasury Services.







        
        
        
        
                      Q4 2021 •                    Net income of $3,892
                                                     million                         20%
            Compared to
            Q4 2020                                                             ↑
        
        
                       •       Diluted EPS of $2.68                       ↑      20%
        
        
                       •               ROE of 16.9%                      ↑   90 bps
        
        
                       •        CET1 ratio of 13.7%                      ↑  120 bps
        
            ---
        
        
                      Q4 2021 •                    Net income of $3,892
                                                     million                    ↓     9%
            Compared to
            Q3 2021
        
        
                       •       Diluted EPS of $2.68                       ↓      10%
        
        
                       •               ROE of 16.9%                      ↓  270 bps
        
        
                       •        CET1 ratio of 13.7%                      ↑   10 bps
        
            ---
        
        








        
        
             ___________________________
        
        
        
             7               Pre-provision, pre-tax earnings is calculated as income (Q4
                               2021: $3,892 million; Q4 2020: $3,246 million) before income
                               taxes (Q4 2021: $1,096 million; Q4 2020: $900 million) and PCL
                               (Q4 2021: -$227 million; Q4 2020: $427 million). This is a Non-
                               GAAP measure. For further information, refer to the Key
                               Performance and Non-GAAP measures section on page 11 of this
                               Earnings Release.
        
        
        


Q4 2021 Business Segment Performance

Personal & Commercial Banking

Net income of $2,033 million increased $531 million or 35% from a year ago, primarily attributable to lower PCL. Earnings growth also reflected strong average volume growth in Canadian Banking of 9% in loans and 9% in deposits, including strong mortgage growth. Higher non-interest income, including higher mutual fund distribution fees and card service revenue, also contributed to the increase. These factors were partially offset by lower spreads, mainly due to the ongoing impact of the low interest rate environment, changes in product mix and competitive pricing pressures.

Compared to last quarter, net income decreased $80 million or 4%, primarily due to lower spreads. Lower card service revenue, the timing of professional fees as well as higher marketing and technology-related costs also contributed to the decrease. These factors were partially offset by average volume growth of 3% in Canadian Banking, lower PCL and higher average mutual fund balances driving higher distribution fees.

Wealth Management

Net income of $558 million increased $12 million or 2% from a year ago driven by higher average fee-based client assets reflecting market appreciation and net sales and average volume growth, largely in U.S. Wealth Management (including City National). These factors were largely offset by higher variable compensation commensurate with increased revenue, a legal provision in U.S. Wealth Management (including City National) and lower spreads.

Compared to last quarter, net income decreased $186 million or 25%, mainly due to a legal provision in U.S. Wealth Management (including City National). Revenue growth from higher average fee-based client assets reflecting market appreciation and net sales was more than offset by higher variable compensation, lower spreads, lower transactional revenue, mainly driven by decreased client activity, and higher staff-related costs.

Insurance

Net income of $267 million increased $13 million or 5% from a year ago, primarily due to favourable annual actuarial assumption updates, partially offset by lower favourable investment-related experience, including the impact of realized investment gains in the prior year.

Compared to last quarter, net income increased $33 million or 14%, largely due to favourable annual actuarial assumption updates, partially offset by lower favourable investment-related experience.

Investor & Treasury Services

Net income of $109 million increased $18 million or 20% from a year ago, primarily driven by higher revenue from our asset services business.

Compared to last quarter, net income increased $21 million or 24%, mainly driven by lower taxes due to favourable tax adjustments, and higher funding and liquidity revenue primarily reflecting the impact of interest rate movements.

Capital Markets

Net income of $920 million increased $80 million or 10% from a year ago, largely driven by higher revenue in Corporate and Investment Banking as a result of increased M&A activity across all regions and higher loan syndication activity in North America. Higher Other revenue and lower PCL also contributed to the increase. These factors were partially offset by lower revenue in Global Markets, including lower fixed income trading revenue across all regions and lower equity trading revenue in North America, and the impact of foreign exchange translation.

Compared to last quarter, net income decreased $209 million or 19%, mainly driven by lower releases of PCL on performing assets. Lower fixed income trading revenue across all regions due to reduced client activity and lower loan syndication activity across most regions also contributed to the decrease. These factors were partially offset by lower compensation.

Capital, Liquidity and Credit Quality

Capital - As at October 31, 2021, our CET1 ratio was 13.7%, up 10 bps from last quarter reflecting internal capital generation partially offset by strong risk-weighted assets growth supporting client-driven business activities.

Liquidity - For the quarter ended October 31, 2021, the average LCR was 123%, which translates into a surplus of approximately $67 billion, compared to 125% and a surplus of approximately $69 billion in the prior quarter. LCR has remained relatively stable compared to the previous quarter as growth in retail and wholesale loans was offset by the issuance of term funding and increases in client deposits.

The Net Stable Funding Ratio (NSFR) as at October 31, 2021 was 116%, which translates into a surplus of approximately $114 billion, compared to 116% and a surplus of approximately $110 billion in the prior quarter. NSFR has remained stable compared to the previous quarter as growth in retail and wholesale loans was offset by the issuance of term funding and increases in client deposits.

Credit Quality

Q4 2021 vs. Q4 2020

Total PCL was $(227) million. PCL on loans of $(218) million decreased $616 million from a year ago, due to lower provisions in Personal & Commercial Banking, Capital Markets and Wealth Management. The PCL on loans ratio of (12) bps decreased 35 bps, and the PCL on impaired loans ratio of 7 bps decreased 8 bps.

PCL on loans in Personal & Commercial Banking decreased $523 million, primarily due to releases of provisions on performing loans in the majority of our Canadian Banking portfolios in the current quarter, driven by improvements in our macroeconomic and credit quality outlook, as compared to provisions taken in the prior year due to the impact of the COVID-19 pandemic. Lower provisions on impaired loans in the majority of our Canadian Banking retail portfolios and our Caribbean Banking portfolios also contributed to the decrease.

PCL on loans in Wealth Management decreased $46 million or 90%, due to lower provisions in U.S. Wealth Management (including City National). The decrease was largely due to releases of provisions on performing loans in the current quarter driven by improvements in our macroeconomic and credit quality outlook, as compared to provisions taken in the prior year due to the impact of the COVID-19 pandemic. This was partially offset by higher provisions on impaired loans.

PCL on loans in Capital Markets decreased $48 million, mainly due to recoveries on impaired loans in the current year as compared to provisions taken in the prior year, largely in the oil and gas sector. This was partially offset by lower releases of provisions on performing loans in the current quarter as the prior year reflected the impact of higher repayments.

Q4 2021 vs. Q3 2021

Total PCL was $(227) million, compared to $(540) million in the prior quarter, increasing $313 million or 58%. PCL on loans was $(218) million, compared to $(492) million in the prior quarter, increasing $274 million or 56%, due to lower releases of provisions in Capital Markets and higher provisions in Wealth Management partially offset by lower provisions in Personal & Commercial Banking. The PCL on loans ratio increased 16 bps, and the PCL on impaired loans ratio decreased 1 bp from last quarter.

PCL on loans in Personal & Commercial Banking decreased $33 million or 19%, primarily reflecting lower provisions on impaired loans in the majority of our Canadian Banking portfolios due to the economic recovery underway and the continued impact of the COVID-19 related government support programs, and recoveries in our Caribbean Banking portfolios in the current quarter. Higher releases of provisions on performing loans in our Canadian Banking commercial portfolios, partially offset by lower releases on performing loans in the majority of our Canadian Banking retail portfolios and our Caribbean Banking portfolios, also contributed to the decrease.

PCL on loans in Wealth Management increased $26 million, primarily in U.S. Wealth Management (including City National), largely reflecting provisions on impaired loans in the current quarter as compared to recoveries in the prior quarter. Lower releases of provisions on performing loans also contributed to the increase as the prior quarter reflected a higher impact from the continued improvements in our macroeconomic and credit quality outlook.

PCL on loans in Capital Markets increased $282 million or 94%, primarily due to lower releases of provisions on performing loans in the current quarter as the prior quarter reflected a higher impact from the continued improvements in our macroeconomic and credit quality outlook.







        
        
        
        
        
                          Selected financial and other highlights
        
        
        
                  As at or 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, number of and percentage amounts)                                                                                                        2021                           2021                                             2020                                 2021                    2020
        
            ---
        
        
                      Total revenue                                                                         $
        
                        12,376             $
                      12,756                                $
                     11,092               $
        
                   49,693      $
                      47,181
        
        
        
                      Provision for credit losses (PCL)                                                                               (227)                         (540)                                             427                                (753)                  4,351
        
        
        
                      Insurance policyholder benefits, claims and acquisition expense (PBCAE)                                         1,032                          1,304                                              461                                3,891                   3,683
        
        
        
                      Non-interest expense                                                                                            6,583                          6,420                                            6,058                               25,924                  24,758
        
        
        
                      Income before income taxes                                                                                      4,988                          5,572                                            4,146                               20,631                  14,389
        
        
        
        
        
                        Net income                                                                                                                                          $
        
                        3,892              $
                      4,296                                 $
                     3,246               $
        
                   16,050      $
                      11,437
        
            ---
        
        
        
                        Segments - net income
        
        
        
                      Personal & Commercial Banking                                                          $
        
                        2,033              $
                      2,113                                 $
                     1,502                $
        
                   7,847       $
                      5,087
        
        
        
                      Wealth Management (1)                                                                                             558                            744                                              546                                2,626                   2,154
        
        
        
                      Insurance                                                                                                         267                            234                                              254                                  889                     831
        
        
        
                      Investor & Treasury Services                                                                                      109                             88                                               91                                  440                     536
        
        
        
                      Capital Markets                                                                                                   920                          1,129                                              840                                4,187                   2,776
        
        
        
                      Corporate Support (1)                                                                                               5                           (12)                                              13                                   61                      53
        
        
        
        
        
                        Net income                                                                                                                                          $
        
                        3,892              $
                      4,296                                 $
                     3,246               $
        
                   16,050      $
                      11,437
        
            ---
        
        
        
                        Selected information
        
        
        
                      Earnings per share (EPS) - basic                                                        $
        
                        2.68               $
                      2.97                                  $
                     2.23                $
        
                   11.08        $
                      7.84
        
        
        
                                                        - diluted                                                                      2.68                           2.97                                             2.23                                11.06                    7.82
        
        
        
                      Return on common equity (ROE) (2)                                                                               16.9%                         19.6%                                             16%                               18.6%                  14.2%
        
        
        
                      Average common equity (2)                                                             $
        
                        89,500             $
                      85,800                                $
                     78,800               $
        
                   84,850      $
                      78,800
        
        
        
                      Net interest margin (NIM) - on average earning assets, net (3)                                                  1.43%                         1.51%                                           1.52%                               1.48%                  1.55%
        
        
        
                      PCL on loans as a % of average net loans and acceptances                                                      (0.12)%                       (0.28)%                                           0.23%                             (0.10)%                  0.63%
        
        
        
                      PCL on performing loans as a % of average net loans and acceptances                                           (0.19)%                       (0.36)%                                           0.08%                             (0.20)%                  0.39%
        
        
        
                      PCL on impaired loans as a % of average net loans and acceptances                                               0.07%                         0.08%                                           0.15%                               0.10%                  0.24%
        
        
        
                      Gross impaired loans (GIL) as a % of loans and acceptances                                                      0.31%                         0.35%                                           0.47%                               0.31%                  0.47%
        
        
        
                      Liquidity coverage ratio (LCR) (4)                                                                               123%                          125%                                            145%                                123%                   145%
        
        
        
                      Net stable funding ratio (5)                                                                                     116%                          116%
                     n.a.                                      116%
                    n.a.
        
        
        
        
        
                        Capital ratios and Leverage ratio (6)
        
        
        
                      Common Equity Tier 1 (CET1) ratio                                                                               13.7%                         13.6%                                           12.5%                               13.7%                  12.5%
        
        
        
                      Tier 1 capital ratio                                                                                            14.9%                         15.0%                                           13.5%                               14.9%                  13.5%
        
        
        
                      Total capital ratio                                                                                             16.7%                         16.7%                                           15.5%                               16.7%                  15.5%
        
        
        
                      Leverage ratio                                                                                                   4.9%                          5.0%                                            4.8%                                4.9%                   4.8%
        
        
        
        
        
                        Selected balance sheet and other information (7)
        
        
        
                      Total assets                                                                       $
        
                        1,706,323          $
                      1,693,540                             $
                     1,624,548            $
        
                   1,706,323   $
                      1,624,548
        
        
        
                      Securities, net of applicable allowance                                                                       284,724                        271,950                                          275,814                              284,724                 275,814
        
        
        
                      Loans, net of allowance for loan losses                                                                       717,575                        698,041                                          660,992                              717,575                 660,992
        
        
        
                      Derivative related assets                                                                                      95,541                        102,033                                          113,488                               95,541                 113,488
        
        
        
                      Deposits                                                                                                    1,100,831                      1,084,878                                        1,011,885                            1,100,831               1,011,885
        
        
        
                      Common equity                                                                                                  91,983                         88,803                                           80,719                               91,983                  80,719
        
        
        
                      Total risk-weighted assets                                                                                    552,541                        543,047                                          546,242                              552,541                 546,242
        
        
        
                      Assets under management (AUM) (3)                                                                           1,008,700                        983,500                                          843,600                            1,008,700                 843,600
        
        
        
                      Assets under administration (AUA) (3), (8)                                                                  6,347,300                      6,369,400                                        5,891,200                            6,347,300               5,891,200
        
        
        
        
        
                        Common share information
        
        
        
                      Shares outstanding (000s) - average basic                                                                   1,424,534                      1,424,614                                        1,422,578                            1,424,343               1,423,915
        
        
        
                                                                 - average diluted                                                1,427,225                      1,427,198                                        1,426,466                            1,426,735               1,428,770
        
        
        
                                                                 - end of period                                                  1,424,525                      1,424,463                                        1,422,473                            1,424,525               1,422,473
        
        
        
                      Dividends declared per common share                                                     $
        
                        1.08               $
                      1.08                                  $
                     1.08                 $
        
                   4.32        $
                      4.29
        
        
        
                      Dividend yield (9)                                                                                               3.3%                          3.5%                                            4.4%                                3.8%                   4.7%
        
        
        
                      Dividend payout ratio (3)                                                                                         40%                           36%                                             48%                                 39%                    55%
        
        
        
                      Common share price (RY on TSX) (10)                                                   $
        
                        128.82             $
                      126.18                                 $
                     93.16               $
        
                   128.82       $
                      93.16
        
        
        
                      Market capitalization (TSX) (10)                                                                              183,507                        179,739                                          132,518                              183,507                 132,518
        
        
        
        
        
                        Business information (number of)
        
        
        
                      Employees (full-time equivalent) (FTE)                                                                         85,301                         85,887                                           83,842                               85,301                  83,842
        
        
        
                      Bank branches                                                                                                   1,295                          1,303                                            1,329                                1,295                   1,329
        
        
        
                      Automated teller machines (ATMs)                                                                                4,378                          4,374                                            4,557                                4,378                   4,557
        
        
        
        
               Period average US$ equivalent of C$1.00 (11)                                                                                                                     $
        
                        0.796              $
                      0.812                                 $
                     0.756                $
        
                   0.796       $
                      0.744
        
        
        
               Period-end US$ equivalent of C$1.00                                                                                                                              $
        
                        0.808              $
                      0.801                                 $
                     0.751                $
        
                   0.808       $
                      0.751
        
            ---
        
        








        
        
                      (1)               Effective Q4 2021, gains (losses) on
                                           economic hedges of our U.S. share-based
                                           compensation plans, which are reflected in
                                           revenue, and related variability in share-
                                           based compensation expense driven by
                                           changes in the fair value of liabilities
                                           relating to our U.S. share-based
                                           compensation plans have been reclassified
                                           from our Wealth Management segment to
                                           Corporate Support. Comparative amounts have
                                           been reclassified to conform with this
                                           presentation.
        
        
        
                      (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)               See the Glossary section of our 2021 Annual
                                           Report for composition of this measure.
        
        
        
                      (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. For further
                                           details, refer to the Liquidity and funding
                                           risk section of our 2021 Annual Report.
        
        
        
                      (5)               Beginning in Q1 2021, OSFI requires Canadian
                                           Domestic Systemically Important Banks (D-
                                           SIBs) to disclose the NSFR on a prospective
                                           basis. The NSFR is calculated in accordance
                                           with OSFI's Liquidity Adequacy Requirements
                                           (LAR) guideline. For further details, refer
                                           to the Liquidity and funding risk section
                                           of our 2021 Annual Report.
        
        
        
                      (6)               Capital ratios are calculated using OSFI's
                                           Capital Adequacy Requirements (CAR)
                                           guideline and the Leverage ratio is
                                           calculated using OSFI's Leverage
                                           Requirements (LR) guideline.
        
        
        
                      (7)               Represents period-end spot balances.
        
        
        
                      (8)               AUA includes $15 billion and $3 billion
                                           (July 31, 2021 - $15 billion and $3
                                           billion, October 31, 2020 - $16 billion and
                                           $7 billion) of securitized residential
                                           mortgages and credit card loans,
                                           respectively.
        
        
        
                      (9)               Defined as dividends per common share
                                           divided by the average of the high and low
                                           share price in the relevant period.
        
        
        
                      (10)              Based on TSX closing market price at period-
                                           end.
        
        
        
                      (11)              Average amounts are calculated using month-
                                           end spot rates for the period.
        
        
        
                      n.a.
                      not applicable
        
        
        








        
        
        
        
        
                        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)                                                           2021                                          2021             2020
        
            ---
        
        
                      Net interest income                                                        $
        
                        3,169                $
                    3,206     $
                      3,114
        
        
        
                      Non-interest income                                                                               1,436                          1,445                 1,259
        
        
        
        
                        Total revenue                                                                                                                                               4,605                          4,651                 4,373
        
        
        
                      PCL on performing assets                                                                          (342)                         (341)                  135
        
        
        
                      PCL on impaired assets                                                                              134                            162                   181
        
        
        
        
                        PCL                                                                                                                                                         (208)                         (179)                  316
        
        
        
                      Non-interest expense                                                                              2,087                          1,998                 2,030
        
        
        
        
                        Income before income taxes                                                                                                                                  2,726                          2,832                 2,027
        
        
        
        
                        Net income                                                                                                                           $
        
                        2,033                $
                    2,113     $
                      1,502
        
            ---
        
        
        
                        Revenue by business
        
        
        
                      Canadian Banking                                                           $
        
                        4,414                $
                    4,463     $
                      4,165
        
        
        
                      Caribbean & U.S. Banking                                                                            191                            188                   208
        
                                                                                                                                                                                                                                                ---
        
        
        
                        Selected balances and other information
        
        
        
                      ROE                                                                                               32.5%                         33.6%                26.0%
        
        
        
                      NIM                                                                                               2.42%                         2.52%                2.59%
        
        
        
                      Efficiency ratio (1)                                                                              45.3%                         43.0%                46.4%
        
        
        
                      Operating leverage(2)                                                                             2.5 %                         6.3 %               (5.4)%
        
        
        
                      Average total assets                                                     $
        
                        543,900              $
                    530,400   $
                      503,200
        
        
        
                      Average total earning assets, net                                                               518,900                        505,600               478,500
        
        
        
                      Average loans and acceptances, net                                                              522,200                        509,300               482,000
        
        
        
                      Average deposits                                                                                524,300                        507,600               481,300
        
        
        
                      AUA (3), (4)                                                                                    367,700                        356,100               292,800
        
        
        
                      Average AUA                                                                                     363,500                        349,100               297,600
        
        
        
                      AUM (4)                                                                                           5,400                          5,400                 5,300
        
        
        
                      PCL on impaired loans as a % of average net loans and acceptances                                 0.10%                         0.13%                0.15%
        
        
        
        
                        Other selected information - Canadian Banking
        
        
        
                      Net income                                                                 $
        
                        1,970                $
                    2,024     $
                      1,474
        
        
        
                      NIM                                                                                               2.42%                         2.51%                2.56%
        
        
        
                      Efficiency ratio                                                                                  43.8%                         41.4%                44.9%
        
        
        
                      Operating leverage                                                                                2.7 %                         6.1 %               (6.8)%
        
                                                                                                                                                                                                                                                ---
        
        








        
        
                      (1)              Calculated as non-interest
                                          expense divided by total
                                          revenue.
        
        
        
                      (2)              Defined as the difference
                                          between our revenue growth
                                          rate and non-interest
                                          expense growth rate.
        
        
                                        AUA includes securitized
                                          residential mortgages and
                                          credit card loans as at
                                          October 31, 2021 of $15
                                          billion and $3 billion,
                                          respectively (July 31, 2021 -
                                          $15 billion and $3 billion,
                                          October 31, 2020 - $16
        
                      (3)               billion and $7 billion).
        
        
        
                      (4)              Represents period-end spot
                                          balances.
        
        
        


Q4 2021 vs. Q4 2020Net income increased $531 million or 35% from a year ago, primarily attributable to lower PCL. Average volume growth in Canadian Banking and higher non-interest income also contributed to the increase. These factors were partially offset by lower spreads.

Total revenue increased $232 million or 5%, mainly due to average volume growth in Canadian Banking of 9% in loans and 9% in deposits, higher average mutual fund balances driving higher distribution fees, and higher card service revenue reflecting increased client activity. These factors were partially offset by lower spreads.

Net interest margin was down 17 bps compared to the same quarter last year, mainly due to the ongoing impact of the low interest rate environment, changes in product mix and competitive pricing pressures.

PCL decreased $524 million, primarily reflecting releases of provisions on performing loans in the current quarter as compared to provisions taken in the prior year. Lower provisions on impaired loans also contributed to the decrease, resulting in a decrease of 5 bps in the PCL on impaired loans ratio. For further details on PCL, refer to Capital, Liquidity and Credit Quality in the Q4 2021 Business Segment Performance section of this Earnings Release.

Non-interest expense increased $57 million or 3%, mainly attributable to higher staff-related costs.

Q4 2021 vs. Q3 2021Net income decreased $80 million or 4% from last quarter, primarily due to lower spreads. Lower card service revenue, the timing of professional fees as well as higher marketing and technology-related costs also contributed to the decrease. These factors were partially offset by average volume growth of 3% in Canadian Banking, lower PCL and higher average mutual fund balances driving higher distribution 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)                                                                                                 2021           2021                                    2020
        
            ---
        
        
             Net interest income                                                                                    $
        
                        675                $
                      682                     $
                    686
        
        
        
             Non-interest income (1)                                                                                                  2,769                          2,691                             2,375
        
        
        
        
                        Total revenue
                         (1)                                                                                                                                                                 3,444                                   3,373                              3,061
        
        
        
             PCL on performing assets                                                                                                   (7)                          (19)                               51
        
        
        
             PCL on impaired assets                                                                                                      12                            (2)                                -
        
        
        
        
                        PCL                                                                                                                                                                                                5                                    (21)                                51
        
        
        
             Non-interest expense (1)                                                                                                 2,718                          2,434                             2,304
        
        
        
        
                        Income before income taxes (1)                                                                                                                                                                   721                                     960                                706
        
        
        
        
                        Net income (1)                                                                                                                                                                         $
        
                  558                               $
                744                      $
                    546
        
            ---
        
        
        
                        Revenue by business
        
        
        
             Canadian Wealth Management                                                                           $
        
                        1,032              $
                      1,012                     $
                    835
        
        
        
             U.S. Wealth Management (including City National) (1)                                                                     1,628                          1,592                             1,532
        
        
        
                U.S. Wealth Management (including City National) (US$ millions) (1)                                                   1,296                          1,293                             1,158
        
        
        
             Global Asset Management                                                                                                    711                            692                               608
        
        
        
             International Wealth Management                                                                                             73                             77                                86
        
        
        
        
        
                        Selected balances and other information
        
        
        
             ROE                                                                                                                      13.1%                         18.3%                            13.0%
        
        
        
             NIM                                                                                                                      2.06%                         2.25%                            2.50%
        
        
        
             Pre-tax margin (1), (2)                                                                                                  20.9%                         28.5%                            23.1%
        
        
        
        
                        Selected average balance sheet information
        
        
        
             Average total assets                                                                               $
        
                        146,600            $
                      136,300                 $
                    126,300
        
        
        
             Average total earning assets, net                                                                                      130,000                        120,200                           109,300
        
        
        
             Average loans and acceptances, net                                                                                      87,000                         83,800                            81,000
        
        
        
             Average deposits                                                                                                       151,500                        142,800                           132,100
        
        
        
        
                        Other information
        
        
        
             AUA - total (3)                                                                                                      1,322,300                      1,292,800                         1,100,000
        
        
        
                     - U.S. Wealth Management (including City National) (3)                                                         704,200                        690,400                           583,800
        
        
        
                     - U.S. Wealth Management (including City National) (US$ millions) (3)                                          568,800                        553,300                           438,200
        
        
        
             AUM (3)                                                                                                              1,000,600                        975,600                           836,400
        
        
        
             Average AUA                                                                                                          1,314,100                      1,265,200                         1,107,700
        
        
        
             Average AUM                                                                                                            997,400                        956,300                           839,600
        
        
        
             PCL on impaired loans as a % of average net loans and acceptances                                                        0.05%                       (0.01)%                            0.00%
        
        
        
             Number of advisors (4)                                                                                                   5,548                          5,522                             5,428
        
        
        
        
                      For the three months ended
        
        
        
        
        
                        Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items                                                                                                                   Q4 2021 vs                  Q4 2021 vs
        
        
        
               (Millions of Canadian dollars, except percentage amounts)                                                                                                                                                                           Q4 2020                     Q3 2021
        
            ---
        
        
        
                        Increase (decrease):
        
        
        
             Total revenue                                                                                                                                                       $
        
                (95)           $
        
             31
        
        
        
             Non-interest expense                                                                                                                                                             (91)                27
        
        
        
             Net income                                                                                                                                                                        (4)                 3
        
        
        
        
               Percentage change in average US$ equivalent of C$1.00                                                                                                                                                                                               5%                              (2)%
        
        
        
               Percentage change in average British pound equivalent of C$1.00                                                                                                                                                                                     1%                                1%
        
        
        
               Percentage change in average Euro equivalent of C$1.00                                                                                                                                                                                              7%                                1%
        
            ---
        
        
        
        








        
        
                      (1)              Effective Q4 2021, gains (losses)
                                          on economic hedges of our U.S.
                                          share-based compensation plans,
                                          which are reflected in revenue,
                                          and related variability in share-
                                          based compensation expense driven
                                          by changes in the fair value of
                                          liabilities relating to our U.S.
                                          share-based compensation plans
                                          have been reclassified from our
                                          Wealth Management segment to
                                          Corporate Support. Comparative
                                          amounts have been reclassified to
                                          conform with this presentation.
        
        
        
                      (2)              Pre-tax margin is defined as
                                          Income before income taxes divided
                                          by Total revenue.
        
        
        
                      (3)              Represents period-end spot
                                          balances.
        
        
        
                      (4)              Represents client-facing advisors
                                          across all our wealth management
                                          businesses.
        
        
        


Q4 2021 vs. Q4 2020Net income increased $12 million or 2% from a year ago, as higher average fee-based client assets and average volume growth were largely offset by higher variable compensation, a legal provision, and lower spreads.

Total revenue increased $383 million or 13%, primarily due to higher average fee-based client assets reflecting market appreciation and net sales, and average volume growth of 7% in loans and 15% in deposits. These factors were partially offset by lower spreads and the impact of foreign exchange translation.

PCL decreased $46 million or 90% in U.S. Wealth Management (including City National), largely due to releases of provisions on performing loans in the current quarter as compared to provisions taken in the prior year. This was partially offset by higher provisions on impaired loans, resulting in an increase of 5 bps in the PCL on impaired loans ratio. For further details on PCL, refer to Capital, Liquidity and Credit Quality in the Q4 2021 Business Segment Performance section of this Earnings Release.

Non-interest expense increased $414 million or 18%, largely due to higher variable compensation commensurate with increased revenue. A legal provision in U.S. Wealth Management (including City National) and higher staff-related costs also contributed to the increase. These factors were partially offset by the impact of foreign exchange translation.

Q4 2021 vs. Q3 2021Net income decreased $186 million or 25% from last quarter, mainly due to a legal provision in U.S. Wealth Management (including City National). Revenue growth from higher average fee-based client assets reflecting market appreciation and net sales was more than offset by higher variable compensation, lower spreads, lower transactional revenue, mainly driven by decreased client activity, and higher staff-related costs.

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